Mastering Strata Documents: A Comprehensive Guide

Strata documents are notoriously lengthy and complex, but they play a critical role in your due diligence when purchasing a property. If you're going to commit to reading 500+ pages, it’s crucial to know what to look for and understand the implications. These documents can reveal essential details about your investment, so leaning on your real estate advisor can make all the difference. Remember, this is likely one of the biggest purchases of your life, and you need the full picture to make an informed decision.

Here’s a breakdown of the key documents you’ll encounter in any strata purchase:

1. Form B: The Information Certificate

This document provides the official disclosure from the strata corporation. It offers a snapshot of the strata’s health at a specific time and is typically ordered by the listing agent from the property manager. Form B includes:

• Current strata fees

• Parking and storage designations

• Number of rental units in the building

• Strata litigation status

• Outstanding charges (special levies, fines)

Crucially, the Form B will also include essential attachments like the strata rules, current budget, depreciation report, rental disclosure statement, and any indemnity agreements. These attachments highlight any responsibility you might inherit for previous owner renovations.

Also it is important to understand that this form is also directly relevant to the subject unit and whether there is any liens or lawsuit against it.

Form be should not be older than 30days and must always be updated. In there you’d also can have the refrence on Parking and Locker whether to be alerted on CP (common Property and if there is any wait list, when you see a CP that is assigned by the strata, you need to investigate whether than particular space comes with the purchase of the unit or not, and if whether there is any waitlist on strata.

Pro Tip: Make sure the Form B is no more than 30 days old. If it’s older, request an updated version to ensure you’re working with the latest information.

Financial Statements are part of Form B in continuation.

Financial statements give you a deep look into the building’s financial health. You’ll see the breakdown of operating costs (expenses and liabilities) and can cross-reference these numbers with the depreciation report to assess how proactive the strata is in addressing repairs.

There are two main funds to understand:

• Operating Fund (OF): Covers annual, recurring expenses (e.g., maintenance, insurance).

• Contingency Reserve Fund (CRF): For larger, less frequent expenses (e.g., major repairs).

Once approved, the annual budget shows what the strata plans to achieve in the upcoming year.

Pro Tip: Check the operating and contingency reserve funds for signs of prudent financial management. Are they on budget? Are there specific reserves set aside for future major repairs? Additionally, look for alternative revenue sources like income from cell towers, laundry, or move-in/out fees.

2. Bylaws and Rules

Bylaws and rules govern your rights and responsibilities as an owner. It’s essential to understand these, as they directly affect your living experience. Rules typically cover areas like gym hours or amenities usage, while Bylaws can govern more significant matters, such as pet and rental restrictions.

Each building will have its unique set of bylaws, which evolve over time. Always review them thoroughly to ensure they align with your lifestyle needs.

Understanding your need of use of strata, leads to review these pages carefully to understand your lifestyle and needs match. If you have pet, or need to do BBQ, investigate these through Bylaws and Rules.

Pro Tip: While the Strata Property Act provides a set of standard bylaws, each strata will amend and add to them. Be diligent in your review to avoid surprises.

3. AGM (Annual General Meeting) & Minutes Review

The AGM minutes are an invaluable resource when reviewing a strata property. The AGM is where owners and the strata council discuss and vote on important matters related to the management of the building. Reviewing the minutes from both the AGM and any other strata meetings (Special General Meetings, council meetings, etc.) will give you insight into ongoing or unresolved issues, planned expenditures, and general owner sentiment toward the building’s management.

Here’s what to look for in the minutes:

• Upcoming or planned major repairs (such as roof or plumbing replacements)

• Disputes between owners and the council

• Pending lawsuits or legal issues

• Special levies that could be passed for future repairs

Pro Tip: Focus on the last two years of meeting minutes. This will give you a sense of how issues are being handled and what the future might look like for the building. Pay close attention to any motions passed or large-scale projects being planned.

4. Depreciation Report

The depreciation report is a key document that assesses the building's physical condition and forecasts future repair and replacement costs for major components (e.g., roof, plumbing, elevators). This report helps owners and prospective buyers understand how well the building is maintained and whether the contingency reserve fund has sufficient funds for future projects.

Key aspects of the depreciation report include:

• Expected life span of major building components

• Projected costs for upcoming repairs

• Recommendations for increasing the contingency reserve fund (CRF)

Pro Tip: Compare the depreciation report to the financial statements and AGM minutes to get a full picture. Are there sufficient funds to cover the upcoming repairs mentioned in the report? Is the strata actively planning to address these issues, or is there a risk of future special levies?