Avoid the Pitfalls When Buying a Condo
If you’re a first-time homebuyer or downsizing from a house to a condo, until recently, you probably haven’t needed to know much about the condo market in Vancouver. Like most buyers you’ve heard about the leaky condo crisis but think those issues have long since been resolved. Regardless of what you do, or don’t know, there are a lot of things you should know before buying a condo.
When it comes to valuation, the condo market is full of apples and oranges: new versus old, concrete versus wood-frame, and so on. But it’s the lemons out there that make it impossible to find the best possible property at the right price without a lot of research and due diligence.
The basic research is no-brainer stuff. Your real estate agent will provide you with plenty of information, including the last two years of minutes from strata council meetings and AGMs, Form Bs and so on. And a home inspector can identify any number of potential problems within the unit you’re buying.
But those documents seldom give you the whole picture. If the strata development is 15 or 20 years old, there are many more years of strata minutes, engineering reports and other information that will help you assess the overall condition of the entire strata development and the quality of the work being done by the strata council and professional managers.
Is the building envelope sound? Has the strata council kept the building or buildings well maintained and addressed warranty issues? Does the strata have policies and practices that will ensure that your property will retain its value over time? Is the Contingency Reserve Fund sufficient to fund major repair or maintenance issues as they arise?
A little extra research out front will save you from costly financial assessments in the future. Ask Fred and Ethyl. Fred and Ethyl looked at a pretty condominium they’d spotted while out walking in Fairview Slopes. They loved the area and could just see themselves jogging over the foot-bridge to Granville Island to buy fresh croissants every morning.
They loved the apartment. The view was spectacular. They were a bit concerned about the mouldy looking eaves in the apartment complex but they were reassured they just needed painting. When they asked whether the building had been rain-screened, they were told that, even better, the entire building exterior had been redone, like new, about ten years ago. Their deck was sloping a bit and gathering water near the patio doors. They weren’t sure but they didn’t think it was a big deal.
They’d done their homework and read the last two years minutes from the strata council meetings and AGMs. They read the Form B twice! And everyone said it was a great building.
Fred and Ethyl were keeners and so when they were told that someone else was about to make an offer, they made an all-cash bid and agreed to forgo the home inspection to make it look more attractive. Their offer was accepted and in a few weeks they moved into their new apartment. And they loved it.
And then, a few months later, while reading the minutes from the latest strata council meeting, Fred noticed the new management company had recommended they have a building envelope review done so they could assess it’s condition and plan for future maintenance and repairs.
“That’s good. Right Ethyl.”
“Of course Fred! Planning ahead is great.”
A special general meeting was scheduled and nearly all of the strata owners agreed to the building envelope review. When it was completed six months later, Fred and Ethyl were shocked to find that twenty years of neglected maintenance meant the condo development had significant work that needed to be undertaken immediately. When the estimates came in, their assessment, the money they would have to pay out of their own pockets, was almost $100,000.
Of course, Fred and Ethyl are a fictional couple, but many condo-owners in Vancouver have bought their own dream apartments only to wake up to the nightmare of a “special assessment” for repairs that no one anticipated.
What could Fred and Ethyl have done differently? Stay tuned.