Special Assessments & Special Levies when Buying!?!?

Special Assessments & Special Levies When Buying?!?!
A hot topic and a feared topic nonetheless! This is a very common question we come up against with First Time Home Buyers when it comes to Strata Documentation or Depreciation reports. It’s imperative to realise, a Special Assessment and a Special Levy are ALWAYS going to happen. 

If you’re looking through you Strat Documents and the Depreciation Report, you’ll come across a wealth of items that need to be either repaired or replaced in a building over the next 15 years. The reality of the being, a building is a man made object! It is prone to wear and tear - plumbing becomes corroded, sealant dries out and cracks and elevators need to be upgraded.

I don’t care if you’re buying a $500,000 unit in Gastown, or a $10,000,000 unit in Three Harbour Green (next to the Cactus Club in Coal Harbour), this happens, and not only does it happen but it happens in EVERY building.

The keys to watch out for are two things:
  • What am I, as a buyer, responsible for paying when purchasing the condo
  • Are their major projects coming up I could be paying for?

In answer to the first question, these are the scenarios you will come across:
Mention of repairs needing to take place - If there is mention, or future mention of repairs once you have purchased a unit that have not been agreed upon fees at the time of purchase, you as the buyer will be responsible for them. End of, there is no negotiation here and this is just part in part of buying real estate.

Already agreed upon/approved fees - If you purchase the unit and the minutes show a vote has taken place and repairs are due to take place by means of a Special Levy then the current seller is due to pay those costs. No matter how payment is broken up (even if it is due after the sale of the unit) the current owner/seller is due to pay them in full.

Now as we mentioned above, Special Assessments and levies will be a part of your life as a condo owner. What you should be watching out for is the WHAT that is coming up? Rainscreening and entire building vs fixing a garage door motor are very opposite ends of the scale. The minimal work, as we said, will always be a part of your life. You just need to be cautious of the big work coming up, for example rainscreening, plumbing work etc.
A very important note - Not all repairs will be charged as a Special Levy. A lot of the repairs cost will be taken from your Contingency Reserve Fund (CRF) or a mixture of both levy and the reserve fund.

An even more important note - It’s common to look through Strata minutes and particularly a depreciation report and see the expected life of components coming up over the next 10 years and panic. The truth is, you will NEVER come across a building that has nothing coming over the next 5 to 10 years. A building constantly needs repairing. 

The fact of the matter is finding out what that cost COULD be. If it’s a potential $10,000 over the next 10 years, that is fantastic, it’s only $1,000 a year to keep your building at the tippity top of operation. If it looks to be $100,000 that is another story! It’s very easy to read a cost on a depreciation report of $500,000 and panic, when in truth, assuming that whole fee is coming from Special Assessments, it will be divided by unit entitlement which half of the time reduces the cost to below $1,000 in total for you.

We could talk about this in a lot more detail and with a lot more passion/rage if we wanted, so if you have any further questions, feel free to reach out on the contacts below and we’ll be happy to help! Make sure you go over this with your REALTOR, it’s such an important topic!
Adios!

Vancouver First Time Home Buyers.

Jay Mcinnes
T: 604.771.4606
jay@mcinnesmarketing.com

Ben Robinson
T: 604.353.8523
ben@mcinnesmarketing.comT: 604.353.8523