STRATA FEES: WHAT YOU NEED TO KNOW

Dated: March 23 2021

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STRATA FEES: WHAT YOU NEED TO KNOW

Condo owners must pay strata fees in order to keep up the property well maintained. On top of your mortgage, insurance, and utilities, they are an extra monthly cost to consider when purchasing a condo or strata townhouse.

WHAT DO STRATA FEES MEAN?

Strata fees go into a development's general operating fund. The strata council manages the fund, which is used to cover the condo development's common expenses. Maintenance of the building and grounds, cleaning of common areas such as the lobby and hallways, garbage collection, and upkeep of amenities such as a gym, pool, or guest suite are all part of this. The building's general insurance plan, management and caretaker costs, as well as services, are all covered by strata fees. Individual unit utilities may not be covered by strata taxes. They also do not cover the cost of your condo insurance. A part of your monthly strata fee is required to be put into a contingency reserve fund. At least 25% of a strata corporation's annual operating budget must be set aside for this fund, according to the law. A strata will, however, opt out of having a contingency fund if 75% of the owners agree. The contingency reserve fund is a savings account that the strata council will use to cover expenses such as a new roof, hot water boilers, or exterior painting. Any expenditures from the contingency fund must be approved by the strata's owners at a special meeting or the annual general meeting.

WHERE DO STRATA FEES COME FROM?

When you buy a condominium, you are also purchasing a piece of the larger development. The "unit entitlement" determines the size of your share, which is based on the square footage of your unit. Your condo's unit entitlement is used to calculate your share of the strata corporation's common costs. Your monthly strata fees will be higher if your condo is larger. The strata fee schedule is established by the strata council each year to cover the strata corporation's annual operating expenses and contingency fund contributions. Your strata fees will increase if your spending increases. Annually, at the strata's annual general meeting, a majority of owners must approve the operating budget and strata fee schedule. When you purchase a new building, the developer generates an initial budget to cover operating costs for the first year of the strata, which will be used to determine strata fees. If the budget falls short of real operating costs, the developer faces a penalty under the Strata Property Act.

WHAT WILL THE STRATA FEES BE LIKE?

If you're thinking about buying a condo, make sure you read the fine print. It will inform you the unit entitlement for your condo as well as the current monthly strata fee. It's also worth looking through the minutes of previous Annual General Meetings to see how much those fees have increased year after year. Reading a building's depreciation report will also give you an idea of any major repairs that may affect your monthly strata fees. Strata fees are influenced by amenities and the strata council's management style. Strata fees would likely be higher in a building with luxury amenities such as a swimming pool, hot tub, or other water features because they are more costly to maintain. To give owners more peace of mind, a proactive council may keep a larger contingency fund.

WHEN DO STRATA FEES HAVE TO BE PAID?

Strata fees must be paid on or before the first day of each month, according to Standard Bylaw 1 of the BC Strata Property Act. A strata company, on the other hand, would enact its own bylaws to establish a different payment schedule. It may also enact a bylaw that establishes fines for non-payment of fees, as well as interest charges for late or unpaid fees. The annual compounded interest rate cannot be more than 10%. If a strata lot owner fails to pay their fees, the strata corporation will file a lien and begin the process of foreclosing on the property. A strata has two years from the date the unpaid fees were first due and payable to file a claim as of June 1, 2013. A strata council may also pass a bylaw prohibiting unpaid fee owners from serving on council or voting on resolutions at general meetings.

CAN STRATA FEES BE DEDUCTIBLE FROM TAXES?

Your monthly strata fee will be very high if you own a condo or strata townhouse and rent it out to tenants. You can claim a pro-rated part of your monthly strata fee as an allowable expense if you use a portion of your home for business. Condo living alleviates much of the stress associated with home ownership in terms of maintenance and repairs. However, there is a monthly fee. If you do your homework on the strata council's management style, the building's maintenance history, and its amenities, you'll be able to tell if your strata fees were well spent.

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Momo Kanev

Momo Kanev, exemplifies integrity, energy, hard work and creativity in every detail of the real estate transaction process. Momo, has over 10 years of experience in the construction industry. He speci....

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