Buying a Unit in an Older Building by Geraldine Santiago
If you are thinking about buying a unit in an older building (as many first -time home buyers do), you will need to look at the entire scope of your purchase. The unit itself might be newly renovated and well-designed with granite countertops and hardwood floors throughout, but you need to think of the over-all health of the building as well.
Buyers-- beware! PLEASE do your own due diligence as you will be living in the property you are purchasing. Do not rely on your agent to go over these important documents. If English is not your first language, hire a professional translator. If legal documents are not clear, hire a lawyer. Take the time, effort, extra funds to make sure you know exactly what you are purchasing and make the necessary inquiries regarding the building's over-all health.
Here are some things you need to find out, and check for yourself:
* Go over the Minutes in detail, highlighting any issues there may be regarding the building's health. Look for issues from owners or tenants complaining about 'water ingress', 'leaks from balconies, windows or any other exterior areas', etc.
*When going over the minute (typically 2 years worth of minutes), see if the strata council is pro-active in maintaining, addressing and following up on concers of the owners.
Look to see if they are meeting monthly,or yearly? If they are meeting yearly, is there a reason? How many units are there in the building?
*Look to see if there are any assessments forthcoming, and if so for what? And how much? What are the strata council's plans?
*Look to see if there were any assessments in the past, and if so, for what? How much? What are the details?
* Look at the contingency or reserve fund. Find out from the management company as to whether or not they are going to increase the maintenance funds for any repairs. Find out how much the contingency fund is at present by looking at the Form "B".
*Look at the date of the Form "B" to make sure that it is current. (No more than 2 months as things could change.)
*Go over the financial statements and look to see if the operating budget is adequate or are they running a deficit year after year? Is it managed properly?
*Find out if the building has been rainscreened. If so, obtain the name of the company who performend the building envelope/rainscreen, and all the necessary documents such as when it was performed and what (if any) type of warranties may be in place.
*Ask for a copy of the warranty provider, and any other details pertaining to the rainscreen/building envelope/assessment/engineer's report/engineer follow-up/maintenance programs/certification, etc.
*Look at the systems of the building, such as roof, plumbing, boiler system, electrical, parkade, elevator, and other common areas.
*How many are owner-occupied vs. tenant occupied properties?
*Look for a certified home inspector with an Errors and Ommissions insurance who is familiar with the area. Home inspectors can be found through their associations. Unless they have the credentials to report on building envelopes or exteriors, he or she will not be a good candidate to report on those areas. choose your home inspector wisely.
*Get a copy of the depreciation report and whenever needed, seek the advise of legal counsel or professionals who can help you with these reports. The depreciation report is a report that looks at the scope of the building's systems (roof, plumbing, heating, etc. and an estimate of the system's life is provided or rather, how long they will last, and approximate cost to save and budget for the future.)
After going through the above checklist, you should also be realistic about your purchase. Look at the age of the building, general condition of the building, and look at what you can afford in the area. Look at the value of the property you are purchasing.
You may have to live with small deficiencies such as older appliances, carpets that need to be changed or cleaned and so on. But you need to outweigh the purchase price of a newer property versus the one that you are purchasing. There may be small to significant assessments in the future that you need to deal with, but older buildings need to be properly maintained as this will add value when you sell your unit later down the road.
Today, in British Columbia, all strata are required to have a deficiency report performed by qualified engineer. This will outline the scope of work that the strata will need to address in the near future, so adequately and properly maintain the health of the building and its systems.
You may have to compromise some aspects of your purchase or make trade-offs. Remember, your first home purchase will not be the final home purchase. You are building equity and taking small, 'baby steps' in this real estate journey! Good luck! I hope this helps!