Glossary
Common terms you may hear in real estate and their definitions for clarity.
Assessment(s)/Levies
When a major project requires funding beyond what the building’s “savings” account (CRF) can afford, an assessment is used to gather funds from owners directly.
Litigation
Although rare, a strata corporation can be sued directly by a third party because it is a legal entity. Any expenses incurred has to be funded by the owners, either directly or indirectly.
Special General Meeting (SGM)
Certain circumstances may arise that are important enough to be dealt with before the next Annual General Meeting (AGM) occurs. When this happens, a Special General Meeting (SGM) can be held, and follows similar procedures to an AGM.
Land Type
Leasehold land is a type of property where the purchaser owns the structure (condo/townhouse/house) but not the land that it’s built on. Many considerations exist for this type of property (including availability of traditional financing) which are important to fully understand.
Construction Type
There many different types of construction systems and materials, with the three most common being: wood, steel, and concrete. Each has advantages and disadvantages, but wood framed buildings have seen particular challenges due to BC’s heavy rainfall - often referred to as the “leaky condo crisis”.
Building Management
Although not legally required, most strata corporations use a management company to assist in the day to day operations of running a building. This can include many things, from budgeting to meeting management, and assists a strata corporation in both effective management and legal compliance.
Developer
The developer is responsible for the original construction of a building, as well as some of the initial setup for a strata corporation. Although there isn’t a long {term connection between the developer (following the new home warranty expiry) the reputation of the developer can play a role in mid to long {term expected maintenance.
Unit Type(s)
Most buildings are either purely residential (homes) or mixed-use residential/commercial (homes and businesses). In mixed-use buildings, there will generally be split provisions within the strata to look after each section (residential and commercial) as well as the building as a whole.
Amenities
From bike storage to hot tubs, the services within a building vary with new and different offerings coming out all the time. Although big ticket items like a pool will add to quality of life, they will also be expensive to maintain - so it’s important to keep both sides in mind when considering a building.
Bylaws
Bylaws are set out by a strata corporation and cover an owner’s rights and responsibilities within a building. Applicable to owners, renters, and visitors alike, these rules dictate considerations such as being able to rent units out, whether pets are allowed, and if smoking is permitted within the building.
Contingency Reserve Fund (CRF)
A CRF can be thought of as a building’s “savings” account, allowing it to be prepared for long {term maintenance by setting money aside from the Operating Fund over time. These expenses typically occur on an infrequent basis (less than once a year), such as replacing a roof or upgrading an elevator.
Operating Fund
The Operating Fund can be thought of as a building’s “chequing” account, allowing a building to cover its regular operating expenses. These typically occur on a frequent basis (monthly or annually), such as landscaping, cleaning, or insurance premiums.
Maintenance Schedule
Generally provided as part of a Depreciation Report, it is a forecast of the expected maintenance needs of the building over the next 30 years. It is the most important consideration for a strata corporation in the planning and budgeting for the repair and renewal of common property.
Building Age
Listed as either years since original construction or major renovation, the age of a building is a leading indicator of upcoming maintenance and other cost-intensive considerations.
Financial History
Presented on our report as a line graph, this is a visual representation of the major financial considerations for a building over a 5 year period: Operating Fund, Contingency Reserve Fund, and Strata Fees.
Expected Maintenance
Presented on our report as a line graph, this is a visual representation of the expected “big ticket” maintenance items over the next 5 years.
Insurance Policy
It’s essential for a building to have an insurance policy in place to protect against catastrophic risks. Especially in recent years, the costs of these policies have risen dramatically as the market is held by a small pool of companies. Many buildings have seen their costs increase exponentially, which can impact their overall budgets significantly.
Insurance Deductibles
The deductibles of a policy define how much a claim against the policy would have to pay before the balance is covered by the insurer. As an owner, this is a consideration as a claim may involve both your insurance and that of the strata corporation. The higher the deductible the less coverage you have as an individual, and the higher the potential risk.
Annual General Meeting (AGM)
In most cases, a strata corporation is legally obliged to hold an AGM every year, no later than 2 months after its fiscal year end. Generally, this meeting of the building’s owners is a democratic process by which the next year’s budget, members of the strata council, and major building business are decided.
Resolution(s)
Items brought to the meeting for a decision are generally called resolutions. The upcoming budget usually comes first, then any business requiring a decision (such as non-critical building maintenance or proposed rule changes), and then the election (or re-election) of the strata council.
Strata
Strata housing can include: condos, townhouses, duplexes, even single family homes in bare land strata corporations ("strata subdivisions").
Strata Fees
The primary income for a strata corporation are the contributions from the owner’s of each unit in the building. Typically split out proportionally by unit size, the majority of the funding for both the Operating Fund and the Contingency Reserve Fund comes from these fees. As inflation and expected maintenance increase as a building ages, these will typically have a linear increase over time.
Strata Corporation
A strata corporation is a legal entity made up of the owners of the units (strata lots) within a building. It is responsible for managing the common property of the development, typically doing so by an elected strata council and/or a strata agent (property manager).
Strata Lot
Each unit within a building is generally referred to as a Strata Lot. A strata plan will show these separately owned components when filed with the Land Title Office. Strata Lots differ from Common Property, which is the commonly owned components of a building (such as hallways and parkades).
Common Property
All areas shared by owners of a building are referred to as Common Property. A strata plan will show these commonly owned components when filed with the Land Title Office. These shared areas (such as hallways and parkades) differ from individually owned components of a building (such as apartments).
Strata Documents
The Strata Documents contain most of the information about a building in written format. These generally fall into four major categories: Annual General Meeting Minutes, Financial Documents, Depreciation Report.
Annual General Meeting Minutes
These record the agenda, votes/outcomes, and discussion/business raised and dealt with during an Annual General Meeting. As most important information is dealt with at this time, it’s a crucial element in understanding the current status of a building.
Financial Documents
These cover the specific line items that make up the budget for the preceding and coming years, providing deeper insight into what makes up the Operating Fund and Contingency Reserve Fund in particular.
Depreciation Report
Prepared by a third party expert, these reports help owners understand the maintenance needs of a building over a 30 year time period. The “savings” account’s (CRF) main purpose is to fund these long term expenses.