Downsizing to a Condo? 7 Critical Issues You Can’t Overlook

In addition to providing a more affordable route onto the property ladder for younger professionals, strata properties are an increasingly popular option for those looking to downsize as they approach retirement.

But living in a condo or townhouse after years in a single-family home can take some getting used to, giving buyers some practical and legal challenges to overcome as they adapt to their new surroundings.

Sellers have a legal obligation to disclose certain information about the property they’re selling, but it can be tricky to work out which documents are the most relevant and what exactly they are telling you.

If you’re thinking about buying a condo, an experienced lawyer can guide you through the process and ensure that any decision you make is a fully informed one. In the meantime, here are my top seven issues to consider when moving into a strata property.

Condos and townhomes come in all sorts of shapes and sizes, but if you’re moving from a single-family dwelling, the chances are high that your new living and storage space will be smaller than you’re used to, which could mean that a clutter clear-out is required ahead of the move.

Even if your new unit is on the larger side, apartment-style accommodation can put you in much closer proximity with other people, placing a premium on neighbourly relations in your new setting.

The maintenance costs for individual condo units are typically much lower than those associated with a detached house, even if payments are structured differently. Unit owners pay strata fees to the corporation to cover the maintenance and use of common areas and shared services such as elevators, parking garages, party rooms and certain utilities.

Cheaper strata fees are not always better since this money is also used to replenish a reserve fund to cover emergency or unforeseen repairs. In the event of a shortfall, the strata board could vote to levy a special assessment on all unit owners — potentially tens of thousands of dollars each — to pay for essential work.

There’s typically no way around payment and refusal could result in a lien being registered against your property, to be paid off when the unit is sold or refinanced.

The health of the contingency fund should be a major factor if you’re buying a unit in an older strata property with more wear and tear, but it’s important to remember that newer properties are not immune to special assessments since it can take some time after construction to identify building defects.

In addition to its bylaws and rules, strata properties will also make a variety of other documents available to prospective purchasers, including the minutes of board meetings and engineering reports.

Properly decoded and understood, these documents can provide clues about ongoing maintenance issues, potential litigation liabilities and even problem unit owners, giving you a good idea of the property’s overall financial and physical health before you commit to buying.

Every strata corporation’s insurance coverage will differ, so check yours to know exactly where you stand in the event a catastrophic fire or earthquake renders the entire property unlivable. In these cases, the corporation’s insurance typically covers the entire loss, but individual unit owners are responsible for paying their own portion of the deductible — much like a special assessment levy.

This can leave individual unit owners liable for tens of thousands of dollars, which is why many buy their own insurance policies to cover themselves for their portion of the deductible, safeguarding against significant financial impact.

Unique to the world of strata property, limited common property is specially designated portions of building or land set aside for the exclusive use of one or more strata lots. It’s commonly used to mark parking spots and balconies associated with particular units.

While the strata corporation is solely responsible for maintaining and repairing “common property,” which usually includes greenspace, hallways and elevators, the board can adopt bylaws making unit owners responsible for the broader maintenance of “limited common property.”

Before buying a unit, you should fully understand your rights and responsibilities regarding the strata’s limited common property.

Considering buying a condo and need some guidance?
Our team of real estate lawyers is well-versed in handling these transactions and is ready to assist. Feel free to reach out to us.

*This post is not intended to be legal advice and should not be taken as such. Please contact McConnan Bion O’Connor & Peterson if you have any questions regarding this post or require assistance or legal advice regarding real estate purchases.