Real(Estate) Talk - Low Strata Fees

Quite often, home buyers will look for a property with a low strata fee, however this is rarely advisable. It's impossible to assess the financial health of a strata solely based on the strata fee. If the strata is not collecting enough funds to cover the future maintenance & repair expenses, there will need to be substantial special assessments paid at the time repairs are needed.

For example, the roof on the building will one day need to be replaced. If the cost of that roof is $1,000,000 and the strata’s contingency reserve fund only has $500,000, the owners will have a special assessment to come up with the remaining $500,000 that is required to replace the roof.

If a strata fee is too low, you may be worried about significant expenses coming your way in the future.

Your real estate agent should help you review the financial statements of the strata corporation to get a better idea of how well managed they are. Most often, the strata documents are available once a buyer has an accepted offer (as part of the subject/due diligence period). In some cases, the documents can be obtained prior to submission of an offer.

At the end of the day, owners of strata properties will always have to cover the expenses for the maintenance, repair & upkeep of the strata corporation’s assets. Those expenses can be covered in a gradually built contingency reserve fund, or in lump sum special assessments.