Principal + Interest, Taxes + Insurance……..and Strata Fees. WTH?

 

 

 

As most of our family and friends know, Elaine and I recently dipped our soon-to-be-sand-covered toes into Kelowna’s real estate bounty. We became townhouse owners barely a three-minute walk from Rotary Beach Park and Okanagan Lake. Just in time for summer. Lower Mission, here we come.

 

 

 

 

As we were lining up our pre-approved financials, one line on the Coldwell Banker residential sales sheet jumped out at me. It specified Strata Fees. Never heard of’em. Elaine had. I was about to learn a new Strata-G, British Columbia style.

 

Strata fees are basically the monthly fees collected from each owner in a development. These fees are usually in proportion with the square footage of the individual units, calculated in accordance with the requirements of the Strata Property Act. A strata-title building is a multi-residence complex or multi-site building, where all the units are owned by individual owners.

 

 

 

 

Sounds like a fancy-schmancy, lipstick-on-a-pig homeowners association (HOA).

 

 

There are two funds that every strata corporation in BC must maintain – an operating fund and a contingency reserve fund (CRF). The operating fund is what is used to pay for common expenses that maintain the building or occur more than once per year. This includes building insurance, property manager’s fees, gardening, garbage collection, water, maintaining common property, upkeep of amenities, repairs, and more. The CRF is typically used to pay for expenses that occur less than once per year, or more uncommon expenses. This may include a new roof, new gutters, or paving.

Individual strata fees are assessed by taking the total cost of the strata’s expenses (as established yearly by the strata council) and dividing that by the unit entitlement of each strata lot. Translation – the larger the square footage of the unit the larger the fee.

The strata corporation is a legal entity with all of the powers of a person who has full capacity. This means it can sue others, be sued by others, enter into contracts with others, and hire employees. The owners of the strata lots are the members of the strata corporation. The specific obligations of the strata corporation are usually carried out by the strata council.

 

 

 

Uh-oh, sounds like we may need to keep Alicia Florrick on retainer?

 

 

 

 

Interestingly, many surmise the term “strata” was borrowed from geology. It meant layers. It was adopted to be used for apartment blocks that had two or more levels (or layers). In modern applications, it defines the concept of individually owned units with shared common areas.

 

 

 

Layers are good. On cake. On burgers. On farms.

 

 

 

Allow me to steal another geologic term – rocks. Our townhouse rocks. Elaine rocks. Beach-side living rocks. Strata fees will not rock our boat.