Understanding Risks
Evaluating Strata Decisions
All investments involve some degree of risk, including condominium ownership. In simple terms, risk is the possibility that an investment could lose value or face unexpected financial pressures.
Before purchasing a strata unit, prudent buyers often evaluate more than just the unit itself. They may review:
- The financial health of the strata corporation;
- Governance and management practices;
- Annual reports and meeting minutes;
- Owner satisfaction within the community; and
- Long-term maintenance planning.
One important consideration is the Contingency Reserve Fund (CRF). Buyers commonly ask:
- Is the CRF adequately funded?
- When was the Depreciation Report last updated?
- Are major expenditures occurring earlier than anticipated?
- Could future special assessments become necessary?
Owners may also wish to consider the potential impact of the proposed resolutions at the SGM.
All proposed bylaw amendments are non-standard bylaws. Some purchasers may view non-standard bylaws as adding complexity or uncertainty, particularly where their interpretation or enforceability has not yet been tested through legal or tribunal proceedings.
Prospective buyers may consider:
- Whether bylaws create additional restrictions;
- The possibility of future legal disputes;
- The overall governance environment of the strata; and
- Whether ongoing disputes or uncertainty could affect marketability or purchaser confidence.
Frequent legal disputes or governance concerns can, in some circumstances, affect how attractive a strata corporation appears to prospective purchasers.
Voting “No” would generally preserve the current status quo while allowing additional time for owners to seek clarification, review supporting information, and ask further questions before significant changes are implemented.
Ultimately, each owner must decide what level of risk they are comfortable accepting based on the information available to them.