Realtors play a vital role in guiding buyers through the often overwhelming process of purchasing a unit in a multi-family complex. For many, the volume of required documentation—from disclosure statements and financial reports to meeting minutes—can feel daunting. Knowing what to focus on and interpret is crucial for a smooth experience and can make all the difference in helping clients make informed decisions.
Assessing financial health
One of the first steps in this process involves familiarizing buyers with regulatory forms like Form B and Form F, which are required in British Columbia when selling a unit in a strata corporation. These forms provide a valuable snapshot of the unit’s financial standing, including outstanding fees and details about parking and storage. However, while Form B and Form F are informative, they don’t tell the whole story. The overall financial health of the community is just as important as the individual unit’s details. Realtors who dig deeper beyond these forms offer their clients a significant advantage.
A key aspect of reviewing a multi-family property’s financials is assessing the strata corporation’s financial health. In British Columbia, strata corporations generally have two main accounts: the operating and contingency reserve accounts. The operating account covers daily expenses, like electricity, landscaping, and routine maintenance, while the contingency reserve fund (CRF) is designated for more extensive, infrequent costs—reroofing, plumbing repairs, or other major building upgrades. A well-funded CRF indicates financial stability and can give buyers peace of mind, knowing the community is financially prepared for unexpected expenses.
Red flags to watch for
Thoroughly analyzing financial statements can help identify potential red flags. Under-budgeting and overspending are common issues that, if left unaddressed, can lead to budget deficits. These deficits are usually covered by increasing monthly fees or levying special assessments—charges that owners must pay to fund significant repairs or unexpected costs.
“A healthy strata corporation should run neither a large surplus nor a deficit,” explains Katharine Olson, owner of Groundbreaking Strata Consulting & Education. Olson emphasizes that special levies are a normal part of the property lifecycle and should be considered when reviewing sales documents. Buyers should carefully examine any history of levies and anticipate future ones based on the age and condition of the building. This helps prevent unexpected financial surprises arising from missed or overlooked fees.
Understanding special levies: What buyers need to anticipate
Special levies are additional charges for specific projects not covered by the contingency reserve fund. These levies are typically documented in both financial statements and meeting minutes. Reviewing these documents ensures previous owners have paid past levies and helps determine if future levies might impact potential buyers. This information can significantly influence a buyer’s decision, especially if costly repairs are anticipated within the next few years.
Matching community rules to buyer expectations
Common issues around people, pets and parking often arise in multi-family living. Carefully reviewing the complex’s bylaws and rules can reveal necessary restrictions, like limits on pet ownership, which may impact buyers directly. Matching the bylaws to a buyer’s lifestyle is essential, ensuring their daily living environment aligns with their needs and expectations.
The importance of reviewing meeting minutes
Meeting minutes are among the most valuable yet often overlooked resources in a strata document review. Minutes from strata meetings provide an honest look at the day-to-day operations of the complex and can reveal important insights. Although two years’ worth of minutes is usually offered, Olson recommends that clients and Realtors look further back if possible.
“Minutes show us a lot about the workings of the complex,” she explains. “For example, the financials might look solid on paper, but the minutes might show that maintenance is often deferred or certain issues remain unresolved.”
AI tools transforming document review
Given these documents’ details, some Realtors and buyers opt for AI-driven tools to simplify the review process. Many brokerages now turn to AI-based platforms, like Eli Report, which can speed up document review by highlighting critical information in financials, meeting minutes, and other documents.
“We bring transparency to documents,” says Thomas Beattie, CEO of Eli Report. “We help Realtors and owners pinpoint what to look for in the minutes and provide an overview of the financial health of the building.” By scanning for trends in levies, maintenance records, and violations, these AI tools can help buyers and Realtors identify potential red flags more accurately, allowing for a more efficient and informed review process.
In multi-family real estate transactions, a thorough document review is essential. For buyers, understanding the financial health and dynamics of the community they’re joining is crucial to avoid costly surprises and find a property that suits their lifestyle. Realtors can provide invaluable guidance by diving deeper into financials, examining the bylaws, studying meeting minutes, helping clients make sound decisions and fostering confidence in their investment.
Jaclyn is a former managing broker, property, and strata manager with over a decade of experience in the British Columbia real estate market. She’s passionate about the industry and setting a higher standard for the people who call it their profession. An avid sailor and surfer, Jaclyn now calls the ocean her home. She’s writing and sailing her way down the west coast of Mexico with her husband and senior Jack Russel Terrier.
