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CONSIDERATIONS IN BUYING A "FRACTION INTEREST" IN REAL ESTATE
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Strata corporation expenses arise in relation to common area cleaning, common area utilities, repair and maintenance of common areas, facilities, furniture, fixtures and equipment, property and liability insurance and contributions to the contingency reserve fund. Additionally, buyers must contribute to the costs of the owner’s association or corporation. Such costs include in suite cleaning, maintenance and repairs, utilities, property taxes, administration and staffing, insurance for furnishings and equipment and a contribution to a capital reserve account for the replacement of in suite furnishings.
When purchasing a fractional interest in a strata development, buyers should consider many of the same issues that they would consider when purchasing the entire interest in a strata lot as a primary residence.
Some specific matters for a buyer to consider are,
Do the bylaws contain restrictions that the buyer cannot live with, such as limits on the number of guests, prohibitions against pets and smoking?
What is the contingency reserve fund and what major repairs have already occurred? If the fund is low and the building is in need of repair, the buyer should expect a special assessment in the relatively near future.
Is the common property well maintained?
In addition, there are considerations that arise as a result of the fact that the development is a time share. Buyers should also consider their ability to access and use the development, their ability to participate in the operation and management of the owner’s association or corporation and their ability to influence costs.
As always, this article is not meant to be any form of legal advice. Please be sure to consult your own team of professionals and do your own due diligence.
If you are looking for more information about fractional interests, I would love to help you. You can reach me easily by phone (250-752-2466) or email.
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