What Other Questions Should You Ask?
Is a Property Disclosure Statement available?
In British Columbia, sellers may have completed a Property Disclosure Statement. This statement provides information about the state of the home to potential buyers.
What is the Zoning on this Home?
The zoning on a home is established by the local government. Zoning sets the type of buildings which may be built on any particular piece of property and how those buildings may be used: single-family residential, duplexes, multi-family residential, commercial, or industrial. You may also wish to ask about the zoning on the surrounding properties to determine if, for instance, a factory or a park could suddenly appear nearby.
Is a Land Title Search Available?
A Land Title Search will allow you to see who is registered as the current owner of the home and if there are any registered mortgages, easements, restrictive covenants, rights of way, etc. which may affect the use or value of the home.
Are There any Restrictive Covenants?
A restrictive covenant places a specific limitation on the owner’s use or occupancy of the property. Such things as a prohibited type of exterior finish, the minimum size of the structure, or the maximum height of the structure are only a few examples of the type of restrictive covenants you may encounter. The act of purchasing a property which has a restrictive covenant compels you to abide by it.
Are There any Easements?
An easement is a right or privilege one party has to use the land of another for a special purpose. Examples are: easements given to telephone and electric companies to erect poles and run lines over private property, easements given to people to drive or walk across someone else’s land, and easements given to gas and water companies to run pipelines to serve their customers.
How Much are the Property Taxes?
As stated earlier, the amount of property taxes payable will figure in the calculation of how much money you can borrow to finance your purchase.
Is the Structure Covered by any Warranty?
Homes built by a licensed residential builder under a building permit applied for on or after July 1, 1999, or where construction began on or after July 1, 1999 in areas where no building permit is required, are subject to the mandatory third-party warranty insurance provisions of the Homeowner Protection Act, unless there is an applicable exemption. The licensee with whom you are working can assist with acquiring warranty information. The Homeowner Protection Office Branch of BC Housing (HPO) can assist with questions regarding warranty issues. The HPO can be reached through their toll-free information line at 1-800-407-7757 or you can refer to their web site at www.hpo.bc.ca.
Fixtures vs. Chattels
Things contained in a building or on the land are classified as either fixtures or chattels. The difference between a fixture and a chattel is very important to you because fixtures stay with the home when it is sold, but chattels depart with the old owner. If you see an attractive fireplace insert, a “murphy bed” in the spare bedroom closet, a vacuum canister in the utility, or custom window blinds which you think should stay, but are not certain if the seller agrees, ask if it is a fixture.
Are there permits in place?
Are there permits in place for building and/or renovation work and for the electrical and gas systems including original and alterations/additions? For information on what type of work in a home requires gas and electric permits, please contact the BC Safety Authority at 1-866-566-7233 or visit www.safetyauthority.ca.
What About Strata Properties and Cooperatives?
If you are contemplating the purchase of a home which involves the strata or cooperative type of ownership, there are some additional points to consider:
- What are the monthly charges for common area maintenance (strata fees)? What services or utilities are included?
- Does the building have a good reputation for honesty and successful operations? Are units not controlled by the developer being successfully resold?
- Who controls the recreational facilities? Will you be required to pay extra fees for using any of the facilities or amenities? If it is a new development, is there a certain date when your unit will be ready for occupancy? Will the swimming pool and recreation facilities be completed by that date?
- How is the property being managed? Is the property being managed by a company licensed by the Real Estate Council to provide strata management services or is it being “self managed” whereby the management is the responsibility of the owners collectively?
- How much money is in the contingency reserve fund and what portion of the strata fee is being contributed monthly to this fund? What capital expenditures (common expenses that usually occur less than once per year or do not usually occur) is this fund being maintained for (e.g. roof replacement, water piping replacement, interior decorating upgrades, etc.)?
- Are owners permitted to rent their units to tenants? How many rental units will be allowed in the project?
- Are pets allowed in the building? Are there any other restrictions on use?
- Have any special assessments been agreed upon or have any structural problems been noted which may lead to a special assessment in the future?
- Has the building envelope been renovated in the past? Since October 1, 2000, all contractors who engage in, arrange for, or manage building envelope renovations in British Columbia must be licensed as a building envelope renovator with the Homeowner Protection Office and must provide applicable third-party home warranty insurance on applicable building envelope renovations.
- What about parking stalls and storage lockers? There are two main designations of property in strata developments which can be found on a strata plan—those being property designated as either a strata lot or common property (CP). Common property can then be further designated as limited common property (LCP) for the exclusive use of one or more strata lots. The strata plan usually contains one or more of the following arrangements for parking stalls and storage lockers.
- the parking stall or storage locker is a separate strata lot. Although rare, parking stalls and storage lockers can exist as a separate strata lot with their own strata lot number. This designation can be identified by looking at the strata plan.
- the parking stall or storage locker is part of a strata lot unit. Parking stalls and storage lockers that are part of the strata lot will share the same strata lot number as the unit (the main strata lot) which uses the stall or locker. This designation allows the buyer to have automatic use of the stall or locker.
- the parking stall or storage locker is part of the common property. If the parking stall or storage locker is part of the common property, the strata corporation has ultimate control over the use of those areas, except in cases where there is a developer’s lease. Common property is owned by all owners as tenants in common. The strata council has the authority under the Strata Property Act to permit an owner to exclusively use common property.
If the parking stalls or storage lockers are designated common property, owners are entitled to use a particular area as a result of the strata council’s grant of exclusive use to that owner. This designation is handled by way of a short-term exclusive use agreement whereby the strata council allows the owner to exclusively use a particular parking stall or storage locker for a limited time period of one year. Although the strata council can renew the arrangement, it can also choose not to renew.
In some strata developments, the developer has entered into a lease of the common property parking stalls and storage lockers to itself or to a company related to the developer. After leasing the common property, the developer then enters into agreements with buyers in which the developer subleases one or more parking stalls or storage lockers to each buyer. Often, the developer will assign one parking stall or storage locker to a buyer. These leases are seldom registered on title, which can make discovering them a challenge.
- the parking stall or storage locker is limited common property. Limited common property (LCP) is common property for the exclusive use of the owner of a particular strata lot. If the property is designated LCP, although it continues to be owned by all owners within the strata corporation as tenants in common, it may be used exclusively by the owner whose strata lot is identified on the strata plan as being entitled to use the LCP.
What information should you obtain about the building? Ask to see the registered bylaws, current rules, annual operating fund budget, Information Certificate (Form B prescribed under the Strata Property Act) and at least the last two-years’ minutes of all meetings (including strata council meetings, annual or special general meetings and meetings of the executive (or of the members) of any section in the strata corporation to which the strata lot belongs). You should also ask to see any applicable warranty information, envelope inspection reports or remediation reports, the registered strata plan and any amendments or resolutions dealing with the common property and any correspondence to owners from the strata council over the last twelve months. These documents will govern the manner in which your unit and the common areas may be used. They will also advise you of what has been going on in the building. Read these documents very carefully as they may reveal potential problems in the building.