Dear Condo Smarts: Before Christmas, my wife and I entered into an agreement to purchase a townhouse in Victoria. In reading all of the minutes of the strata, and the Information Certificate, we discovered that the strata was in litigation with an owner over an alleged significant miscalculation of strata fees and a special levy.
Our agent, the seller and the council secretary advised us that the matter was going to be settled in mediation prior to Christmas and there was nothing to worry about. So we proceeded with the sale.
The strata now has an offer to settle the claim, which we are voting on next week. If the owners agree, the resulting cost is more than $5,000 for our unit alone.
We never anticipated that the costs could be so high.
How could we have protected ourselves before we purchased ? Shouldn't the seller have to pay this?
Steve & Margaret
Dear Steve & Margaret: The first rule of thumb for every purchaser is to get everything in writing -- always -- and from the right person. If anyone makes any claims, get them into the agreements for sale and purchase and obtain written verification from the agent and/or strata.
When you purchase a strata property, the liabilties and benefits of that strata property remain with that unit. So if there is a payout, insurance deductible, special assessment or even a refund for settlements, they are applied to that strata lot.
The result is that the owner on title at the time of the settlement either pays the costs or receives the benefits from the settlement. Alternative arrangements may be made with hold-backs in trust until any settlements are resolved or agreements that clearly define which party will either pay or benefit from the proceeds.
However, these are not agreements to be taken lightly. This is one point in an agreement where it is critical that your lawyer represent your interests and negotiate these conditions for your protection and satisfaction.
Then you, as the purchaser, must assess whether you are prepared to accept the risk.