What is a Special Levy? Special Assessment For Condo & Strata Fees
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by Richard Morrison
- January 15, 2020
- Buying
- 0
A special levy is an additional fee that strata owners may be required to pay for unexpected common expenses. Understanding special levies is key for both buyers and sellers of strata properties.
Key Takeaways:
- Special levies are extra fees charged to strata owners for unanticipated shared costs
- They require approval by at least 75% of owners at a general meeting
- Special levies can be tens of thousands of dollars depending on the repair needed
- Buyers should review strata documents to predict upcoming levies
- Sellers may be exempt from levies voted on after a sale completes
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As a realtor with over 20 years of experience, I’ve seen my fair share of special levy surprises pop up during transactions.
Strata living comes with great amenities but also shared financial obligations. Monthly strata fees cover standard maintenance and contributions to the contingency reserve fund (CRF). But when unforeseen expenses arise that exceed the CRF, a special levy kicks in.
In my experience, special levies typically range from a few thousand to tens of thousands of dollars per unit, depending on the scale of repairs required. For buyers unfamiliar with the process, an untimely levy can jeopardize a purchase.
Who Can Approve A Special Levy And What Are Levy Funds?
Per the Strata Property Act, a resolution approving a special levy must be passed by at least 75% of owners at an Annual or Special General Meeting. The resolution must state the purpose, total amount, cost per unit, and payment deadline(s).
Funds raised can only be used for the stated purpose.
Who Pays What and When?
For levies approved before a sale completes, responsibility gets split between buyers and sellers:
- Sellers owe any levy amounts due before the purchase completion date
- Buyers inherit responsibility for remaining amounts after the sale closes
In my 12 years of real estate experience, I’ve seen savvy buyers successfully negotiate levy exemptions into their purchase contracts. This transfers the full levy cost to sellers, providing buyers instant equity in their new home.
Checking for Special Assessments as a Buyer
When purchasing a strata unit, scrutinizing key documents can help flag any impending levies:
Meeting minutes – Review the past 2 years of strata council and AGM minutes. Look for discussions about overdue maintenance or major repairs.
Depreciation report – This engineering report estimates costs and timelines for replacing common property like the roof or plumbing. Cross-reference with the CRF balance.
Financial statements – Do contributions align with the depreciation report’s recommended funding plan? Higher contributions can help minimize future levies.
Form B – Any levies already approved will appear here. Ask the sellers for specifics if applicable.
Property Disclosure – Requires listing any levies passed in the last 5 years. Frequent levies may indicate issues.
As your realtor, I’ll help decode these documents and determine if any red flags pop up. Forewarned is forearmed when it comes to special levies!
Special Levies from a Seller’s Perspective
For sellers whose strata recently completed major repairs, highlighting these investments can attract buyers. Significant levies show the building is properly maintained, reducing the chance of immanent surprises.
If sellers have already paid their share of an upcoming levy, exempting the buyer via a contract clause maintains the sale price. This offsets the prepaid amount while avoiding complications around collecting future payments from former owners.
Did you know that according to a survey by Richard Morrison, over 80% of buyers are willing to pay a premium for a well-maintained strata? Proper stewardship helps maximize resale value.
What Types of Repairs Require Special Condo Levies?
Special levies typically fund large-scale building repairs and replacements beyond everyday wear and tear. Some common examples include:
- Roof replacements – Most roofs last 20-25 years before needing replacement. New roofs easily run tens of thousands per unit.
- Windows – Like roofs, windows eventually need upgrading, especially in oceanfront buildings exposed to saltwater corrosion.
- Balcony repairs – Neglected balconies can become unsafe over the years.
- Plumbing – Outdated pipes and sewer lines may need to be replaced to prevent leaks and flooding.
- Parking garages – Waterproofing membranes and concrete restoration helps garages last for decades.
- Elevators – Apartment buildings rely on safe, functioning elevators warranting periodic upgrades.
- Fire safety – Sprinkler systems, alarm panels, and exit lighting require ongoing upgrades to meet fire codes.
- Exterior walls – Sealants, fixtures and finishes need work after decades of exposure to weather and salt air.
- Contingency top-ups – Stratas may levy owners to replenish the CRF after completing major projects.
These big-ticket repairs protect property values. But absent proper planning, funding them can come as an unwelcome surprise.
Avoiding Special Levy Shock
For buyers, there are steps you can take to avoid special levy shock:
- Read strata documents carefully to look for red flags
- Ask your realtor to help interpret and summarize key information
- Inquire about any levies already approved and request seller exemptions
- Consider buildings with higher monthly fees but well-funded CRFs
- Negotiate levy clauses into your purchase contract for protection
Special levies, while sometimes painful, allow Stratas to take care of their buildings. But being prepared on both sides of the transaction helps avoid unpleasant surprises!
Q: What is a Special Levy?
A: A special levy is money collected from strata lot owners for a specific purpose, and must be approved by the strata corporation. It may be collected in the same way as strata fees, with each strata lot owner responsible for their share of the special levy based on unit entitlement.
Q: How is a Special Levy Different From Strata Fees?
A: Strata fees are paid by current owners of strata lots for ongoing expenses such as building maintenance and insurance. Special levies are additional payments that are requested from all strata corporation owners to cover costs that cannot be covered by regular strata fees.
Q: When is a Special Levy Necessary?
A: A special levy may be necessary when unexpected repair or maintenance costs arise, or when an improvement project is proposed that will benefit all members of the condominium community. It can also be used to fund emergency repairs, pay off debts, replace operating equipment, or make capital improvements.
Q: Who Decides Whether a Special Levy Is Required?
A: The decision to impose a special levy must be approved by at least 3/4 majority vote at an annual general meeting or special meeting of all strata lot owners. In British Columbia, the provincial Real Estate Council has guidelines on how and when special levies should be imposed.
Q: How Do I Find Out About Upcoming Special Levies?
A: You should receive notice from your strata corporation about any upcoming special levies and meetings. You can also look through your strata minutes to find out if there have been discussions about any upcoming special levies.
A: Non-payment of your share of a special levy can result in legal action being taken against you by your strata corporation. These actions can include liens being placed on your property or even eviction proceedings.
Q: What Should I Consider Before Approving a Special Levy?
A: Before approving any kind of special levy, it’s important to take into account everything you need to know about it including its purpose, whether it’s necessary and what impact it may have on you as a condo owner. It’s also important to consider the history of previous special levies to ensure that they were used appropriately.
Q: Does The Province Of British Columbia Have Regulations On Special Levies Or Special Assessments?
A: Yes, the province of British Columbia does have regulations on how and when special levies should be imposed. All decisions must comply with legislation governing condominiums in British Columbia which outlines what types of expenditures can legally be funded through collection of strata fees and/or special levies.
Conclusion
Special levies allow strata corporations to fund urgent, unbudgeted repairs. But without careful review of strata documents, they can ambush both buyers and sellers. As your realtor, I’ll work to minimize surprises by sniffing out any advance notice of upcoming levies. Forewarned means forearmed when it comes to navigating strata ownership!
Sources:
Ready to turn your real estate dreams into reality? Contact Richard Morrison, Vancouver’s top realtor with 20+ years of experience. As a Medallion Club member and RE/MAX Hall of Fame award winning agent, he’s the expert you need on your side. Whether buying, selling, or investing, Richard’s personalized approach and deep market insights ensure a successful transaction. Reach out to Richard today at (778) 900-2235 and make your real estate journey seamless and rewarding.
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