Things to Do Before You Buy a Strata Property

Posted by Tanya Chu

• Review Strata Council minutes for the past 12 months or more, along with by-laws, financial statements, Annual General Meeting minutes, and engineering reports that may have been completed. Look for past problems, previous repairs, special assessments, and upcoming expenditures.
• Look at the history of price increase on the Property Management / Strata Fees. Past increases may indicate future results.
• Ensure a maintenance program is in place by talking to the strata manager to determine whether the building has a solid preventative maintenance program in place.
• Check the contingency fund since a portion of strata owners’ monthly maintenance fees must go into a “contingency fund” to pay for extraordinary repairs, such as a new roof or exterior painting. Find out if the contingency fund is large enough to cover any upcoming expenses.
• Review the Strata Property Condition Disclosure Statement which sellers are required to complete. It is a checklist about the property's condition. Buyers should carefully review it for any defects or potential problems.
• Investigate the warranty program and builder’s background whether the condo is new or resale. Your realtor can find out what type of warranty the building carries, noting the limits and duration of coverage. S/he may also be able to help you obtain background information about the builder/developer of the project.
• Hire a professional home inspector with proper accreditation and one who carries Errors and Omissions insurance to inspect the condition of the suite, common areas, and the overall building structure.
  

Five misconceptions about property taxes

Posted by Tanya Chu

1. You can appeal property taxes. No. You can appeal your assessment, not your taxes. You annually receive your assessment the first week of January and must appeal by January 31.

2. An appeal will change the market value. The market value may not correlate to the assessed value. BC Assessment typically assesses properties as of the previous July 1. A REALTOR® valuing a home now – 11 months later – may find the market has changed, the home has had an addition or the street has been re-zoned, all of which affect value.

3. If you just bought a home, the previous owners are liable for taxes. No. When you buy a property you become liable for all outstanding taxes.

4. New home owners can claim the Home Owner Grant. No. New home owners cannot claim the Home Owner Grant if the seller paid the taxes or if the new home owner claimed a grant on another property.

5. You haven’t claimed your Home Owner Grant for a few years and you want to claim it all now. You’re out of luck. You can claim the grant amount only for the previous year.

Are you considering adjusting your mortgage rate?

Posted by Tanya Chu

With mortgage rates being at an all time low, many people are wondering if it's a good idea to go back to their banks and adjust their current mortgage rate.

However, if you had locked yourself in at a fixed mortgage rate prior to when the market collapsed, and are now considering breaking your fixed term for a lower mortgage rate, you must realize that you may have a hefty penalty to pay.

Some mortgage contracts will ask that you pay a three month interest penalty or "interest rate differential" if you want to adjust the rate of your mortgage. That means you have to pay the bank the difference between your higher mortgage rate and today's lower rate times what you owe -- times the remaining years on your mortgage.

(Your rate minus today's rate times what you owe times years left)

For example, if your mortgage rate is six per cent and today's rate is four per cent, that two per cent difference is multiplied by what you owe -- say $300,000 times the number of years remaining. Say that was four years you'd be left with a penalty of $24,000.

(6 % minus 4% = 2% times $300,000 times four years = $24,000 penalty)

This can add up to a lot in penalty. For some, it can be a full year's worth of interest on the principle.

So before you make the switch, consider the amount of penalty you'll have to pay. Ask your banker to fully disclose this information to you. Alternatively, there are many penalty calculators online at your disposal.