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The Risks Associated with Low Strata Fees

Posted on September 19, 2023 by Lee-Anne MacPherson

The Risks Associated with Low Strata Fees

There is no doubt that it’s important for strata corporations to be fiscally responsible. That being said, strata corporations whose main focus is keeping strata fees as low as possible can, at times, make decisions that lead to low strata fees in the short term, but significantly higher costs to owners in the long term.

Some risks associated with very low strata fees include:

Deferred repair and maintenance, which can result in premature failure of building components.
Significant increases in strata fees every few years, rather than gradual yearly increases.
An underfunded contingency reserve fund, resulting in significant special levies to owners.
Owner frustration as a result of under maintained and under serviced grounds and amenities.
Additional emergency expenses as a result of unexpected building component failures.
Negative effects on real estate values as a result of negative perceptions of the strata corporation

Because there are so many variables influencing expenses within a strata corporation (such as building size, location, amenities, long term planning strategies, etc.), caution should be taken when comparing one strata’s fees with another.

The best way to determine whether a strata corporation’s fees are enough to effectively repair and maintain all the corporation’s assets is through:

a detailed review of the strata documents, as well as
a thorough inspection of the property

Working together with various industry experts, including Realtors, home inspectors and strata document review providers (such as Condo Clear), will enable consumers to make more informed decisions on whether the stratas they are looking to purchase into are maintaining the property well and doing a good job budgeting for short and long term expenses.