What is a Strata?

 In Canada, when a building is divided into units that are individually owned, a corporation must be formed to govern the structure, and its common property – this corporation is called a strata.

These entities act and operate much like any other corporation, wherein they are run by a president who acts on behalf of the stakeholders (the unit owners), their rules and bylaws are passed through a board of directors (a select number of unit owners voted into the committee), and they collect and retain monthly fee’s for their services. The revenues earned by way of monthly ‘strata fee’s’ are used for the ongoing maintenance and protection of the building.

So, why form a corporation at all?

The reason that a separate entity is formed is so that all unit owners are heard equally; in addition to ensuring that decisions are being made in the best interest of the building, and its members, to preserve property value and safety. Conversely, if no strata were created, then owners would be left to their own devices to fix repairs and agree on maintenance issues, otherwise the building would suffer because of it. It would be like creating a government with no leader – someone needs to take charge, keep the peace, and make sure all voices are heard.

Moving forward, now that we understand the basic structure of a strata, it’s important to know what they are responsible for governing.

As we mentioned earlier, the corporation is there for the protection of the structure and its common areas. The structure is considered the foundation and the building that it sits on (everything outside of the unit owners walls), and the common areas are parts of the property owned under title and shared by all the owners (hallways, elevators, amenity rooms, gardens, etc.). It is important that things like the roof, the carpet in the hallways, and the sidewalks all be maintained for both preservation of value, and for the safety of owners and their visitors.

How do they protect these two major categories? Insurance! The strata will use a portion of their revenues from monthly fees to pay for premiums for their ‘Master Policy’.

In our next article we will discuss this elaborate coverage, and how it affects condo and townhome owners.