- A strata townhouse comes with a strata corporation, strata fees and bylaws, while a freehold townhouse generally does not.
- Strata fees fund an operating fund and a contingency reserve fund, and the annual CRF contribution must be at least 10% of the operating fund contribution.
- A buyer with an agreement to buy a strata lot can request a Form B information certificate, even during the subject-removal period.
Two townhouses can look almost identical from the street and still be very different to own. One may be a strata lot, part of a strata corporation. The other may be freehold, sometimes called fee simple, with no strata corporation at all.
This article compares the two in plain terms for a British Columbia buyer. Financing and title details vary, so a lawyer should confirm which type you are buying.
This article covers the law of British Columbia.
The basic difference
With a strata townhouse, you own a strata lot and deal with a strata corporation, which must obtain property insurance for the common property and the buildings on the strata plan. With a freehold townhouse, you generally own your own land and building and are responsible for them yourself, without a strata corporation.
Some townhouse developments are set up one way and some the other, so do not assume from appearance. Your lawyer can confirm the title type from the title search.
Side-by-side comparison
| Topic | Strata townhouse | Freehold townhouse |
|---|---|---|
| Monthly costs | Strata fees fund the operating fund and the contingency reserve fund | No strata fees; you budget for your own repairs |
| Reserve savings | Annual CRF contribution of at least 10% of the operating fund contribution | Your own savings |
| Rules | Bylaws and rules, such as pet limits | Municipal rules and any registered covenants |
| Insurance | Strata insures common property and buildings on the strata plan; you insure contents and more | You insure your own home |
| Buyer paperwork | Form B information certificate | None of the strata documents apply |
Fees and the reserve fund
A strata must keep an operating fund for expenses that occur once a year or more often, and a contingency reserve fund for expenses that occur less often than once a year or do not usually occur. Both are funded by strata fees. CRF contributions are not refundable when you sell your lot.
If the reserve is thin, owners may face a special levy. A levy with shares calculated by the strata-fee method generally needs a 3/4 vote at an AGM or SGM. A freehold owner has no such vote, but also has no shared fund to draw on.
There are exceptions. If a levy's shares are calculated another way to fairly divide the expense, a unanimous vote is required. If a levy for a common property repair needed for safety or to prevent significant loss or damage gets majority support but less than 3/4, the strata may apply to the BC Supreme Court for an order approving it. If a levy is approved before a sale, the seller owes the part payable before the conveyance and the buyer owes the part payable on or after it.
Bylaws and day-to-day living
Strata bylaws can affect everyday life. The standard pet bylaw allows one dog or one cat, among other limits, but a strata can pass its own pet bylaw. A strata cannot have a residential rental-restriction bylaw, though it can limit or ban short-term rentals with a 3/4 vote of owners.
Fines are limited too. Ordinary fines are capped at $200 per bylaw contravention and $50 per rule contravention.
Insurance matters as well. The strata's policy covers common property, common assets and buildings on the strata plan, but not personal contents or personal liability. Deductibles on a strata policy can range from $100,000 to $750,000 or more, and a deductible is a common expense paid through strata fees. How this affects a particular townhouse depends on the strata, so it is worth confirming with a lawyer.
Financing and what to do next
Lenders can look at the two types differently, and the documents they ask for may differ. Talk to your lender early about what they need for the type of title you are buying.
For a strata lot, the strata must give a Form B within one week of a request, and a buyer in the subject-removal period can ask for it. The Form B covers fees, amounts owing, special levies, the CRF balance and an insurance summary, with the rules, current budget and latest depreciation report attached.
A purchaser can also ask for a Certificate of Payment (Form F). Within one week of a request, the strata must issue it if the owner owes nothing, a debt has been paid into court or to the strata in trust, or satisfactory arrangements are made, and the fee is capped at $15.
- Confirm with your lawyer whether the townhouse is strata or freehold.
- If strata, request the Form B and read the attachments carefully.
- Check whether a depreciation report exists, since stratas with five or more lots need one every five years.
- If the strata has sections, request a Form B from both the strata corporation and the section.
- Ask your lender what it needs for your type of title.
Frequently asked questions
Is a strata townhouse cheaper than a freehold one?
Price depends on the market and the property, not the type of title alone. With a strata townhouse you also pay monthly strata fees, so compare total ongoing costs.
Do freehold townhouses have bylaws?
A freehold townhouse generally has no strata corporation, so the Strata Property Act bylaws do not apply. Municipal rules and any registered covenants on title may still matter, so have a lawyer check.
What should I read before buying a strata townhouse?
Start with the Form B, which discloses fees, amounts owing, special levies, the CRF balance and an insurance summary. Also review the bylaws, minutes and the depreciation report if one is attached.
How long does a Form B take, and what does it cost?
The strata must give it within one week of a request. The fee is capped at $35 plus photocopying costs.
Sources
- Strata Property Act (BC Laws), Part 4 — bclaws.gov.bc.ca
- Strata Property Regulation, B.C. Reg. 43/2000 — bclaws.gov.bc.ca
- Province of BC – Form B: Information Certificate — www2.gov.bc.ca
- Province of BC – Paperwork for buyers and sellers — www2.gov.bc.ca
- Strata Property Act (BC Laws), Part 6 — bclaws.gov.bc.ca
- Province of BC – Depreciation report requirements — www2.gov.bc.ca
- Province of BC – The contingency reserve fund (CRF) — www2.gov.bc.ca
- Province of BC – Special levies in stratas — www2.gov.bc.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
This is a real estate question
A home purchase with us is from $1,900.88, tax included. Third-party fees are extra.