Strata vs. Condo vs. HOA: Key Differences Explained

When looking at real estate options in Canada, you’ve likely encountered the terms “strata,” “condo,” and “homeowners association” (HOA). These terms are often used interchangeably, but they each have unique meanings and implications, especially for prospective homeowners. Understanding these differences is crucial if you are planning to buy a property in a multi-unit building or a community with shared amenities.

In this blog post, we'll explore the distinctions between these three concepts, clarify some common misconceptions, and answer some frequently asked questions.

What is a Condo?

A condominium (condo) is a type of property ownership that allows individuals to own a specific unit within a larger building or complex. Condos are popular in urban areas where high-density living is common. When you buy a condo, you own everything within the boundaries of your unit, which includes the interior walls, floors, and ceilings. You also share ownership of common areas such as elevators, swimming pools, gyms, hallways, and outdoor spaces.

Condo owners are required to pay monthly fees that cover the maintenance of these common areas, building repairs, and sometimes utilities. These fees can fluctuate based on the building's expenses, which means a rise in operational costs could lead to higher condo fees.

What is a Strata?

The term strata is essentially synonymous with “condo” but is more commonly used in British Columbia, Canada, and Australia. The concept of strata originated in Australia and was adopted in BC in the 1960s. Just like a condo, owning a strata unit means you own your individual unit and share ownership of the common areas with other residents.

The key difference lies in terminology and legal framework. In BC, the Strata Property Act governs strata properties. Each strata development forms a strata corporation, which is responsible for managing the common property and assets. Strata corporations are self-governing entities where all owners have a say in decision-making through a strata council elected at the annual general meeting.

In addition to individual unit ownership, strata owners have a proportionate ownership share of the common property, which is maintained through strata fees. Strata corporations also have specific bylaws that govern everything from property maintenance to whether pets are allowed.

What is a Homeowners Association (HOA)?

A homeowners association (HOA) is typically found in residential communities in the United States but can also exist in Canada. HOAs manage the communal aspects of neighborhoods, which may include single-family homes or townhouses, not just multi-unit buildings.

An HOA is a non-profit organization set up by developers or residents for the management and maintenance of common areas and amenities like parks, playgrounds, and community centers. HOA members are residents who pay monthly or annual fees for these services. The HOA board, often elected by homeowners, makes decisions about property rules and regulations, maintenance, and community improvements.

Unlike strata corporations, where each unit owner has a share of ownership in common property, HOA members do not have ownership stakes in communal areas. Instead, they have the right to use these areas, which are managed and maintained by the HOA.

Key Differences Between Strata, Condo, and HOA

1. Terminology and Location: The term “strata” is predominantly used in British Columbia, whereas “condo” is more widely used across Canada and the US. “HOA” is more common in single-family residential communities in the US.

2. Ownership Structure: In condos and strata, owners have an ownership interest in their units and a shared interest in common areas. In HOAs, homeowners do not own the common areas but have usage rights and pay fees for their upkeep.

3. Governance: Strata and condo developments are governed by a strata corporation or condo association, respectively, which are made up of the unit owners. HOAs are governed by a board of residents who enforce community rules and manage common spaces.

4. Legal Framework: Strata properties in BC are regulated under the Strata Property Act, which outlines specific bylaws and regulations for management. Condos and HOAs are typically governed by individual governing documents and bylaws set by the respective associations.

5. Fees and Responsibilities: All three involve monthly fees, but how these fees are used can vary. Strata and condo fees often cover building maintenance, repairs, and amenities. HOA fees can cover community upkeep and sometimes extend to services like trash removal or security.

Q&A Section

Are there any major differences between strata and condos?

No, in essence, strata and condos represent the same concept of individual ownership thin a larger property, coupled with shared ownership of common areas. The difference is mainly in terminology and the specific laws that apply. Strata is used more commonly in British Columbia, and its legal framework is defined by the Strata Property Act.

Can an HOA exist in a condo building?

Typically, HOAs are associated with single-family homes and townhouses rather than condo buildings. However, it is possible for a larger community to have both a condo association (for individual buildings) and an overarching HOA (for the broader community amenities).

Who sets the rules in a strata or condo?

In a strata or condo, rules and regulations are set by the strata council or condo association, which is made up of unit owners. These rules can include everything from pet policies to noise restrictions and can be amended by a majority vote during meetings.

Are strata fees the same as HOA fees?

Both strata fees and HOA fees are used to maintain common areas and amenities, but they differ in structure. Strata fees are calculated based on the proportionate share of each owner's interest in the common property, whereas HOA fees are set by the HOA board and apply uniformly to all homeowners.

What happens if I don’t pay my strata or HOA fees?

Failure to pay strata or HOA fees can result in penalties, including fines, interest charges, and potentially a lien against your property. Consistent non-payment can lead to legal action and, in extreme cases, foreclosure.

Can I attend strata or HOA meetings even if I am not on the council or board?

Yes, most strata and HOA meetings are open to all owners, and attending these meetings is a great way to stay informed and participate in community decision-making. Owners can also vote on certain issues, depending on the bylaws of their strata corporation or HOA.

Conclusion

Understanding the differences between strata, condo, and HOA is crucial for making informed real estate decisions in Canada. Whether you're looking to buy a unit in a multi-story building, a townhouse, or a single-family home, knowing the governance, fees, and legalities involved will help you navigate the complexities of shared property ownership.

At StrataReports, we offer comprehensive insights into strata documents to help buyers, sellers, and real estate professionals make confident decisions. Whether you're new to strata living or a seasoned investor, our AI-driven platform provides clear, detailed analyses of financial statements, meeting minutes, and more, ensuring you have all the information you need at your fingertips.