Condo Document Red Flags Checklist
The 15 most important red flags our certified analysts look for when reviewing condo documents across Canada. Use this checklist to protect your investment.
Last updated: March 2026
Underfunded Reserve Fund
Severity: critical.
The reserve fund balance is below the recommended funded ratio (typically under 25%). This means the corporation may not have enough money set aside for major repairs and replacements.
Request the most recent Reserve Fund Study. Compare the current balance to the study's recommended contributions. Ask if a special assessment is planned.
Pending or Threatened Litigation
Severity: critical.
The condo corporation is involved in a lawsuit or has been notified of potential legal action. This could result in significant costs, special assessments, or insurance premium increases.
Review the litigation details in the certificate. Ask the corporation for an update on the status and potential financial exposure. Consider legal advice.
Recent or Upcoming Special Assessments
Severity: critical.
Unit owners have been or will be charged a one-time fee for major repairs or shortfalls not covered by the reserve fund. These can range from a few hundred to tens of thousands of dollars per unit.
Determine the amount per unit, payment schedule, and what the assessment covers. Negotiate with the seller to cover any outstanding amounts.
Insurance Coverage Gaps
Severity: critical.
The corporation's master insurance policy has inadequate coverage limits, high deductibles, or missing coverages. Individual owners may be liable for significant amounts in the event of a claim.
Review the insurance certificate for coverage limits and deductibles. In BC, strata insurance deductibles can exceed $250,000. Ensure you have adequate personal condo insurance.
Operating Budget Deficit
Severity: high.
The corporation is spending more than it collects in monthly fees. This can lead to fee increases, service cuts, or deferred maintenance.
Review the financial statements for the last 2-3 years. Look for trends in revenue vs. expenses. Ask about planned fee increases.
Deferred Maintenance Backlog
Severity: high.
Necessary repairs and maintenance items have been postponed, potentially leading to accelerated deterioration and higher future costs.
Look for references to deferred items in board minutes and engineering reports. Ask about the corporation's maintenance schedule.
Governance Issues
Severity: high.
The board has difficulty achieving quorum, has frequent director turnover, or lacks proper oversight. This can lead to poor financial management and deferred decisions.
Review the AGM minutes for quorum issues and director election patterns. Look for signs of conflict or dysfunction.
High Common Fee Increases
Severity: high.
Common fees have been increasing significantly year-over-year (above 5-8% annually), indicating financial pressure or catch-up contributions.
Compare fee history over the last 3-5 years. Ask what's driving the increases and whether they're expected to continue.
Aging Building Infrastructure
Severity: high.
Major building systems (roof, HVAC, plumbing, electrical, elevators) are approaching or past their expected useful life without planned replacement.
Cross-reference the reserve fund study's component inventory with actual building age. Look for items with 0-5 years remaining life.
Restrictive Rental Bylaws
Severity: medium.
The corporation has bylaws that limit or prohibit renting your unit. This can affect your exit strategy and unit resale value.
Review the bylaws for rental caps, waiting lists, or outright prohibitions. Check if changes are being proposed.
Pet Restrictions
Severity: medium.
Bylaws may restrict the type, size, or number of pets allowed. Violations can result in fines or forced removal.
If you have pets, review the specific bylaw wording carefully. Some restrictions may be unenforceable — but enforcement varies.
Inadequate Reserve Fund Study
Severity: high.
The reserve fund study is outdated, uses overly optimistic assumptions, or doesn't account for all building components.
Check the study date and the assumptions used for inflation, interest, and component costs. An outdated study may understate future contribution needs.
Unit Entitlement Issues
Severity: medium.
Your unit's share of common expenses may be disproportionately high relative to the unit's size or value.
Review the unit entitlement or unit factor schedule. Compare your unit's share to similar-sized units in the building.
Bylaw Non-Compliance
Severity: medium.
The corporation or unit owners are not consistently following or enforcing the bylaws, which can create precedents and future disputes.
Review board minutes for enforcement issues. Look for patterns of non-compliance that could affect your enjoyment of the property.
Management Company Concerns
Severity: medium.
Frequent changes in property management companies or ongoing disputes with management can indicate deeper organizational problems.
Note how many management companies have been used in the last 5 years. Ask current residents about management responsiveness.