VANCOUVER — About two dozen stratas across Metro Vancouver are positioning themselves to dissolve and sell their entire buildings to developers, according to Tony Gioventu, executive director and strata property adviser for the Condominium Home Owners’ Association of B.C.
“In the next months, stratas will be starting to act,” said Gioventu, adding the rough estimate is based on his organization’s dealings with law offices and commercial brokers. “We know of 25 stratas looking at liquidation. [Most] of them are within two blocks of a SkyTrain station.”
In recent years, many single-family homeowners, especially those who live around designated arterials, have reaped the benefits of real estate deals known as “land assemblies.” This is where several neighbouring homes sold together as a parcel can be worth double or more to a developer looking to build higher-density condo and townhome projects.
Now, more owners of multi-family units stand to cash in after a fresh piece of legislation came into effect two weeks ago.
Just as with single-family homes that are prime fodder for land assemblies, some of these condo and townhome buildings are older and in need of repairs that could be costly for stratas. In some cases, special levies of between $50,000 to $100,000 per unit could be in store for major upgrades. But, if owners group together to sell an entire building to a developer looking to build a much higher-density project, they could see selling prices that are between 11Ú2 to three times their typical market value, Gioventu said.
“So a unit that might go for $325,000 could go for as much as $975,000.”
He said buildings in areas targeted for high-density development are the most obvious ones having these conversations. He named zones surrounding SkyTrain stations at Brentwood, Metrotown and Lougheed Mall in Burnaby. There are some in the Lonsdale Quay area, as well as near the SkyTrain station in New Westminster.
“The buildings are generally in a six-block radius of these stations,” he said.
For the hundreds of strata-titled buildings in B.C., a recent change in provincial legislation means that instead of needing 100 per cent agreement among owners, councils will only need an 80 per cent vote to disband.
It’s a change that puts B.C.’s rules about joint housing ownership more in line with other provinces, and might make it easier for stratas to push holdout owners into selling and deals to close more quickly.
It used to be if stratas couldn’t get 100 per cent of the votes to disband and sell, the owners in favour would have to go to court to try to get a legal order in an often long and expensive process.
Now, stratas with an 80 per cent vote will still have to apply to court within 60 days for a sale order. However, it is more of a “second sober thought” process that is designed to prevent a “developer [coming in to] buy up 81 per cent of the units at a low price,” Gioventu said.
Once a strata decides to engage a broker and begin marketing, the process could take about eight to 10 months to get a sale and close, he said.
This is possible, but it can also take longer, said Peter Roberts, a Lawson Lundell lawyer. He has worked with condo owners to sell entire buildings to developers, including the only recent case of a completed deal, which happened in May of a 21-unit building in Coquitlam.
His “strata wind-up group” has been busy in recent months with queries from dozens of groups of owners.
A combination of rising property prices, looming repair costs and this new legislation — which says “a lack of unanimity isn’t going to hamper a sale” — has sparked “a greater willingness toward extracting value” from their units, Roberts said.
At first glance, the new legislation might make it seem like it will now be a breeze for a group of owners who want to sell to push through opposition from holdout owners who don’t. However, Roberts said it will still depend on what’s behind the resistance.
“Is it an owner saying, ‘I don’t like this price’? Or someone feeling like, ‘This has been my home for 80 years, my doctor is next door’? There is a difference.”
