The first of two parts
Dear Tony: What happens when a strata corporation reaches an impasse on repairs? In October, our strata had an offer from a developer for our modest four-floor wood-frame strata of 45 units at Metrotown. The offer would have given each owner about 50 per cent above the market value for their condos, so council decided to call a general meeting of the owners to consider the offer.
By majority vote, the owners decided not to consider the offer and directed council to move forward with our routine maintenance and planning. A new council was elected in January, including one owner who is a real estate agent, and we are back on the program of selling the building.
The council is now claiming the depreciation report is a major factor in our decision, because we need about $800,000 in upgrades in the next five years. Of course we do! We’re 30 years old and due for a new roof, an elevator upgrade and boiler upgrade for hot water.
They directed the depreciation planner to do a presentation to the owners that was basically a threat to liquidate or face devastating costs. We are concerned the owners are being pushed down a road that will have adverse effects on everyone, and we have a high level of mistrust developing in our community as a result.
Monica R.
Liquidation is a complicated series of procedures for a strata corporation. While depreciation reports are an important part of the financial planning for strata corporations, they are the least important information for liquidation if the buildings are being demolished for redevelopment.
In the fall of 2015, the Strata Property Act was amended to change the voting requirement for liquidation from 100 per cent to 80 per cent of the schedule of voting rights.
The change is significant, but even 80 per cent of the total number of votes will still be extremely difficult to achieve, and an application to the Supreme Court of B.C. will now be required to approve the decision.
There are two methods of selling the property. The first is simple. A developer/speculator purchases all of the units directly from each owner. The strata is not involved in the liquidation process and the deal is fairly clean. The second method, a strata vote and liquidation, is complicated but gives the strata owners the collective ability to market the property for competitive bidding to obtain the best offers.
This process will take six to 18 months, depending on the owners and conditions of sale.
The depreciation report will be valuable for owners when they assess, based on the costs in the coming five to 10 years for maintenance and renewals, whether selling the property is a prudent financial decision. The information could influence owners’ decision to maintain versus liquidate, but until they have voted to sell, strata owners must maintain and repair their property.
Next week: Part two on liquidation
Tony Gioventu is executive director of the Condominium Home Owners Association
