What to Know if your Strata is Interested in Seeking Redevelopment
Here's a great article from Pazder Law on what to do if you have been approached by a developer seeking redevelopment or if your strata council is interested in dissolving the strata corporation.
A strata council may believe the best decision is to dissolve the strata corporation especially if:
the strata complex is on its last legs;
the future cost of repairs and capital upgrades may no longer make economic sense;
the owners don’t have the financial wherewithal to finance the costs and upgrades; or
the neighbourhood is being redeveloped pursuant to a new “community plan” which is encouraging redevelopment.
What then should the owners of an older, low rise building do?
STEP 1 Organize your owners. Collectively the complex belongs to all the owners, so every owner should have full, unrestricted access to all available information. Call a meeting of all of the owners to discuss your options. Find out who wants to sell and who does not.
STEP 2 If there is significant interest in selling by a majority of the owners or its evident that the community plan for the neighborhood is being changed to encourage much higher density, then get some expert legal and marketing advice.
STEP 3 Get a real estate lawyer, an experienced realtor and an appraiser to attend an owner meeting to discuss the foregoing and answer other questions for the owners.
Examples of questions to ask:
- How does “winding up the strata” work?
- Are there other sale options, like selling 80% or more of the individual units to a developer at the same time?
- Should the same sale formula apply to everyone (i.e. 2X or 3X tax assessment value)?
STEP 4 Have an appraisal done on the building based on what can be built in its place (the appraiser can obtain this information from city hall). When a property developer presents an offer and proffers am appraisal in support you will have something to compare it to.
STEP 5 Get a consensus on the procedure to market the building and whether the preferred route is to wind up or to sell off the individual units as a group and then engage a realtor or marketing representative to market the developers for proposals.
STEP 6 When a proposal or offer comes in, call a meeting to discuss it with all the owners and negotiate your best deal. Sell the units directly to the developer concurrently and disburse the proceeds. If you can get a developer to buy 80% or more of the units in one coordinated sale, that will maximize the value for all of the owners and save you the expense and stress of having to make a court application to dissolve the strata corporation.
STEP 7 If an acceptable offer comes in to purchase the whole complex (as opposed to purchasing individual units) then the strata corporation must be wound up. In such case the following procedure must be followed:
Notice of General Meeting to Consider Windup Resolution
At least 4 weeks’ notice must be given of a general meeting that includes a resolution to wind up the strata corporation.
Who must be given notice?
Notice must be given to every owner regardless of whether notice must also be sent to their tenant or mortgagee. Notice must also be given to every mortgagee who has given the strata corporation a mortgagee request, and every tenant who has been assigned their landlord’s right to vote.
The termination resolution will authorize termination of the strata plan, authorize the strata corporation to apply to the Supreme Court for termination orders and a vesting order authorizing the cancellations of the strata plan and winding up of the strata corporation.
Court Supervision
If the resolution to wind up the strata corporation is passed, then for strata corporations that have more than 5 units, the strata corporation must then apply to the BC Supreme Court for an order confirming the winding up resolution. This must be done within 60 days after the resolution is passed. If the strata corporation has less than 5 units no application to court is necessary. The application to court gives strata owners extra protection.
Conversion/ Interest Schedules
A conversion or an interest schedule must be approved and attached to the resolution. If a liquidator is to be appointed an interest schedule must be attached to the resolution, otherwise a conversion schedule is required. The Conversion/Interest Schedule must meet the requirements as to form and content.
The Schedule must:
State whether or not the Strata Corporation holds lands in its name
Identify the land by legal description sufficient to allow the registrar at the land title’s office to identify it in the records of the strata plan
List the name and postal address of each owner and registered charge holder
List all registered interests in land at the time of the resolution and as they will exist if the registrar grants an order in shares calculated according to the following formula:
Most recent assessed value of an owners’ strata lot
Most recent assessed value of all the strata lots in the
Strata plan, excluding any strata lots held by or on behalf of
The strata corporation
If there is no assessed value for the owner’s strata lot or for any strata lot in the strata plan, an appraised value that has been determined by an independent appraiser and that is approved by a resolution passed by a ¾ vote at an annual or special general meeting may be used in place of the assessed value for the above formula.
If a liquidator is appointed and an interest schedule is required, the interest schedule will have all the above information contained in the conversion schedule and in addition will have the name, postal address and interest of each creditor of the strata corporation who is not a holder of a registered charge against the land.
Submitting an Application to the Land Title Office
To cancel a strata plan the strata corporation must submit the following documents to the Land Title Office:
The conversion schedule,
A reference plan that shows the land shown on the strata plan and the land held in the name of or on behalf of the strata corporation not shown on the strata plan,
If the strata corporation has more than 5 units:
A Certificate of Strata Corporation stating that the winding up resolution has passed and the strata corporation has no debts other than the debts held by holders of registered charges
a copy of the court order
If the Strata corporation has fewer than 5 units and does not obtain a court order:
The written consent of all holders of registered charges,
a Form E Certificate of Strata Corporation confirming the winding up resolution has passed and the strata corporation has no debts other than the debts held by persons who have consented in writing to the winding up of the strata corporation
Any other document required by the registrar to resolve the priority interests of any registered charges against the land shown on the strata plan or to transfer title.
Registrar Order
If the registrar is satisfied, the registrar may order that the strata plan is cancelled. Once the order is made, the registrar must file the order, register indefeasible titles to the land referred to in the order and give each owner and registered charge holder shown on the conversion schedule a copy of the order.
When the order is filed, the strata corporation is dissolved. The owners are then tenants in common of the land and the personal property of the strata corporation is held in shares equal to the owners’ shares of the land set out in the conversion schedule.
Your questions are always welcome. Please email Shana Rivett at oceanparkrealestateconsulting@gmail.com with your questions.
Full article can be reviewed at: https://www.pazderlaw.com/my-strata-wants-to-sell-my-building-from-under-me/
Disclaimer: The foregoing is not intended as legal advice. It is presented for information purposes only.