New condo-sale rule brings relief to many, grief to some
By Glen Korstrom
14 March 2017
Part 1 of a two-part series
Developers, lawyers, realtors and some condominium own-ers rejoiced
last summer when the B.C. government changed the law to make it easier
for strata corporations to sell assets.
The government’s Bill 40 lowered the bar so that if 80% of the owners
in a strata corporation vote to dissolve that entity and sell the site
to a developer, they can petition BC Supreme Court for final approval.
The court then takes into consideration whether owners who oppose the
sale will suffer a significant hardship. Court approval is not a
rubber-stamp process, but proposals are now a lot more likely to find
success in court than they would have before Bill 40 became law.
Previously, courts usually required unanimity among the owners,
although judges could make exceptions for cases in which a development
was badly rundown.
The downside of B.C.’s new legislation, however, is that condominium
owners who like where they live and have no desire to sell are in a
more precarious situation when neighbours start looking to divest.
The new law raises the possibility that seniors and other owners and
tenants on fixed incomes could be forced out of their homes – a
prospect that is particularly daunting in the Lower Mainland given the
huge run-up in the region’s real estate prices.
Nonetheless, developers are excited about the new law because it could
bring a new stream of potential development sites into the market.
Condominium owners who live in older buildings that need extensive
repairs are relieved that there is a new viable route to escape ongoing
Strata lawyers and realtors, similarly, are happy with the new law
because they see lucrative spinoff work for many years to come.
Leaky condo nightmare
Bill 40 was drafted to address the issue of condominium owners stuck in
a frustratingly drawn-out and costly legal process in which a few
holdout owners could thwart the will of the majority. It was a problem
that exploded with B.C.’s leaky-condominium crisis in the 1990s.
Ted Broekhuizen was among the first British Columbians caught in this
situation when he owned two of 216 units in Burnaby’s Glenrobin complex
at 9200 Sandlewood Crescent.
Problems started in 1997, when the province’s leaky-condo crisis was in
full swing. Broekhuizen bought his units in 1994, when the complex was
converted from rental housing into stratified suites.
Units sold for around $100,000 each, which was low even for the
mid-1990s. Owners looked forward to peacefully living on the five
hectares of property where 16 buildings and a series of townhomes were
perched on a sloping hill among patches of parkland, and where shopping
was a mere 10-minute walk away at Lougheed Town Centre.
But just a few years later, many buildings were saturated with mould
and decay. Some were scarcely livable.
“The trauma for people was horrendous as the units were seriously
compromised,” Broekhuizen told Business in Vancouver. “Many owners
said, ‘I can’t take this anymore. I have young children, and they
shouldn’t be living like this.’”
When a mid-1997 engineering inspection deemed that repairs would cost
as much as $9.5 million and that owners would be on the hook for
$40,000 each, the drive to sell the property launched in earnest.
(Modern row houses were rebuilt after Glenrobin was demolished | photo:
Owners chipped in about $5,000 each in special assessments, but it was
soon clear that the complex needed much more than a touch-up.
“We went to court probably five or six times,” said Broekhuizen, who
was on Glenrobin’s strata council continuously between 1994 and 2004,
when Polygon Homes Ltd. bought the property for $23 million.
“We had to go through an initial court process just to get a listing
agreement – to have a realtor legally be able to offer the property,”
he said. “It was a very frustrating process.”
Unanimity could not be achieved because a minority of the residents had
units that were in relatively good repair, and those owners did not
want to move.
Broekhuizen remembers that some of those owners were “simply blind” and
did not accept reports that the vast majority of buildings were not
Glenrobin’s property manager, Gerry Fanaken, told BIV that feelings ran
so high in the property dispute that fist fights broke out at meetings
and police had to be called.
Dozens of owners walked away from their homes, leaving Canada Mortgage
and Housing Corp. to take control of the empty units.
Owners rejected Polygon’s initial offer, but, in 2003, after Polygon
sweetened its bid, owners voted more than 90% to sell.
The owners then went to court to seek an order declaring that the
entire complex was essentially destroyed and giving the OK to dissolve
the strata corporation.
“In the end, the court can do pretty much anything,” said Marcel
Peerson, who was a lawyer who represented banks and other lenders that
loaned money to Glenrobin mortgagees.
Relief, joy – and some anguish
There are winners and losers now that Bill 40 is the law.
Winners include the condominium owners in buildings where the value of
potential redevelopment of the land far exceeds that of what now sits
on the site.
Then there are the realtors and lawyers who help the owners navigate
At the other end of the scale are the owners who do not want to sell
and who doubt that the sale will bring enough money to allow them to
buy an equivalent home.
The Brandywine project at 585 Austin Avenue in Coquitlam is a microcosm
of these divergent interests.
(The Brandywine development at 585 Austin Avenue is designed in a West
Coast modern style that was popular in the 1970s | Photo: Chung Chow)
Patricia Depodesta, who owns one suite in the 40-year-old, wood-frame
development, told BIV that her building is like many in Metro
Vancouver. There is much to be repaired, and special assessments would
be a severe burden on owners.
“You think that your maintenance is going to cover the repairs, but it
doesn’t,” said Depodesta, who has lived in her unit for 28 years. “Ever
since I’ve been in this building there have been special levies. At the
beginning it was like, ‘Oh, darn.’”
More recently, however, the need for major repairs at Depodesta’s
58-unit complex has become urgent.
A 2013 depreciation report notes that Brandywine owners should expect
to pay $5 million in the next 10 years for “major maintenance”
including fixing water ingress issues in the parkade, deteriorated wood
cladding on exterior walls and a blistered roof membrane.
That cost works out to more than $86,000 per unit.
Instead of accepting those costs, members of her strata corporation
voted 49-9 on December 12 to sell the complex to Anthem Properties
Group for $32 million. The case is now before the court.
For Depodesta, who is a senior, the successful vote was a godsend.
She expects to get far more than her suite’s 2016 assessed value of
$373,200. On average, owners will get more than $550,000 each.
That, however, is not nearly enough for Daniel Nikitiuk, who owns a
unit at Brandywine with his wife, Denise Quesnel.
He has priced units at nearby buildings and found that an equivalent
unit would sell for between $600,000 and $700,000. More troubling for
him, however, is that he doubts he will be able to find another unit
nearby that is as big as the 1,366-square-foot unit he bought last year
“We are making a profit on the sale, but I have to spend all of the
money in order to have a place to live again,” he said.
“This building also has unique architectural construction. It’s West
Coast modern from the 1970s, and there’s not a lot of that kind of
Things are worse for Aeja Shin, who owns a 1,152-square-foot
ground-floor unit at Brandywine.
Proceeds from the Brandywine sale, like those of buildings built in
B.C. from 1974 to 2000, are based on the developer’s original estimate
of each unit’s value. (Proceeds from sales of buildings constructed
between 1966 and 1974 are based on assessed value, as are those from
sales of properties built after 2000.)
Shin’s unit is not that much smaller than Nikitiuk’s, but she said her
share of the proceeds is disproportionately less.
“Upstairs the units are a little bit larger than mine but there is a
lot of money difference between my unit and theirs,” she said.
Neither Shin nor Nikitiuk sees the value of fighting the Brandywine
sale in court because they believe that a court will not accept their
complaints and that they will be out of pocket the tens of thousands of
dollars that lawyers would likely charge.
Things are slightly different at 2777 Oak Street, where a numbered
company offered $21.5 million to buy the 30-unit, 44-year-old Twelve
Oaks development. That is more than twice the site’s 2016 assessed
value of $10,630,300.
Only two of the 30 owners voted to reject the offer in December. The
case is now before the court for final approval.
Because Twelve Oaks was built before August 1974, the method of
dividing proceeds is based on assessed values, according to Lawson
Lundell partner Peter Roberts, whose firm represents the owners.
That method of distribution prompted has four of the Twelve Oaks owners
to appeal to the BC Assessment Authority that their property
assessments were too low.
Panagiota Kravariotis, who has lived in the building for 22 years, told
BIV she thinks the offer is “good” and that it will provide
substantially more than her suite’s $567,000 assessed value.
Along with owners, realtors and lawyers similarly see opportunity from
“This will be work for about 15 or 20 years,” said Royal LePage Sussex
Klein Group principal Eugen Klein. “There is lots of work out there.”
His staff is putting together six to eight presentations to strata
corporations each month, and he is marketing more than a dozen
“I’m very active with Bill 40 windups right now,” he said. “I’ve
branded and created an online business to deal with it. We’re probably
doing two to three evaluations for stratas every week. I’m doing
presentations to stratas every couple of weeks, and this is throughout
the Lower Mainland.”
Larger law firms have also plunged headfirst into helping strata
corporations navigate the Bill 40 windup process, with lawyers such as
Clark Wilson LLP partner Darren Donnelly and Lawson Lundell’s Roberts
developing niches in the area.
Countless other small firms and independent strata lawyers are
similarly carving out specialties in strata windups.