So you want to liquidate your aging condo building…
28 September 2017
Do you live in a well-located older condominium complex in need of
extensive repairs? Have you been thinking of buying into an older
condominium complex, or know someone who is? Read on.
Although condominium legislation was first approved in the late 1960s,
it was not until the early 1970s that condominium developments were
built in Vancouver. While many early projects continue to provide
wonderful accommodation, others have been poorly maintained and require
significant repairs, often costing more than the homes are worth.
Other projects are in locations ripe for redevelopment, making them two times or more valuable as vacant sites.
Until November 2015, an older condominium development could not be
wound up or liquidated without the approval of 100 per cent of the
residents. While a few projects were sold to developers with unanimous
approval, many sales did not proceed because one or more residents did
not want to sell.
After all, these were their homes. Many were elderly and wanting to
live out their final days in the apartment they had enjoyed for 40-plus
However, in November 2015, Bill 40 received royal assent from the
British Columbia legislature. It amended the Strata Property Act with
respect to the winding up of a condominium project.
The Bill 40 amendments resulted in two important changes. The threshold
required to terminate a strata development was reduced from 100 per
cent to 80 per cent of the strata’s eligible voters. Secondly, when
there was not unanimity, the strata must apply for a court order to
provide some protection for dissenting owners.
Since the legislation was passed, it seems like every older condominium
along a major road or near SkyTrain has a realtor knocking on the door.
Increasingly, strata corporations are considering a potential windup
and sale. Sadly, this is also causing major strife between those
wanting to sell, and those wanting to stay.
Increasingly, legal firms are specializing in this aspect of property law.
In March 2017, the B.C. Supreme Court approved the first sale of a
condominium complex. Although owners of two of the building’s 30 units
previously voted against selling the building, no one was in court to
oppose the sale.
I’m told another 10 projects are now going through the court process.
However, in some cases, the dissenting owners are hiring their own
lawyers to challenge the majority decision.
A key issue for many owners is how the proceeds from a sale will be distributed.
Three different formulas could apply depending on when the project was
built. They are unit entitlement, interest on destruction, or B.C.
Assessment valuation. A strata corporation may also create its own
custom-made formula through unanimous vote.
Unit entitlement is the number assigned to each strata lot that
determines its share of common property and assets, and is used to
calculate strata fees and special levies. It is generally based on
size, not value. However, if a project was developed in the 1970s, this
is the formula that was used to distribute proceeds if a building
For those projects developed in the 1980s or 1990s, prior to
registration of the strata plan, a schedule of “Interest on
destruction” was prepared. This set out the value of a strata unit
compared to the whole building, usually based on its initial sales
price in relation to the total sales prices.
For more recent projects developed under the current Strata Property
Act, B.C. Assessment values are to be used to determine each unit’s
share of the proceeds in the event a building is destroyed.
However, there is a problem using B.C. Assessment’s valuations, since
for many projects, they have been found to be skewed and inconsistent.
Furthermore, since so many condominium projects are now being viewed as
redevelopment sites, B.C. Assessment no longer values their units based
on current use. Rather, they are valued as part of a future vacant
Consequently, property taxes are rising significantly, even though the
buildings may need extensive repairs. While many planners, realtors,
and developers may view this as a good thing, it is not for those
wanting to stay in their homes.
It’s time for a public conversation on this.