Friday, March 17, 2017

Cashing Out Condos

As reported today
"Owners of a 114-unit condominium complex in North Vancouver have become among the first to achieve court approval to sell their entire complex to a developer. 
The BC Supreme Court approved Anthem Properties’ bid of $51 million for the 6.5-acre Seymour Estates project on Lytton Street in North Vancouver district in December. The transaction closed in late January."
For those who don't follow strata legislation, the Province changed rules last year to allow a vote of 80% of owners as enough to force the sale of an entire strata complex, pending a review in the courts.  Previously the vote had to be unanimous for a sale to happen, something that was pretty much impossible.

The Seymour Estates deal has been in and out of the courts for several years.

There are a lot of strata developments on the North Shore. Many are forty or more years old, and facing massive repairs to basic infrastructure.  How many more will opt to sell out, and what impact will this have on our community?

There are a number of these applications working their way through the courts right now, usually with one or two hold-out owners refusing to sell.

The wildcard in all of this is the new Civil Resolution Tribunal, which has already shown a willingness to force a strata to do essential repairs even if owners voted not to spend the money.


Anonymous said...

"The wildcard in all of this is the new Civil Resolution Tribunal, which has already shown a willingness to force a strata to do essential repairs even if owners voted not to spend the money. "

Makes ya wonder what the point of being an 'owner' is besides champing at the bit to be solely responsible for paying property taxes.

We've all got neighbors but there's more than one advantage of a true 'single family' designation going well beyond a private back yard for the kids and dog.

Anonymous said...

I would say the wildcard is the DNV Council which may not increase the density on the site. All that work by the owners and they don't have a rezoning proposal that is acceptable.

Anonymous said...

I could be convinced that it is time to add a little density to that site, but I don't want to lose the spectacular setting of the property. Anyone who has walked past the grungy shell of this out-of-time building has seen the rolling greens surrounded by 80ft trees. The loss of low cost housing is a temporary hit, but the loss of the grounds would be a loss for the community forever. Rebuild on mostly the same foot print and I would support adding two more floors on the site.

Barry Rueger said...

Followup: a couple of very good Business in Vancouver articles on the subject of condo wind-ups. Part 1 Part 2

Hazen Colbert said...

Contrary to lawyer Peter Roberts, who acted for the pro-sale group, the decision is not a precedent in the strata market. Certainly the vagaries of a solitary Supreme Court judge who may have well little or no strata, business or financial education in the matter should be taken as qualm.
There are a number of unique aspects of the case including the legal structure that do not apply to strata. In addition the involvement of DNV Council in agreeing to redevelopment in the absence of a redevelopment application and no public consultation is not only irregular but should be contrary to the Community Charter.
The examples Barry references in the links involve municipal councils approving rezoning which creates the platform for this form of real estate speculation which creates no real value but simply takes economic value from future real estate owners and passes back to existing owners. But that is the only thing that this province’s economy is based these days.
It seems that speculation should be a private matter and not draw the support of public entities such as the courts and local councils.
Speculative activities should be dissuaded by public policy including by setting aside principal residence exemptions on capital gains taxes for these types of activities which are speculative investment activities not outcomes of standard home ownership.

Anonymous said...

I would challenge your notion that the activities are entirely speculative. Yes, of course the existing owners are trying to unlock the value of their property, but speculating implies that the property was purchased for the purpose of exploiting a future value, while most of these units were purchased primarily for housing the owner which is exactly what the exemption is for.

And... simply put the short to mid-term foreseeable future value is the current value in both the sellers and buyers minds. Granted the delta between 'As Is' and 'future potential' is largely a marketing exercise.