A Mock Strata Council Meeting for Okanagan Property Managers Takes Place in Kelowna

Normac co-sponsored a Professional Association of Managing Agents (PAMA) Educational Event on April 12th, 2019.  The breakfast seminar took place at Kelowna’s Ramada Inn with 29 property managers in attendance from cities across the Southern Interior including Kamloops, Vernon, Salmon Arm, Penticton, and Kelowna. The property managers in attendance were able to take part in a well-prepared mock council meeting addressing issues and situations that arise during a typical strata council meeting. The format of the seminar was entertaining and interesting; it gave those in attendance an opportunity to brainstorm and “problem-solve” through some challenging issues in small, breakout session groups.  We want to thank all those that attended and made this such a great and engaging event.

If you are in BC and interested in connecting with a large group of like-minded individuals, expanding your connections, and having access to a network of industry professional, then you should consider joining PAMA.  Being a PAMA member with an established real estate association gives you access to a community with over 2000 members and growing. Continuing education is a large component of what the PAMA association offers such as the mock council strata meeting event above. Wanting to learn more about becoming a PAMA member? Visit PAMA’s website HERE to join.

Did you know that Normac is Canada’s leading insurance appraisal firm? If you are in need of an insurance appraisal– request a quote from us today.  Visit us at HERE to request a quote.


Land Assembly Prevails, Strata Corporation to Wind Up

Barclay Terrace Land Assembly

Barclay Terrace is a 36 unit concrete condominium in Vancouver’s West End which was just approved for a land assembly sale as determined by BC Judge, Justice Warren B. Milman. This decision comes despite ongoing resistance from two owners.

The building is owned almost entirely by Barclay Thurlow Property Inc. and Shepstone Investments Inc., Westbank and Bosa companies respectively. These two majority owners have 34 units in the building and have been slowly buying out owners since 2015 with the goal of winding up the strata and selling the land for redevelopment. Under Bill 40, a strata only requires an 80% percent vote in favour of a wind up and these two developers currently own 94% of the building. We previously wrote an article about Bill 40 and that you can read about here.

While negotiations with the two minority owners occurred in 2015 and 2016, both ultimately declined offers citing the price was too low. The units, which were assessed at $672,000 and $793,000 in 2017 turned down offers between $2 million and $3.5 million.

Throughout the legal proceedings, the two minority owners claimed they had been holding out on the sale of their condos because the sale prices were too low and that they were not adequately informed during the sale process of the land assembly.

Milman, however in his decision on March 13, 2018, wrote, “The minority owners were not taken by surprise by what occurred. They were able to see the writing on the wall by late 2015 or early 2016, when the majority owners sought and then acquired a controlling block in pursuit of their patent agenda to redevelop the property. At that point, a dissolution and sale of Barclay Terrace was all but inevitable.”

Milman reject the owners’ notions that the price was unfair or prejudiced against them. He continues, explaining that the minority owners will receive “enormous premiums” above their 2017 assessed values thanks to the efforts of the majority owners. Milman also states that the minority owners were as well informed as well as they could be given that the majority owners were not able to disclose all the details of the of the sale agreement due to confidentiality clauses.

With the application to wind down the strata approved, the minority owners will now be forced to move out and find other housing.

This is not an uncommon experience for many owners in Vancouver and the GVRD. Under Bill 40, many developers have used this method of buying units one by one until they hold majority. They can then successfully wind down a strata as soon as they obtain 80% of the ownership. While many owners are able to negotiate higher sale prices for their units going this route, for owners wishing to stay, this does little to incentivize them.

While the two minority owners at Barclay Terrace received sale prices well above their assessed values, this will not be case for all owners. In East Vancouver, owners on the strip along Broadway between Nanaimo and Rupert are being promised millions of dollars above their assessed value if they sell their homes as part of a land assembly. Realtors are projecting that some owners could receive $2 million more than what their land is worth by marketing the lots to foreign developers unfamiliar with Vancouver’s zoning bylaws.

The problem with this particular example is that the area is zoned for affordable rental housing or ownership condominiums priced 20% below current market value. Homes like the ones along the Broadway strip in Vancouver’s East Side are being assessed for around $1.5 million dollars. However, they are being listed at prices that would otherwise be found in affluent areas of Vancouver’s West Side where the assessments are almost $2 million more.

It would be impossible to build affordable housing for those prices. The only way a developer could benefit from purchasing these lots is if they are able to hold onto the land after purchase in anticipation of zoning changes which are not guaranteed to take place. The realtors and owners are relying on the ignorance of foreign investors to be successful in their pursuit of a successful land assembly, directly contributing to Vancouver’s housing crisis. For the owners along Broadway, they are holding out for prices that they are unlikely to receive.

To read more about these two case, you can check out Stephanie Ip’s article in The Province and Jill Slattery’s article on Global News.

Here is a useful graphic that shows the steps of a strata wind up. As well, the Province of BC also has a great resource about strata termination for those considering this here.

Construction Costs Increase Due To BC Fires

British Columbia is a leader in providing quality wood exports to destinations around the world. In 2013, BC exported $5.8 billion worth of softwood lumber, pulp and other products with the US and China accounting for 75% of the export. Nonetheless,  BC’s forestry industry is under raging fires and building and construction costs are being heavily impacted with increases of 10-40%.

While BC is not unaccustomed to wild fires spreading across the province, the problem with the 2017 fires is where they are located. Of the 5,000 square kilometers burned, over 70% is situated in the Cariboo region. Six of eight large wood producers have been shut down, either due to impending fire threats, or because their log supply has been cut off. The result is that there is simply not enough wood to go around.

In the last year, the cost of lumber has already increased by 30% due to home building in Canada and the US gearing up, and a lack of skilled labour. But in the last few weeks, there has been another 10% increase on lumber and up to 40% increase on sheeting material such as plywood and oriented strand board. Lead times which were previously three to five weeks are now unknown. For BC’s wood mills, these existing problems are being exacerbated  by Mother Nature.

Normac stays up to date on current constructions costs by monitoring Statistics Canada and other local guides for any fluctuations. This way, we can adjust our Insurance Appraisals regularly to ensure accuracy so our clients’ assets are always sufficiently covered. Our research has shown that current costs are 6 – 7% higher than last year. While these changes are primarily due to increased demand for labour and materials from, the ongoing fires and lack of rain could cause construction costs to climb even higher.

To learn more about rising construction costs, read this article in the Vancouver Sun written by Andrew A Duffy.

At Normac, we are confident that our costs accurately reflect the current state of the construction market. We also believe that the recent changes underscore the importance of always having a current appraisal for every property. If you are interested in receiving a no obligation Insurance Appraisal quotation, please fill out Normac’s contact form here.

BC Introduces Civil Resolution Tribunal

BC is leading the country with Canada’s first online legal platform for settling strata disputes. Introduced in the summer of 2016, the Civil Resolution Tribunal (CRT) is an innovative and efficient service to resolve issues relating to strata fees and fines, enforcement of bylaws, unfair actions, and any other strata owner problems. More than 3500 individuals have used the CRT’s Solution Explorer, over 200 claims have been submitted, and 23 resolved to date. Due to its success, the Civil Resolution Tribunal will also start taking on small claims, totaling $5,000 or less, as of June 1, 2017 – a highly anticipated addition to the BC judicial system

In the Civil Resolution Tribunal Act, section 48.1, the CRT may resolve to make one or more of the following actions:

  1. order a party to do something;
  2. order a party to refrain from doing something;
  3. order a party to pay money

In practice, the Civil Resolutions Tribunal resolves issues ranging from enforcing the repayment of debts, barring owners from breaching bylaws, and holding strata councils accountable to their bylaw obligations. Once a dispute is brought to the CRT, the actions of the involved parties are legal and binding.

In the case of The Owners, Strata Plan NW 1512 v. Yang, the strata council was seeking repayment for repair expenses to an owner’s balcony. In this case, the Civil Resolution Tribunal made a default order in the strata’s favour due to the owner’s lack of response to the Dispute Notice within the required two weeks of its receipt. Therefore, a decision was reached without the participation, or defense of the owner, to repay incurred fees, including the tribunal fees.

Similarly, in the case of James MacArthur v. The Owners, Strata Plan K588, the Civil Resolutions Tribunal applied a default decision ordering the strata to issue a $100,000 special levy, payable by all owners, to fund necessary building foundation repairs. The CRT determined that the strata had failed to meet its statutory and bylaw duties to repair and maintain the common property.

The latter case is unique in that a strata owner was able to seek action where the strata was collectively failing to meet its requirements, but also because the value being sought exceeded $35,000, the maximum allowable in the BC Small Claims Court.

The platform works similarly to a small claims court, but is accessible online, 24 hours a day, from any electronic device including mobile. It enables individuals and strata corporations to seek mediation, legal advice and action without having to go to court, incur costly fees, and waste precious time.

For more information on the Civil Rights Tribunal, you can review their website here.

On May 17th, Normac is sponsoring a seminar in collaboration with PAMA, the Professional Association of Managing Agents to aid Property Managers in understanding the CRT, how to leverage its services and review previous CRT decisions.


Bill 40 Making Strata Windup Easier and More Controversial

Bill 40 Infographic

Recently, we shared information on selling a strata corporation following the introduction of Bill 40 (read about it here).  Bill 40 made it easier for strata owners to sell their complex when it has reached the end of its life cycle, but new evidence is uncovering some unanticipated consequences as well as new market opportunities.

Since the implementation, the amount of unit assembly efforts has increased significantly. This refers to selling off units in a building, owner by owner rather than as a group, to a developer who can then seek a windup under Bill 40. While the expectation was for strata owners to act cohesively under the changes, they are being counselled instead to act independently.

Some real estate brokers have begun to market unit assemblies across the Lower Mainland, and are prospecting strata corporations who could benefit from this type of windup. Those firms bear the brunt of the initial costs, including legal fees, property evaluations, etc.

The benefits for owners wanting to sell are two-fold; they avoid paying legal fees from going to court and they can negotiate their own selling price rather than being grouped in to sell as a collective.

For owners not wanting to sell, the Bill now means that they can more easily be challenged at the Supreme Court level once 80% of the strata is owned by a developer. While it may take years to settle as the developer must wait until they own the 80% majority, the developer has the means to endure the legal process. At the tail end, these owners may not get top dollar for their homes as the pressure, or requirement, to sell is imminent.

Other real estate agents and developers are avoiding this route altogether, explaining that they don’t want the bad press. “[The Developers] don’t need to have their names dragged through the mud with accusations that they are throwing people out of their homes,” says Jim Szabo vice-chairman of CBRE’s investment properties group.

A unit assembly sale could result in strata corporation bankruptcy or fractures, and internal and legal disputes. As there is no legislation yet on how to deal with this new law, strata owners should observe caution before embarking on this kind of windup.

Read more from the two part series in Business in Vancouver, by Glen Korstrom, here and here.

For more information or for a no-obligation insurance appraisal proposal, email us at info@normac.ca or call us toll-free at 1.888.887.0002.

Image Source: Business in Vancouver, March 21, 2017, https://www.biv.com/article/2017/3/tale-two-ways-sell-condo-complex/