Understanding the Bill 40 Strata Wind Up or Strata Assembly Wind Up Processes:
Which Option is Right for Your Strata and Ownership Group?
Strata corporations and strata councils are often faced with a few scenarios when it comes to the future of their buildings. First, Stratas often face pending repairs or larger capital cost upgrades that create speculation amongst owners as to whether the building should be sold. Other Stratas face the surprise of receiving an unsolicited offer for the whole building or select units, and this leads to more questions and intrigue. These two scenarios pose questions that often circle around the issues of new OCP/NCP announcements, whether another offer could be better, or maybe we should simply repair the building and accept the special assessments proposed in our Depreciation Report or Engineering Report. More questions surface in owner and strata council discussions about land value, municipal development taxes, the dissolution of strata, the cost and timeline of dissolving the strata and the sale of land for redevelopment. There are several factors to consider and speaking to well experienced commercial real estate brokers in the specialty of land assembly and strata windups is an excellent start. Remember that a lot of misinformation exists and getting the right advice from the start of the process will help you make the correct decision and avoid well documented risks and significant costs to owners and the strata.
You have options, but here are some questions that you need to ask:
When considering the Bill 40 strata windup or strata assembly of land – when should we consider a strata dissolution if the special assessment costs per owner are very high? What have other stratas, who have been successful in the process, achieved?
Is there any liability for strata councils to start or engage in a dissolution process? What are the costs? What is the timeline? What else could go wrong? What does success look like?
What are the steps a strata and/or a strata council should take to assist owners in the process? How does the brokerage help with communication and project management?
How many different types of processes are there? What are the alternatives?
What is the valuation of the assembled land – how will other neighboring parcels negatively affect or positively affect our land value?
Is the timing of the sale important?
How can the brokerage help manage all the stakeholders involved in the assembly: city planning, city council, neighbours, developers, organized ownership group, school boards, etc.
Who are the people that can affect the outcome of a land assembly?
There are two methods to dissolve or sell stratas that should be used in differing circumstances.
Ask us which one may be right for your building.
Strata Dissolution under Bill 40 provision
Strata votes to dissolve strata.
A court process is required.
The sale includes standard terms for all owners.
Typical timeline to complete can vary significantly depending on complexity and whether there is any “in-fighting” that can push timelines and increase legal costs 12-25 (36) months.
Establishment of sale price through an accepted offer can be 9-20 months before closing, lessening real value to owners.
Owners take the risk of market changes.
Long timeline between accepting and closing.
Strata owners are responsible for all costs to dissolution but can be recovered from a developer, but not guaranteed.
Group Assembly
No upfront costs for appraisal and legal costs through court proceedings
Decisions made on consensus and individual owners agreement for their units
Good method for sale when all owners not in alignment
No dissolving of strata required, developer takes over strata and dissolves later.
No court proceedings required.
Customizable terms for each owner based on expectation brokerage sets with successful developer: (rent back options, buy back options, closing dates, allocation for improvements, etc.)
Imagine trying to assemble different parcels of land into one piece - it's kind of like snapping building blocks. Except that we are talking about something people deeply value and cherish - their land. Due to their very nature, land assemblies require long timeframes to complete and can be very time-consuming. Often it is not […]
How To Maximize Value in a Land Assembly Land assemblies involve the selling of unique properties in a single transaction to maximize value in a situation that would otherwise not happen. They require longer time frames to complete and are very complex - mostly this is due to the alignment of ownership expectations and sourcing […]
A Guide to Land Assembly in Vancouver As one of the most popular and densely populated cities in Canada, Vancouver is continuously experiencing growth and expansion. This growth has led to an increase in demand for land, leading to land assembly becoming a popular method for developers to acquire large plots of land in the […]
Western Investor - Chilliwack 2.4-acre industrial site sells for $5.5 million
July 23, 2021
Considered a record per-acre price for Chilliwack industrial, the site is zoned for service industrial on Progress Way. Property: Industrial Location: 44394 Progress Way, Chilliwack Size of property: 6,700 square feet (2 buildings) Size of land: 2.5 acres Zoning: M-I Industrial Sale price: $5.5 million Date of sale: March 31, 2021 Brokerage: Klein Group – […]
