Strata Corporations and Councils are often faced with the surprise of receiving offers from developers for the whole building or select units, and this leads to questions. These questions often range around the issue about new OCP/NCP announcements, or special assessments that lead to other discussions about land value, the dissolution of strata and the sale of land. There are several factors to consider and speaking to a commercial real estate broker that specializes in the land assembly would be a good start. Now, remember that a lot of misinformation that exists and getting the right advice from the start of the process will help you make the correct decision.
You have options, but here are some questions that you need to ask:
- When considering the assembling of land – should we consider a strata dissolution if the special assessment costs per owner are very high?
- Is there any liability for strata councils to start or engage in a dissolution process?
- What are the steps a strata and/or a strata council should take to assist owners in the process?
- 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 increase 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.)
