What Happens if Your Entire Building Considers Selling Together?
With land in Vancouver at a premium, new community plans allowing for and a high demand for all types of housing, Strata Assembly sales have become more common.
A Strata Assembly sale is when the owners of a building sell to a Developer, who will likely tear the building down to build something bigger. As you can imagine, this process has only occurred with older buildings and more importantly, buildings that are sitting on land that would allow for a much bigger building.
A couple key things to know about Strata Assembly sales:
- Owners make more than the market value of their home. Why? Because no one would agree to sell if they didn’t! The amount of money that each owner can make depends on what kind of building can be built on the lot. A future condo that can be sold off is worth more than a future rental building, and the ability to build 25 stories will net owners more than the ability to build 10 stories.
- A typical Strata Assembly requires three official votes from the Owners. The first vote is asking the owners if they are willing to pursue the possibility of selling, by hiring a Commercial Agent. This requires 75% of the owners to approve. The second vote occurs when an offer is received, negotiated and ready to be voted on to accept or not. This requires 80% of the owners to approve. The third vote is once the offer to purchase is official, and officially asks the owners to dissolve the strata. This requires 80% of the owners to approve.
- Developers typically submit offers with month to two month long due diligence periods to allow them to do research with regards to their financing, zoning, potential builds, environmental assessments, etc.
- The requirement that only 80% of owners need to agree to accept an offer was lowered from 100% a few years ago. This means that there are some owners in the building who may vote “No” to selling, but are still required to do so if more than 80% of owners agree to sell.
- The entire process takes a long time, easily 6 months to a year, if not longer.
- Owners typically have quite a few months before they have to move out, giving each owner a long time to plan their next move. These terms are negotiated along with price, and will form part of the accepted offer.
- There is a lot more to know about potential Strata Assemblies. Each situation is different depending on the area, zoning, owner interest and what offers are received (if any).
- Strata’s need to hire a professional Commercial Agent to ensure their interested are protected, to ensure it’s sold at it’s highest market value, and to ensure the process is handled properly. Not only has our team handled small Strata and Land Assemblies, but we work with a great team of Commercial Agents to handle the large projects. Contact me (778-387-7371 or [email protected]) if you need a referral to an agent to handle the potential sale or if you’re interested in purchasing a unit in a building that is considering a Strata Assembly sale.
