Owners in a 58-unit condominium development are petitioning the British Columbia Supreme Court (BCSC) to dissolve their Coquitlam strata corporation so it can be sold to Anthem Properties Group Ltd. for $32 million even though nine owners oppose the sale.
This is the second time that a strata corporation has petitioned BCSC to allow it to dissolve since Bill 40 became law on July 29, 2016.
The law reduces to 80% from 100% the threshold needed for a strata corporation to vote to dissolve. Courts still need to approve any vote that is not unanimous.
Courts historically could agree to consider winding up a strata corporation when a vote of owners was not unanimous, but it has been extremely rare for a court to agree to such a windup.
Business in Vancouver last month reported on the first strata corporation to make a court application under Bill 40. That case, which involves the Twelve Oaks property at the corner of West 12th Avenue and Oak Street, has yet to be heard in court. Its tentative court date has been set for February 20.
At both Twelve Oaks and the Brandywine property at 585 Austin Avenue in Coquitlam, owners in the strata corporations are faced with significant maintenance and repair costs. Twelve Oaks was built in 1973; Brandywine was built in phases starting in 1976.
In both cases, an owners' vote was overwhelming but not unanimous in favour of dissolving the strata corporation.
At Twelve Oaks, 93.33% of the owners of 30 strata units voted for the wind-up; at Brandywine, 84.5% of the owners of 58 strata lots voted to wind up the strata corporation.
The Brandywine petition stressed that realtors at CBRE shopped around the development to ensure that the complex attracted the highest bid possible – something that the courts are expected to consider important when deciding whether the sale is in the best interest of the owners who do not want to sell.
“Following an extensive marketing campaign by its real estate broker and a competitive bidding process that resulted four initial offers and two further offers, the owners received an offer to purchase their strata lots that significantly exceeds the market value,” noted the Brandywine petition, which was filed on February 10.
Anthem first made an offer in December, 2015, and then revised its offer in several agreements in 2016.
Anthem’s final offer allows owners to stay in their homes for six months rent free so they have time to consider their next move. That is another thing that the courts are expected to find important when determining whether the sale is not “significantly unfair” to owners who do not want to sell.
The petition noted that repairing and maintaining the common property of a condominium complex is an “essential and fundamental” statutory obligation of strata corporations under B.C.’s Strata Property Act.
That means that no strata corporation can legally vote against repairing something essential in a condominium complex, such as an elevator.
“A decision not to confirm the 80% vote resolution to wind up the strata corporation and cancel the strata plan would leave the owners obligated to incur significant costs to repair and maintain the Brandywine complex, and it is uncertain as to where the funds to pay for these significant costs will come from, given the limited funds currently held in the strata corporation’s bank accounts and the imminent nature of many of the repairs,” the petition noted.
It added that if the strata corporation were to impose high special levies against all of the owners to pay for the repairs, some owners might not be able to pay for those levies and could be forced, via foreclosure, to sell their homes.
Longtime Brandywine resident Patricia Depodesta told Business in Vancouver that she is happy that her strata corporation voted overwhelmingly to wind up because she feared high special assessments. She added that Anthem’s offer is a significant premium on her suite’s assessed value.