Vancouver investors mimic U.S. condo takeover schemes

By Deborah Goonan, Independent American Communities

 

Some of my readers own property in both the U.S. and Canada. A few months ago I wrote an article about worldwide trends toward condo termination and hostile takeovers.

https://independentamericancommunities.com/2015/11/01/condo-strata-termination-trend-goes-worldwide/

In that article, I explained what happened in Florida after legislative amendments in 2007, and I also wrote about B.C., Canada:

In British Columbia, a proposed change to the Strata Property Act would allow an 80% membership vote to terminate a condo (strata) association, rather than requiring unanimous consent from all members. However, in addition to meeting the required vote threshold, the termination process would require a court order. Requiring court approval is intended to give dissenting owners a chance to present their concerns, and to better ensure all members receive fair market value for their property.

At the time, I also warned readers:

Property owner groups around the world should pay close attention to legislative proposals that remove property rights of owners, especially when they are written for the advantage of influential and wealthy land developers and the entities that finance them.

I’m sorry to say that B.C. passed the amendment to its Strata Property Act, as specified above. Now, less than one year later, I read in The Globe and Mail that condo owners in older housing structures are now involved in a David vs. Goliath game over their homes.

Wealthy real estate investors are all too eager to acquire condo units in prime locations, for the sole purpose of forcing out remaining owners and redeveloping more condo units at much higher sale prices.

And those investors are using the exact same play book as their U.S. counterparts. Intimidation. Leasing to inconsiderate or even criminal tenants. Taking over condo boards and demanding large special assessments. Legal threats. Making low-ball offers to buy out condo owners.

West End Vancouver condo owners say they’ve been harassed to sell

Residents in the West End, many of them elderly, say that some unscrupulous property investors are harassing them in an attempt to get them to sell their strata condos.

In some of Vancouver’s overheated residential areas, owners of strata properties are under tremendous pressure to sell. One homeowners’ group says that has led to bad behaviour by a small number of developers and real estate companies to force strata owners out of their buildings.

Tony Gioventu, executive director for the Condominium Home Owners Association of BC, has been advising condo owners who say they are being harassed. He says the bullying tactics started around the time the province made changes to the Strata Property Act with Bill 40, removing the requirement that all owners agree to liquidate in order to sell a building. Now, only 80 per cent of strata owners need to agree in order to start the process. That legislative change has opened the door to investors with underhanded tactics, he says. Elderly residents living on low incomes are the easiest targets. One tactic, Mr. Gioventu says, is to buy up units to obtain majority power and then try to use them as rentals. They will suggest to the minority group of owners that the new tenants may be difficult or even unsavoury.

“I’m hearing of everything from physical threats to verbal threats and harassment to threats from lawyers, and third-party agents – all kinds of aggression and attacks being targeted at the senior community and remaining owners, trying to force them out at lower-than-reasonable prices. This is the side of industry that is really appalling,” Mr. Gioventu says, stressing this is not behaviour typical of the development industry – it is something new.

Read more:

http://www.theglobeandmail.com/real-estate/vancouver/west-end-vancouver-condo-owners-say-theyve-been-harassed-to-sell/article31933562/

The only difference I see between what’s been going on in the U.S. and our neighbors in Canada, is that B.C. offers new access to the legal system through their “new Civil Resolution Tribunal, where they can represent themselves,” according to Attorney Oscar Miklos. “It is like a small claims court for strata property owners, but it will also handle block-busting tactics and failure to follow strata bylaws, such as pushing for rentals when the bylaw says none is allowed.”

I wrote about this new Tribunal last October:

https://independentamericancommunities.com/2015/10/13/british-columbia-to-begin-internet-access-to-condo-strata-dispute-resolution/

And you can visit the CRT site directly here: http://www.civilresolutionbc.ca/

It looks like the new system will be put to the test. While it may not stave off a forced sale for condo owners, it remains to be seen whether the Tribunal will assist Vancouver homeowners in getting a fair price for their buyout offer.

Let’s watch and see what happens. If the B.C. Civil Resolution Tribunal provides favorable outcomes for condo owners, perhaps the U.S. can copy the model and provide greater access to the legal system for American condo owners?

 


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