Condo Smarts: Stratum Type Conversion Can Raise A Slew of Sensitive Issues

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Dear Tony:

Our strata corporation has an unusual layout of 28 freestanding houses and was created as a townhouse complex. The exteriors of our buildings are courtyards and all are common property, requiring the strata corporation to repair and maintain them as a common expense. Our insurance is also a common expense.

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We have been discussing the possibility of converting to bare land strata so that each homeowner is responsible for their own homes, including insurance. We have been reading the Law but we did not find anything about conversions.

Is this a simple amendment to the strata plan that homeowners can vote on?

—Marguerite S., Cranbrook

Dear Marguerite:

Your strata corporation design is common throughout British Columbia. Many strata corporations are not bare-land strata plans, which is for several reasons.

The most common is density, zoning, and setbacks approved by the local approval officer or municipality when the project was submitted.

If your strata corporation is interested in turning your strata plan into bare ground, you will need an attorney who is familiar with Strata Property Law and the development of a strata corporation.

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Property and titles cannot simply be turned into bare land. Before beginning this process, your attorney will submit an application and proposal to the local approval officer to determine if this option will even be considered. Without the approval of the regional district or local municipality, there is no point in moving forward.

If they are considering the potential “conversion,” the next step will be for the attorney to strategize the steps, meetings, and votes of the owners necessary to liquidate the current strata corporation and create a new strata corporation. This will require the approval of the Superintendent of Real Estate and the Registrar of Land Titles. A notice should also be issued to all interest holders on each security, such as mortgage providers, as the changes will affect individual mortgages, appraisals, and appraised values.

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If the owners can successfully navigate through the different levels of approval, approach the creation of a new strata corporation as a bare land stratum, and vote on all the resolutions necessary to liquidate the corporation and create the new strata plan, it is There may be a fighting opportunity to reach your goal as a conversion.

Expect the costs to be substantial, as individual titles for each batch of strata will be reissued, there will be several special general meetings to address owner approvals, and the legal fees to administer the process will be substantial.

To be successful, if all parties and owners agree, I would recommend a budget of at least $ 7,000 to $ 10,000 per unit and for a period of one to three years.

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If you start the process, get a written assessment from your attorney of anticipated costs to consider worst-case conversion.

I have yet to see a strata corporation successfully manage a conversion from a semi-detached house stratum to bare ground with the current owners maintaining occupancy as the time frames and costs are significant.

Remember, this type of change will affect homeowners and how their properties are valued, how utilities and services are provided, easements, financing requirements, tax assessments, and insurance obligations.

Due to dynamic changes in insurance costs and deductible liability, we have had many inquiries about converting building townhome developments to bare land strata corporations. The change may not lead to better group insurance costs, and your strata corporation may find that it has spent significant finds on the process without any success.

Use your funds wisely. Work with your insurance brokers to determine the best method of addressing your risks and the steps your community can take to manage your property to reduce costs.

Tony Gioventu is Executive Director of the Condominium Owners Association. Send an email to [email protected].