Land assembly is a common phenomenon in BC, historically involving a group of single family homeowners bundling the sale of their properties to a developer. For developers these assemblies allow them access to a sizable lot for high density re-development. Recently, as many older strata buildings reach the end of their life cycles and face substantial upkeep costs, selling the site for redevelopment has become appealing. The motivation is compounded in areas targeted for high-density development where local developers are eager to obtain land.
There are two common ways which a strata corporation can sell:
The first option is for owners to group together to sell chunks of buildings in a method known as a unit assembly. This practice can be less desirable to a purchaser, as it does not guarantee all owners will eventually sell.
Alternatively, a strata corporation could choose to dissolve and sell the entire site to a developer. On July 2, 2016, new amendments to the Strata Property Act came in to affect. Bill 40 was introduced, which made it easier for owners to dissolve or “wind up” a strata corporation. As a result of this new amendment, the voting threshold requirement was reduced from unanimous approval of all strata lot owners to 80% approval.
In December 2016, owners of a Lower Mainland strata became the first in British Columbia to successfully vote to dissolve and sell their building to a developer under Bill 40. Since then, several strata corporations have also successfully voted to dissolve and proceed with selling their entire site and many others are following suit.
The process of dissolving can take 18-24 months. There are many variables in the process. It is strongly recommended by the Government of BC that a Strata Corporation that is considering termination, seek independent professional and legal advice well in advance of a vote to wind up (terminate) and/or sell using other methods. There are many steps in the process and not all of these are referenced in the strata legislation.
Strata corporations and developers should also work in consultation with their insurance brokers throughout the process. Strata corporations need to be aware of the coverage transitions required throughout the dissolution process. Most importantly, the broker will discuss the continuing liability requirements of the strata corporation after dissolving. Your broker will work with you to ensure continued protection and will assist the strata corporation with preparing for these necessary insurance costs. Developers will also need to be aware of the liability implications of their purchase and work with an experienced broker to address their unique and specific needs.