If disclosure was misleading, claim might be worth it
Tony Gioventu
Province
Dear Condo Smarts:
We recently bought an apartment in a 55-year-old building that was converted from a rental building to a strata-titled building. Within three months of moving in, all the new owners are facing a new roof, new boiler and likely major plumbing upgrades.
We have to admit we didn’t insist on any probing inspections of the building systems. However, we were under the impression that the owner of the building had to provide us with disclosure of any conditions in the building that may be of a major expense or risk to our investment.
Our real estate agent advised that there were no problems disclosed with the building so we went ahead with the sale. Now that we’re facing all of these accumulated costs, is there any way we can go back to the original building owner to recover some of our losses ?
— TM, Fraser Valley
Dear TM: A conversion of property from one-titled to divided-strata-titled property is basically the same as creating a new strata.
For the purpose of marketing, the owner of the building creates a disclosure statement defining the property that is being created and sold. This covers what is being included with the property and the strata lots and a projected budget for the first year of operating as a strata. In most cases, the owner also includes a conditional disclosure of the age of the building and the building systems.
If you read the disclosure, you’re likely going to discover the owner has disclosed the building is 55 years old and that many of the building components are also in the same age category. If the disclosure was misleading, your strata may have a reasonable claim.
Before anyone buys a conversion they need to insist on building inspections, maintenance records and renewal schedules of roofing, exterior cladding and windows, plumbing and heating systems, electrical and gas services, elevator servicing, etc.
There is also another type of strata about to hit the market that buyers need to be aware of.
When the Homeowner Protection Act came into effect in 1999, there was a prescription that required new strata-titled property to have mandatory warranty coverage for two, five and 10 years.
However, there is an exemption that buyers need to be aware of. A development that was intended and used solely for rental purposes by the owner/developer could be exempt from warranty provided suites were not sold or marketed for a period of 10 years.
The first of these such exempted buildings will be coming on the market in the next year and may have the same type of building-condition risks relating to maintenance and operational problems.
Like any other piece of multi- family real estate, their value is only as good as their original construction and maintenance and renewal programs.
Before you buy, engage a qualified building technician or engineer to review the complete building system. Remember, as a strata owner you not only purchased your unit, you also purchased the share of risks of all the common property.
For more information on strata operations, you can attend a one-day seminar April 12 at UBC Robson Square. Contact Deanna Ferguson at 604-515-9672.
Tony Gioventu is executive director of the Condominium Home Owners Association.
E-mail him at [email protected]
