In December 2019, Klein Group Royal lePage Commercial successfully brokered and completed the sale of an independently owned, 33 unit strata building in 100 Mile House BC. 100% of the building interest was sold as a rental building to BC Housing Corporation.
The strata council of Sheridan Manor (KAS 2033) in 2017, was originally given the task from its owners to determine the best method of sale, market valuation, and brokerage representation. Proposals from three independent brokerages, with substantial strata sales experience were reviewed. Each brokerage was asked to submit their valuation, marketing strategy and experience profile. Once short listed, each brokerage answered a series of in-depth questions, followed by an interview. Klein Group Royal lePage Commercial was proud to be awarded the exclusive representation of the strata.
After a few members of the strata council, acting as individual owners, completed an independent legal review of the listing agreement, 32 of 33 owners signed the listing agreement to place their properties on the market, representing 97% of the building. The opportunity was fully marketed, both in Canada and internationally, as a cash flow investment opportunity. Three offers were received on the property all with a limiting condition to purchase 100% of the units.
Given the market changes in 2018, investors and institutional buyers had the ability to be very specific in their buying choices. Buyers were not prepared to buy strata offerings with anything less than 100% interest in the building, thereby simplifying the purchase, reducing risk and avoiding any court process or legal costs. These potential buyers were not prepared to wait the 12 to 18 months required for the Bill 40 court process to potentially complete a strata wind up, even if the strata council was prepared to front the legal and court costs of application.
Under suggestion of Klein Group, Royal LePage Commercial, the strata council initiated a Bill 40 strata wind up. The strata council hoped that this action would align all owners to sell, and that the vast majority of unit owners were fully committed to proceed forward with the sale under the laws of the Strata Property Acy of British Columbia (BC).
Klein Group, Royal LePage Commercial referred a number of potential law firms, specializing in strata representation, including Clarke Wilson LLP which was ultimately selected. Clarke Wilson drafted the necessary strata resolutions and formal notice for the SGM. Owners voted in favor of the associated upfront and ongoing legal costs, the selection of the commercial brokerage: Klein Group, Royal LePage Commercial, and proceeding forward with a Bill 40 strata sale of their building.
With much effort and personal attention from the strata leadership and the brokerage, we were able to gain the support of the last unit in the building. Almost immediately a strong institutional buyer came forward and after several rounds of negotiations an accepted offer was reached. 100% of the units were individually contracted and thus the full process of the Bill 40 strata wind up, was not necessary.
There were no further legal fees, appraisals, liquidator, environmental assessments, court fees, court application fees or court timelines to worry about. Klein Group, Royal LePage Commercial was also able to negotiate a substantial portion of the Contingency Reserve Fund paid out to the individual owners, in addition to the purchase price, which is not typical within a voluntary 100% strata assembly sale.
Klein Group, Royal LePage Commercial was successful in achieving maximum price and minimizing costs for our clients. The sale process began as a strata assembly, was strategically converted to a Bill 40 strata wind up at the midway mark and, given market conditions, ultimately concluded by a 100% individual-unit strata assembly sale - thereby avoiding the full set of court costs, court timelines and many of the upfront costs that the strata/owners would normally face. We were please to fully maximize our clients’ returns.