Contract of Purchase & Sale for Strata’s
Buying into a strata whether it is 4 suites or 500 you must have many subjects and protective clauses in your contract of purchase of sale.
The most important one is the Special Levy / Special Assessment Clause.
Here is the long version of the Special Levy Clause:
” The Seller[s] will pay, on or before Completion Date any Special Assessment levied prior to the Completion Date, including Assessments which are levied but not due until after the Completion Date. If a Special Assessment has been proposed but not passed by the Strata Corporation before the Completion Date, the Buyer[s] may hold back in the Buyer[s] lawyer or notary trust account, the amount of the proposed Assessment and either pay said amount to the Strata Corporation or, if the proposed Special Assessment is defeated, pay said amount to theSeller[s].”
What does this mean?
It means, that anything approved by strata before your closing date (before you own the property), the seller will have to pay it or the money will be held back by your lawyer or it may even come off as a credit on the statement of adjustments in essence lowering your purchase price. Even if the work to be carried out on the building is not happening for 60 days, 1 year or 2 years. If approved by strata before you are the owner this is the sellers responsibility.
Why is this important to you?
The easiest explanation is that it protects you. What if you closed on your property and the Annual General Meeting (AGM) is a month after closing? During this AGM they decide to re-pipe the building and the cost to your suite is $10,000. You just moved in, paid for inspectors, paid lawyers, movers, down payment, taxes (PTT) and also your mortgage! The last thing you need is another cost – and especially a surprise one.
Now, what if the AGM is a month after you buy your home? How do you protect yourself from a special levy when the meeting does not happen until after you own the home?
– Close on the home after the AGM; Unless you have to close before you can always close after the AGM. However, this is easier said then done depending on each situation.
– Read the Notice of AGM; There will be a notice to AGM that goes out weeks before the AGM. MAKE SURE you read this as it will indicate what will be voted on. If you find items in here that could be voted in and will incur costs for you make sure your lawyer holds back funds in order to pay for these should they be voted in.
It is shocking how many Vancouver Realtors do not use this clause when sending in contracts. Make sure you have an agent who is experienced in contracts or you could find yourself in a very tough situation. In the last few years with all the competing offers Real Estate Agents have been leaving this clause out way too much. This has left many buyers vulnerable to big and unexpected expenses. Do not let this happen to you!
When meeting/interviewing Real Estate Agents ask to review a contract in advance to see what type of protection you will receive. The contract is your lifeline and you should be protected from every possible angle.
If you would like to see a complete list of clauses, subjects and anything else involved in a contract of purchase and sale feel free to contact Leo at [email protected] or (604) 729-5203 and I will be happy to go over on in detail.