LEASEHOLD STRATA PARKING AND STORAGE

January 23rd, 2015

Other

Strata developers often use long-term leases to generate revenue from the sale of leasehold interests in parking stalls and storage lockers. A recent case1 reminds licensees about the importance of the lease documentation.2

In a lease over land, recall that the tenant acquires exclusive possession for the term of the lease. Sometimes, in the early stages of a development, the developer will lease the intended parking or storage areas to an associated corporation for a lengthy term (e.g., 99 years). Later, the developer will designate those areas as common property in the strata plan.

When the developer eventually files the strata plan, the common property parking stalls and lockers are subject to the prior long-term lease. If a first purchaser wants to use a stall or locker, the purchaser pays extra. In exchange, the developer causes the associated corporation to partially assign or sub-lease that stall or locker to the first purchaser.

In Christian v. Calvano, the complex contained parking stalls as well as two-car garages and storage lockers. Before filing its strata plan, the developer — as the landlord — entered a long-term lease with an associated corporation — as the tenant — for all of the parking stalls, garages and lockers. After registering the lease at the Land Title Office, the developer later deposited its strata plan.

When the seller, Mr. Calvano, bought his strata lot from the developer, he also acquired a partial assignment of the long-term lease from the long-term tenant for the use of parking stall 30 and a locker. Later that year, needing more space, Mr. Calvano paid a further $60,000 for a partial assignment of the long-term lease for the use of Garage 3.

In early 2011, the seller listed his strata lot for sale, including his leasehold interest in parking stall 30, the locker and the garage respectively. When the property did not sell, he reduced the price and excluded from the listing his leasehold interest in the garage. Apparently, he asked the listing licensee to say that the garage lease was available for an additional $65,000.

In October 2011, the seller entered a Contract of Purchase and Sale to sell his strata lot to the buyer with an assignment of the seller’s respective leasehold interests in parking stall 30 and the locker. The contract did not expressly deal with the garage. Despite some negotiation, there was no agreement to assign the seller’s leasehold interest in Garage 3 to the buyer.

Shortly after completion, the strata corporation notified the buyer that her purchase included the leasehold interest in the garage. When the seller disagreed, the buyer sued to confirm her leasehold interest in the garage.

In Christian, the lease documentation was critical. It provided, in effect, that an owner is only entitled to further assign their leasehold parking or locker rights so long as the owner owns a strata lot. Should the owner sell the strata lot without assigning their leasehold parking or storage interest to another owner or purchaser, the lease would deem that leasehold interest would be automatically assigned to the purchaser. Since the parties’ contract did not include the seller’s leasehold interest in Garage 3, the court confirmed that it was automatically assigned to the buyer.

These long-term parking and storage leases are seldom registered. If the seller does not have the relevant documentation on hand, the Real Estate Council of British Columbia suggests asking the seller to check for information about the lease in the contract by which the seller bought the strata lot. Alternatively, a licensee may inquire with the Superintendent of Real Estate. If the developer filed a disclosure statement, it should disclose the lease. If there is still confusion, the seller should seek legal advice.3

Often, a long-term parking or locker lease will require the long-term tenant to own a strata lot in the complex. Upon selling the strata lot, if the owner fails to transfer their leasehold parking or storage rights to the buyer, the lease usually deems that leasehold interest to be assigned to the buyer anyway.

Copyright ©2015 BCREA

Craigslist rental scam: Vancouver real estate agents warn about impersonators

January 23rd, 2015

B.C. rental scam victim recognizes suspect from citizen’s arrest

Natalie Clancy
Other

The Real Estate Council of B.C. wants agents to use caution before handing over the keys to properties being viewed, after half a dozen condos were used to steal hundreds of thousands of dollars from potential renters.

A CBC investigation into the elaborate scheme has led several victims to come forward, including one B.C. woman who says she recognizes the suspect captured in video from a citizen’s arrest as the same person who allegedly duped her as part of an elaborate Craigslist rental scam. 

“I think it’s the same man, the same stature, same magpie hat, straight teeth,” said Sandy Irving.  

Linda Tran and her roommates took video of the man who showed them the rental (left). On the right, is a screen capture of the man who showed the Shaw Tower condo. (CBC)

Irving said she saw the Coal Harbour apartment several times and that the fake landlord impersonated a real estate agent. She also said he used photos from a legitimate listing for the sale of the condo. When she realized she has been duped, Irving filed a complaint against the condo’s actual listing agents with the Real Estate Council. 

Larry Buttress, deputy executive officer for the Real Estate Council of B.C., is concerned that real estate agents might be tricked into letting fraudsters show their properties. 

“They need to be aware that these kinds of fraud are taking place” and should call the police if they believe their condo listings are being used in a scam, he said.

Typically, real estate agents attend showings for properties they have listed in person. They’re also required to make sure that any other real estate agent who is showing their property is properly licensed before they leave the keys with them or a doorman.

However, Irving said the council found no evidence of wrongdoing on the part of the two agents who had set up the listing for sale. 

Irving said she felt sick watching the video recorded by Linda Tran and her roommates. When the roommates figured out they’d lost more than $8,000 for what they thought was the perfect Yaletown condo, they requested one more viewing of their fake rental and held the man until the police arrived. 

“I just find it despicable. I lost $6,000 and I too was without a home and traumatized,” said Irving, who now has a new home in Sechelt, B.C.

The president of the Vancouver Real Estate Board also said he does not know how criminals are gaining access to vacant properties that are for sale.

“We don’t like it when people of that ilk represent us,” said Ray Harris. “We really try and do as much as we can to have security. We all have cards that say we’re Realtors. It should have our pictures.”

But he acknowledges forgeries and fake IDs can be hard to spot.

Police investigation continues

While the suspect in the video was not charged and was released pending a police investigation, the man had several IDs with aliases in his wallet.

Irving said she called the Vancouver police to tell investigators she believes it is the same man who pretended to own the Coal Harbour condo she thought she had rented in June. 

While Tran knows him as Edward Young, a sales executive with Pacific Luxury Rentals, Irving said the man she interacted with called himself Charlie and was “too polished and he wanted cash.”

Meanwhile, the Vancouver police say the investigation of this luxury condo rental scam case is complex and time consuming.

“You’re dealing with individuals that are using fake names, fake identities, the paper trails are endless and they often lead to additional crimes,” said Const. Brian Montague.  

©2015 CBC/Radio-Canada

The Black + Whites on Foster Extraordinary townhome living

January 22nd, 2015

Other

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Does Airbnb let tenants own a piece of your property?

January 22nd, 2015

Jennifer Paterson
Other

Renting out space as an Airbnb property is a new source of income that many Canadian tenants are jumping on, but should it be cleared by the landlord and does the renter have the right to sublet the space?

“‪We use a lease that forbids the tenants from subletting of any kind unless approved by the landlord,” said investor James Maggs. “I wouldn’t feel comfortable allowing a tenant to choose someone else, as who knows what type of screening process they would use.”

According to Aaron Zifkin, Airbnb’s country manager for Canada, the majority of people that post their rooms or properties on the website are doing it to pay for monthly expenses and day-to-day living.

In some cases, the homeowner or landlord will post the property themselves. In these cases, added Zifkin, it is a way to pay off the mortgage.

But this really isn’t common practice, at least not yet. “With the ease of finding tenants willing to sign 12-month leases, it really hasn’t been something I, or any other investors I know, have even considered,” added Maggs. “It would definitely be something I would look into if I dealt in seasonal rentals though.”

A recent post on the CREW Forum asked investors whether Airbnb renting is something that should be drafted in an agreement.

The poster wrote: “I’m wondering if it’s the same as having a tenant and writing a lease?”

One respondent advised investors to check their insurance to determine whether short-term rentals invalidate it.

Have you ever considered posting your property as a seasonal Airbnb rental? Have you ever been approached by a tenant about whether they can sublet the property via the popular site?

Copyright © 2015 Key Media Pty Ltd

Vancouver is second most unaffordable market in the world

January 20th, 2015

Jamie Henry
Other

Vancouver has been identified as one of the most unaffordable cities in the world in a study of major property markets. The Demographia International Housing Affordability Survey studies and ranks property markets in Canada, the U.S., the UK, Australia, Japan, China (Hong Kong), Singapore, Ireland and New Zealand. Its findings for this year rank Hong Kong as the most unaffordable city followed by Vancouver. While it is the only Canadian city in the top 10, Victoria, Toronto, Kelowna and Fraser Valley are also listed as unaffordable. Among the most affordable in the study are the New Brunswick markets of Moncton, Saint John and Fredericton, as well as Windsor and Charlottetown

Read the full report.

oronto becoming ‘the New York of the North’
House prices in Toronto will continue to be out of reach of many homebuyers even if there is moderation in the coming years. That’s according to a new report by TD Economics that highlights government regulations and taxation among the factors affecting affordability. The report says that the policy of pushing for high density with small units has led to an increasing shortage of townhouses and single-family homes, increasing prices. Co-author of the report, economist Diana Petramala, says that prices in the GTA mean that the area is now not far behind New York in terms of being unaffordable.
 
High-end sales hit new record in Vancouver
The number of Vancouver properties selling for $3 million or more hit a new record last year. The Macdonald Realty Group reports that there were 842 properties in the price bracket in 2014, an increase of 31 per cent from 2013. While most of the high-end homes sold were single-family detached properties, there were also many condos at higher prices. The record for homes selling above $5 million was also broken last year with 199 sales, beating 2013’s high of 148. 

Copyright © 2015 Key Media Pty Ltd

What are the Dangers of Older Homes? #LesTwarog

January 20th, 2015

Older character homes may be charming, but they can house a multitude of sins. Home inspector Sean Moss outlines a few

Sean Moss
Other

Q: What are the potential issues to be aware of when buying – and maintaining – an older home?

A: Although older homes are very desirable and charming, they also come with potential issues. This article describes some of the common risks associated with older – what many refer to as character – homes.

Outdated or unsafe electrical systems: Many older homes do not have a properly grounded system, which is important to keep the home safe. A two wire system; known as Knob & Tube, is especially dangerous as the sheathing can deteriorate over time, possibly leading to fires. In addition, older homes have usually been renovated at some point. Often these homes contain mixed wiring (old and new) and or hidden junction boxes, again increasing the potential of electrical fires. Other electrical issues include limited circuits and aluminum branch wiring.

Environmental concerns: Many older homes contain asbestos, which has been proven to cause cancer when disturbed and inhaled. Lead paint was frequently used as well, which can be toxic. Buried oil tanks pose a serious environmental concern, especially when they leak. Removing one can be an expensive ($40,000 or much more) proposition, so it is best to have the property scanned for one before you buy. All interior environmental issues should be dealt with by a Hazmat (hazardous materials) contractor before renovations take place.

Outdated, damaged or missing drain tile: Antiquated drain tile (usually made from clay or concrete) tends to break down over time. This condition can allow run off to erode the below ground foundation wall, causing a whole host of other problems such as structural issues, moisture ingress, musty basements and mold. This existing drain tile should be scoped out by a drainage contractor to determine its condition. Updating the system is both necessary and potentially expensive.

Inadequate/poor ventilation: Ventilation issues can lead to excess indoor humidity, poor indoor air quality and mold problems. This can have a negative impact of the residents of the home. Attics, bathrooms, dryers and kitchens should all have proper venting.

Structural issues: Settlement, older building materials, past renovations and weak foundation walls contribute structural concerns in older homes. If your home inspector points out any red flags, be sure to consult a structural engineer.

Incorrect, unsafe renovations: To save time and money, people often upgraded their homes without pulling the proper permits and or having post inspections completed. This can lead to future safety hazards. The problems arise when you remove walls, only to discover structural flaws, dangerous wiring, and environmental concerns that must be corrected.

Outdated plumbing materials: Cast iron, lead pipes and galvanized steel were common plumbing materials in older homes. Over the years, the pipes crack, leak at the threaded joints and rust out in the middle. All outdated plumbing materials should be upgraded to modern standards.

Higher energy costs: Loosely built older homes are expensive to heat and can be uncomfortable, especially during the winter. Inadequate or missing insulation is common. It is wise to have an energy audit performed so you can determine the necessary changes needed for modern living.

© 2014 Real Estate Weekly

BC Home Prices, Sales Will Keep Rising in 2015 #LesTwarog

January 20th, 2015

Joannah Connolly
Other

The BC housing market shows no sign of contracting after its strong 2014, with sales and prices expected to rise again in 2015, according to a Central 1 Credit Union forecast issued January 20.

However, the credit union said that the increases would be “relatively modest, with sales up five per cent compared to 18 per cent last year, while the median provincial home price will climb 2.5 per cent to $414,000.”

The BC Housing Outlook also doesn’t anticipate any price drops any time soon in 2016 or beyond, saying that the growing economy would keep sales on a “positive trend through 2018 with average annual price increases above two per cent.”

“Regional variations will persist over the next few years, particularly given recent gyrations in oil prices,” said Bryan Yu, Central 1 senior economist.

The credit union trade association also predicted that the Bank of Canada would not increase interest rates until early 2016, that the high Vancouver prices will continue to rise due to the lack of developable land, and that northern BC will see even bigger price increases.

“I think sky-high prices in Greater Vancouver have more room to grow with little risk of a significant downturn,” said Yu.

“A key characteristic of the market has been the divergence between detached and multi-family prices. While condo markets have been soft, with median home values flat since 2010, detached values have surged. Single-family housing is increasingly a luxury good detached from income drivers.”

Read the full BC Housing Outlook here.   

© 2014 Real Estate Weekly

Court rules against City of Vancouver in Arbutus Corridor case

January 20th, 2015

Naoibh O

Demand for Toronto condos stays strong

January 19th, 2015

Jamie Henry
Other

The demand for condominiums in the Greater Toronto Area stayed strong at the end of last year, according to the president of the local real estate board. Paul Etherington announced that there were 4,975 condominium apartment sales reported through the Toronto MLS system in the fourth quarter of 2014. This is up by 8.3 per cent compared to the fourth quarter of 2013. “While the supply of condominium apartments listed for sale grew in the fourth quarter, including a large number of newly completed units, the number of sales grew at a faster pace,” said Etherington. “Competition between buyers increased in the condo market over the past year.” He also noted that there was increased interest from first-time buyers in the GTA who understood that, although prices are high, home buying is a long-term investment. There is still undersupply in the market and that has pushed the average price for a condo apartment to $367,199 – up 3.8 per cent compared to the average of $353,799 reported for the same period in 2013.
 

Non-residential building investment increased in the fourth quarter
Investment in non-residential building construction reached $12.9 billion in the fourth quarter, up 0.3 per cent from the previous quarter. The new figures from StatsCan reveal that the industrial sector increased by 1.1 per cent, while institutional was up 1.4 per cent and commercial was down by 0.4 per cent. Investment rose in 14 of 34 census metropolitan areas, with the largest increases in Edmonton, Toronto and Winnipeg. In Edmonton and Toronto, investment increased in all three components, while the gain in Winnipeg was attributable to commercial and institutional spending. Conversely, the largest decreases occurred in Saskatoon and Ottawa. In Saskatoon, investment declined for a third consecutive quarter, as spending fell across all three components. In Ottawa, the decline was mostly attributable to lower investment in the commercial components.
 
Alberta sales tax would trigger compensation
Alberta premier Jim Prentice has not ruled out using sales tax as a way to plug the gap from falling oil revenues in the province. Speaking to reporters, federal finance minister Joe Oliver didn’t comment on the issue directly, saying it was a matter for the provincial government. However, he did say that there would be compensation for the province if the administration chose to hand over control of sales tax to Ottawa. This has already been the case in other provinces, although there is no guarantee that this would be handed down to taxpayers to offset the increase. Oliver said that his government are committed to lower taxes and will not be raising them despite falling oil revenues. 

Copyright © 2015 Key Media Pty Ltd

Construction starts on Strathcona library and social housing complex

January 19th, 2015

Naoibh O