FAQ

A blog category dedicated to common questions I’m asked by Buyers and Sellers and things I think you should know, including maintenance, Stratas, the real estate process, and more.

Kristi Holz FAQs

Co-Buying and Co-Ownership with Friends and Family

Interested in buying real estate in Vancouver with friends or family? It’s a great idea that’s becoming more popular in Vancouver. I’ve helped friends purchase real estate together and have many clients who have bought with their parents.

Co-ownership gives you the opportunity to afford more together than you can alone, which can lead to different opportunities – together you might be able to afford a house compared to each of you living in condos, which gives you both access to yards, garages, new neighbourhoods and detached vs strata ownership. There are different types of co-ownership and many things to consider. Buying with family is a little more intrinsic, but the following considerations should still be made.

Here’s a quick guide to some things to think about if you’re embarking on a co-ownership journey with friends or family. The following considerations should be made when you decide to purchase together and then again once you’ve found a property but haven’t yet contractually bought it! You’ll want to make sure you finalize any agreements and numbers prior to removing subjects on any property.

You and Your Co-Buyers

Who are you buying with? Your relationship and expectations will form the basis of your agreement and what kind of property you’ll need. Unfortunately side by side duplexes are few and far between so it will be difficult to find a property with two exact units. This means one party will have to compromise, though this may be an easy decision if the co-Buyers have different budgets. A few questions to consider when thinking about your co-Buyer:

  • What is your current relationship? Do you have a strong understanding of how the co-Buyers currently live and maintain their home? How do you each handle conflict?
  • Do you have similar lifestyles? This is important when it comes to noise, usage of the space and each persons list of wants and needs for their ideal home. Although you can buy any home and have terrible, noisy neighbours, buying with a friend who turns out to be a terrible neighbour is an expensive mistake that can lead to a fractured relationship.
  • Do you anticipate any major life changes in the next few years?
  • Can one party afford significantly more than the other or are your budgets fairly similar? Are you looking for two separate but comparable suites? Are you considering a co-living situation where you’ll share a kitchen and living space?

You should have an open and honest conversation with your potential co-Owner about these things. If you feel that you can’t be honest, then you shouldn’t buy with this person!

Budget and Mortgage

Like any real estate purchase, your budget determines what you can afford and where you can afford it. You’ll need to get approved for a mortgage together. Everyones assets, debts and income will be considered when it comes to what you can afford.

Vancity Bank offers a great Mixer Mortgage program for co-ownership. Any mortgage broker can offer mortgages for a co-buying situation, but Vancity has created a specific program for it that should help make the process easier from start to finish. I would suggest going to Vancity for an approval in addition to another mortgage broker so you can have a few different options to consider.

Considerations for the Home

In some scenarios the co-Buyers have equal budgets and are looking for fairly equal suites. In general, side by side duplexes would be the best option, but they are rare. Vancouver Specials are another fantastic option because the top and bottom suites can be fairly similar, aside from the fact that one Buyer will be on top of the other (leading to less light and more noise). There are some character houses that have been divided into suites that could work as well, but they are often quirkier and may require a little more give and take when it comes to the value of each unit. I know a set of co-Buyers who purchased a home with 3 suites: one Owner got the biggest suite, and the other owner got the two 1 bedroom suites and rented one out.

Perhaps the co-Buyers have significantly different budgets, and a typical detached home with basement suite would be the best option, given one co-Buyer in the basement and one in the main part of the house. You could also find a home with a laneway house.

You’ll also have to consider how to split the other spaces in the home: gardens, garages, patios, external storage, etc.

Considerations for your Legal Agreement

Getting a legal agreement between all co-Buyers is a must to ensure everyone understands the expectations of the group. There are going to be some general stipulations but the agreement will be tailored to you specific situation. For example, the agreement will differ if the co-Owners have separate units within the home vs co-Owners who share kitchen and living space, and the agreement may differ if one co-Owner lives in the property and one co-Owner rents out the property.

In co-Ownership situations, the title to the property is typically “tenants in common” vs “joint tenants”. This typically means that if one Owner passes away, their portion of the property is passed on to their estate, though this detail should be clarified with a Lawyer prior to purchasing a property.

Here are a few details that should be considered in every co-Ownership agreement:

  • Outline each co-Buyers interest in the property, for example 50/50 if everything is shared equally. This is often based on interior sqft of each unit, but it can be calculated in any way as long as both parties agree. This percentage could impact each Buyers required down payment, future profit, share of expenses, etc. If two couples are buying together, this legal agreement will usually be between Unit 1 and Unit 2, and then a separate agreement should be done between the couple in each unit.
  • Outline of any financial information regarding profit and expenses. You should also have a shared bank account where each party makes monthly deposits in order to pay for all house related expenses. You should also agree to prepare an annual operating budget for expenses and profit, including:
    • Purchase costs (including property transfer tax and legal fees)
    • Property taxes and any municipal fees
    • Property insurance
    • Hydro and gas (some properties will have separate connections)
    • Fees for expected maintenance on the property (yearly gutter cleaning, gardening, fireplace maintenance, etc)
    • A Contingency Fund for any unexpected maintenance
    • If this is a rental property, the related profit and expenses
  • Outline how property maintenance and repairs will be handled, in the event of expected maintenance and unexpected maintenance.
    • What maintenance will each owner do and what will be done by a professional? Who will arrange the repairs? How many quotes will be gathered? Does each need to agree on the final decision? What if it’s an emergency? What if each Owner disagrees about what needs to be done?
  • Outline who gets to use each part of the home, garage and exterior space and if there are any rules related to these spaces.
  • Outline what happens if one Owner wants to do major renovations or improvements to their home, since this not only costs money but improves the value (and thus profit). Does the Owners percentage of profit change? Does the other Owner have a say in what renovations are done (since a quirky renovation would negatively affect the value of the home)?
  • Outline how and when can the property be sold
    • If only one party wants to sell, how will you handle the sale? Typically the remaining Owner has the right of first refusal to purchase the property but you’ll need to decide how you will come up with a reasonable price and how long the remaining Owner will have to complete the sale.
    • If both parties want to sell, how will you handle the sale? How will you choose a realtor? How will you decide on price? How will you compromise if you disagree about an offer?
  • Outline what happens if one party defaults on their portion of the mortgage
  • Outline what happens if one unit will be rented, either immediately or in the future. How does this change how tasks are shared? Does the remaining Owner have a say in the chosen tenant?
  • Outline any rules, including the number and type of pets, vacation rentals, smoking, etc.

Final Thoughts on Co-Ownership

I think co-Ownership is a great idea! It’s great for friends who want to live in a house-like property vs a condo (that’s me!) and great for families who want to stay close while getting older. There are lot of things to think about, but the if you can get through the nitty gritty details I’ve mentioned above then you’ll be on the right track when it comes to a successful and happy co-Ownership life.

Reach out to me at kristi@realestatevancity.ca if you have any questions or would like any recommendations to mortgage brokers or lawyers.

Cheers!

Kristi Holz FAQs

Vancouver’s Peat Bog Land

One curious detail that Vancouver homeowners and potential homeowners need to be aware of is the soft land found in various areas of Vancouver’s East and Westside. Vancouver used to have many streams running through the city and False Creek used to be much bigger than it is today. These areas have been drained and filled in over time, but certain spots have soft soil which needs special attention when it comes to older houses and new construction requirements. This soft soil is a peat bog – soft soil made up of slowly decomposing organic matter. If you have ever driven down a road in a boggy area, you may notice that the sidewalks and streets are not very flat – this is due to slight shifting over time in soil that doesn’t have a lot of structure. It is the City of Vancouver’s job to fix these sidewalks and streets when needed.

These boggy areas can lead to structural and drainage problems for older homes and added (and potentially expensive) building permit requirements when it comes to new construction and major renovations.

Attached is a screenshot from Vancouver’s VanMaps Viewer, which shows the City of Vancouver’s known but unconfirmed peat bog areas (the dark green splotches). This map is not a definitive resource – there needs to be specific site testing done to verify any potential issues with the soil, so if the home is close to these areas, think about doing extra site testing and make sure you get a home inspection.

Vancouver’s Peat Bog areas in dark green. Screenshot is from the City of Vancouver’s Vanmaps Viewer.

Older Homes in the Peat Bog

If you’re looking to buy an older home located in or very close to a peat bog, you’ll need to do extra due diligence to ensure the property does not have any structural or drainage problems, and what happens if the house develops a these issues over time. These houses may feel uneven and may show signs of sinking. Extra attention and maintenance needs to go into the foundation and drainage around the property.

Older properties in the peat bog are typically less expensive due to the risks involved. I don’t know the exact timeline by which the City required special building requirements for peat bogs, but I would be especially weary of houses built in the 1990’s or earlier, with special attention to homes built since the 2000’s. If you plan on living in the older house, you need to make sure that you have done specific research into the site so you’re not surprised by an expensive bill in the future.

New Construction in the Peat Bog

When it comes to new construction, any issues with the peat bog should be dealt with during the initial design and build. The City of Vancouver requires specific reports prior to any building permit and then requires a special kind of foundation to ensure a solid home.

First, the builder must bring in a geotechnical engineer to have soil samples done to indicate the type of soil as well as the depth of solid ground. The City of Vancouver requires specific reports – detailing the depth and characteristics of subsoil materials, recommendations for the design and construction of the foundation, assessment of predicted settlement, and more –

to approve any building permits in this area. Once approved by the City, the builder will have to install a pile foundation, which are columns inserted to the depth of the solid ground. The new house foundation will be built on top of these piles, giving the home a foundation connected to solid ground.

It costs builders extra money and time to produce the required reports and install the pile foundation, so the cost of construction can be significantly higher in these areas compared to a non-boggy area. The cost will vary significantly depending on how far down the solid ground is – there is a big difference in cost between a few feet and forty feet. If the peat is only a few feet deep, the builder may be able to dig it out and backfill, but that comes with its own costs and issues, and still requires specific approval by the City.

Once a new home is built on a foundation pile, there isn’t much to worry about as a homeowner. You may notice the sidewalks become a little uneven over time but your house should remain solid. Another benefit to considering new construction homes in boggy areas is some of the East Van bogs are located in some of the most popular neighbourhoods – just off Main (to Kingsway) and around Trout Lake.

Kristi Holz FAQs

What to Consider when Buying a Newer Unit

Just like older buildings, newer buildings have their pros and cons. Here are a few things to consider if you’re keen to buy a new(er) unit, or are considering the differences between older and newer buildings. In general I would consider a newer unit to be less than 10 years old, particularly less than 5 years old.

Keep in mind these aren’t reasons not to purchase a newer unit, just a reminder that new units aren’t as perfect as you may expect. Better to have your expectations in check so you aren’t surprised in the future.

  • Information, or lack thereof

A newer building, particularly one that is less than 2 years old, often doesn’t have much information to provide prospective purchasers. The strata will be in early stages of management and they won’t have had time to work out the kinks in the building, particularly for large buildings. In the first few years of a new building’s life the strata will be considering everything from what regular and irregular maintenance is needed, their property management relationship, appropriate budgets (and thus your strata fees) and bylaw changes so important details can change as the strata settles in. There also may not be very many meetings minutes to review if the strata hasn’t committed to a regular meeting schedule.

In addition, the strata typically doesn’t acquire any professional engineering reports commenting on the quality of building construction until the 4th year, and depreciation reports typically aren’t completed until a building is much older, so you may not have a professional engineer’s opinion on the quality of the building. You may expect a new building to be in great shape, but the building may discover some major warranty issues as they do their 5 year and 10 year warranty reviews.

  • Warranty Pros and Cons

There is a specific, provincial wide warranty attached to every new condo and most new houses (check out BC Housing’s New Home Registry to verify). This new home warranty is typically called the “2-5-10 year warranty” and coverage includes:

  • 2 years on labour and materials (some limits apply)
  • 5 years on the building envelope, including water penetration
  • 10 years on the structure of the home
  • More information can be found at BCHousing.org

This 2-5-10 year home warranty offers some peace of mind as it can offer new owners protection in the case of defects, though you should know that warranties can be really hard to claim. Prior to the expiry of the 5 year envelope warranty and 10 year structural warranty the building will typically hire an engineering company to do a full warranty review, which the strata can then submit to the warranty provider if there are outstanding issues that should be covered under warranty (and thus fixed by the developer). Not only do warranty providers and developers typically fight back, but there can be some fine print that may render a warranty void (for example, did the building follow the maintenance plan provided by the developer?). If a strata files a major warranty claim, it can take years to be rectified and often ends up in a lawsuit. In the best case scenario the issue is rectified at no cost to the strata but in the worst case scenario the strata doesn’t receive any support to fix an issue.

In the last few years I’ve seen a lot of warranty claims on buildings between 5 to 10 years, so if you purchase in the building in it’s first few years you may realize the building has some major defects that will need to be rectified, one way or the other. The Developer’s reputation is a big factor to consider when purchasing a unit less than 5 years old – are they known for quality builds? is the style of construction something they’ve done before? are they building other complexes in the neighbourhood? Research the developer prior to purchasing.

  • Unknown neighbours

If the building is newer, you may find that the neighbouring units are still vacant and moreso, that the commercial units are still vacant. Neighbours and businesses can change anytime in a building of any age, but it’s nice to know what you can expect when you move in. In some cases, the new build may be the first in a future community, so it may be years before their promise of amenity spaces, grocery stores, transit, etc are in place for residents so consider that when thinking about your lifestyle.

Kristi Holz FAQs

Really Useful Cleaning Products for your Home

Did you just take possession on your new home and want to make sure it’s in tip top shape? I’m sure there were a few items on the inspection report that you should be tackling soon. The products below are some that might help you deal with common maintenance and cleaning issues in your home.

I can’t say enough about how much I love the Dyson vacuum. Brooms are out and cordless, handheld vacuums are in. It makes cleaning more often that much easier. For more information: Dyson.

Kitchen

Stainless Steel Sink Cleaner: Stainless Steel sinks often need a refresh. There are plenty of products out there that can ensure your sink is clean and polished including Weiman and Bar Keepers Friend. Check out the options on Amazon.

Cooktop Cleaning Kit: It’s always best to clean your cooktop soon after using it, but it it’s been awhile you might need a more serious option. There are some cleaning kits that include good products and scrubbers that won’t ruin the surface. Check out the options on Amazon.

Garbage Disposal Cleaners: Most people don’t know how to use a garbage disposal properly (count me in that too). A home inspector told me to throw some cut up lemons along with some ice down the garbage disposal to clean it every now and then, but these tabs make it that much easier. Check out the options on Amazon.

Dishwasher Cleaner: I know your dishwasher is used to clean things, but it can get dirty too, with stains, grease and limescale. Run an empty cycle with one of these tabs to clean it out every now and then. Check out your options on Amazon.

Steel Braided Hoses: Every home inspector will tell you to replace plastic hoses on your dishwasher to steel braided hoses to reduce the possibility of pipe bursts and major floods (super important with high insurance deductibles these days). Check out the options on Amazon.

Stone Counter Top Cleaner and Sealer: Those stone counter tops need to be cleaned and sealed on a regular basis. Check out the options on Amazon.

Bathroom

Drill Brush Attachments: What a novel idea adding a brush head to your drill so you don’t have to do the heavy scrubbing. I haven’t tried these but I’m going to order them! Check out the options on Amazon.

Mild and Mould Grout Cleaner: Are your bathrooms starting to look.. uhh.. not white? I see a lot of showers with grimy grout. There are some strong products out there to make your grout look a lot better. Check out the options on Amazon.

Caulking Tools: Every home inspection will tell you to re-caulk around the tub and sinks. It’s easy to make caulking look poorly done so get same tools to help remove and reapply it. Check out the options on Amazon.

Laundry

Dryer Vent Vacuum Attachment: Dryer Lint can be a fire hazard, and we should be cleaning out dryer lint traps and vents a lot more often. There are some useful attachments for your vacuum if you want a deeper clean. Check out the options on Amazon.

Washing Machine Cleaner: Just like your dishwasher, this cleaning appliance can get pretty dirty over time. Run an empty cycle with some cleaning tabs to ensure it’s fresh and ready for your next load. Check out the options on Amazon.

Steel Braided Hoses: Every home inspector will tell you to replace plastic hoses on your washing machine to steel braided hoses to reduce the possibility of pipe bursts and major floods (super important with high insurance deductibles these days). Check out the options on Amazon.

Windows

Window Blind Cleaner: How often do you clean your blinds? Not very often in my household. These window blind contraptions can help make it easier. There are also window frame/track brushes that can really get into the crevices to ensure the track is clean too. Check out the options on Amazon.

What is a Strata?

This is a great question, with a simple answer and a long answer!

The Simple Answer: a strata property is any property where at least 2 owners share common space/roofs/walls/etc. This includes any condo building, townhouse complex or duplex (or triplex, fourplex, etc).

The Long Answer: In legal terms, a strata property is a “lot” in a building that has multiple units available for ownership. Collectively, the owners own the common areas, including lobbies, elevators, hallways, walls, roofs, common rooms, etc. When you purchase a Strata Lot, you become part of the building’s Strata Corporation and thus have a say in the maintenance and happenings in the building.

For detailed information about Strata’s, check out BC’s Strata Property Act Guideline and Resources.

Here are some key words to know:

Strata Corporation (the Strata): All owners of a Strata building, collectively.

Strata Council: A group of 3-7 owners who oversee the building and manage the day to day tasks and decisions with regards to maintenance, financials, bylaws enforcement and planning. If you’re really invested in the health and management of your building, you want to be on your Strata Council so you know exactly what’s happening. The members of the Strata Council volunteer every year and are voted onto the Strata Council by the Owners.

Property Management Company: The Strata Council works closely with the Property Management Company, which is an outside company hired to guide the Strata Council and manage the intricacies of building maintenance and financials. The representative from the Property Management Company, the Property Manager, is present at all building meetings and acts as the head of the Council. Owners contact the Property Manager whenever they need anything from the strata (i.e. renovation approval, elevator bookings, etc).

Strata Documents: These are the records related to the Strata Corporation, which includes meeting minutes, bylaws (see below), rules, financial statements, budgets, Engineering Reports, etc detailing everything you need to know about how the building is being managed. At any time, Owners can request to view the Strata documents. Most Property Managers offer an online portal where owners can easily access this information. For more information: What to Look for when Reading Strata Docs.

Meetings: The Strata Council holds regular meetings to discuss ongoing issues and building updates. For example, some discussion topics may include ongoing maintenance, upcoming projects, bylaw violations and regular financial reviews. Some Strata’s have monthly meetings, some have only a few per year. Every Strata has an Annual General Meeting (AGM) where big decisions need are voted on by the Owners in attendance. Details discussed and voted on at the AGM are the annual budget, bylaw changes, major maintenance requiring special levies, etc.

Common Property: The areas of the Strata Building that are owned by all the owners together. These areas include (if applicable) the: roof, gardens, lobby, hallways, elevator, recreation areas, gyms, pools, parkade, common rooftop decks, etc. These areas are maintained by the Strata Corporation.

Limited Common Property: This is common property that is only for use by certain people, yet is maintained by the Strata Corporation (i.e. your balcony, etc.). For example, your ground floor patio is for your use only, but is called “Limited Common” because the Strata may have to come on your property to maintain it – they will give you notice prior to access.

Unit Entitlement: This is the percentage of ownership of common areas is divided between every owner (for financial and insurance reasons), which is typically based on square footage. If you own the biggest suite in the complex, you technically own the biggest percentage of “ownable” common property. This means your Strata fee is higher because you own and “maintain” a bigger area of the building. Your Unit Entitlement can usually be found on the Strata Plan.

Strata Fee: A monthly fee that you pay to the Strata Corporation, used to pay for common bills and maintenance as detailed in the yearly budget. The Strata Fee is determined by applying the % of the building that you own (your Unit Entitlement) to the yearly budget. You’ll be fined if you don’t pay your Strata Fees and would run into legal trouble if you don’t pay for a few months.

Contingency Fund: Think of it as your building’s emergency bank account. Funds are pulled from here to pay for unexpected building repairs and other big expenses. A portion of your monthly strata fees goes towards the Contingency Fund. A healthy contingency fund can help reduce future costs to owners.

Special Levy: If a building requires maintenance outside of what was planned in the yearly budget, they will need to charge each owner a “special levy” to pay the cost. Special levies can be as low as a couple hundred dollars per unit for a simple project to tens of thousands of dollars per unit if the building needs major maintenance – this is why you don’t want to spend every dollar you have on purchasing a property. For more information about Special Levies: What are Special Levies for Condos?

Rain Screen: Simply put, a rain screen is an exterior wall design that helps to keep buildings dry. A rain screen is the space between the exterior wall of a building and the interior wall of a building (also called an air cavity) that allows for rainwater and condensation to escape before seeping into the interior wall of a building, thus avoiding moisture and mould problems inside units. For photos and more information: What is a Rainscreen?

Depreciation Report: Many buildings in Vancouver have a document called a Depreciation Report. This report details all the components in the building as well as their current age, their expected lifespan, year of replacement, and how much it is expected to cost to maintain or replace the item. The Depreciation Report will discuss everything from the roof, exterior, windows, balconies, elevator, parkade, fire system, boilers, pipes, hallways, lighting, etc. The estimates in Depreciation Reports are based on industry standard for product life span so projects can happen sooner or later than indicated and can be more or less expensive than indicated (assume a lot more!!). Some Depreciation Reports are really detailed, and some are really vague – it just depends on the company that completed the report. Buildings are not required to follow the advice of a Depreciation Report, but it is used as a guide on what to expect over the coming years and how to budget for the upcoming costs. These reports make it a lot easier for potential Buyers to understand what to expect for future building maintenance.

Strata Bylaws: Every Strata Corporation has a set of rules that every owner needs to follow. The BC Strata Property Act stipulates a set of Standard Strata Property Act Bylaws but Strata Corporations are allowed to add new Bylaws if approved by the Owners. Strata Bylaws touch on everything from rental restrictions, pet restrictions, age restrictions, smoking, noise, BBQs, Strata Council rules, amenity usage, cleanliness, etc. The Bylaws is a REALLY important document for any potential owner.

This is just a start about the intricacies of strata living. I’ve read PLENTY of strata documents over the years, and I’ve been on Strata in my own building. I will tell all my clients to join their strata at least for a few years as it’s a great opportunity to understand your building and make a difference in the short and long terms goals of the Strata. It’s annoying (there are a lot of emails) but it’s worthwhile.

If you have any other questions feel free to contact me: kristi@realestatevancity.ca.

Kristi Holz FAQs

Assignments of Contract on New Construction

If you’ve been looking for a condo in a brand new building, you may have come across “assignments” as an option to buy. If someone purchases a condo in a yet-to-be-finished new condo building and then wants to sell the unit prior to the completion of construction, they will need to “assign” the contract to a new buyer. The unit can’t be officially sold since the building isn’t completed yet, so instead the rights to the original purchase contract are sold to a new buyer, with the new buyer entering into the already agreed upon pre-sale contract with the Developer. The new buyer will receive the same information that original buyers received during pre-sale, which include the Developer’s Disclosure Statements, floor plans, colour schemes, etc. Any assignment buyer will need to know the important details of purchasing a pre-sale condo as well as the financing requirements of an assignment deal. The developer will need to approve the assignment sale and often only allows assignments when the building is sold out. 

Financing for Assignment Sales

Financing is where things get tricky with assignments deals, as you may only be able to get a mortgage on the original purchase price of the condo (minus the original deposit), not the “lift” you’ll likely be paying the Seller. The “lift” is the difference between the Seller’s original purchase price and the price you pay the Seller. In a rising market like we’ve seen the last few years, it’s common for Sellers to be able to make a profit on their original investment.

This mortgage restriction with assignment deals is what makes these units really tough for the average person to be able to afford, as you generally need a lot of cash in order to purchase them. Check in with your mortgage broker to verify current lending requirements surrounding assignment sales – mortgage rules can change so this post may be out of date.

When looking to purchase an assignment sale, you need to find out the Sellers original purchase price, original deposit and whether any credits will be applied to the purchase by the Developer.

The contracts for these purchases are different than a standard contract. The entire purchase requires much consideration to ensure there are no surprises.

Give me a call if you have any questions: Kristi at 778-387-7371 or kristi@realestatevancity.ca.

DISCLOSURE: This post only an example. Details regarding GST, Property Transfer Tax, any applicable Capital Gains Tax, Lawyer Fees, Contract Details etc may be different depending on your situation, potential new rules regarding government taxes, the original Contract, Developer’s Requirements and more. Make sure you speak with professionals (Realtors, Tax Professionals, etc) about your particular situation.

Assignment of Contract Example

Seller’s Asking Price for the Assignment Sale: $514,900.00

ASSIGNMENT PRICE CALCULATIONS

Original Contract Price: $399,900.00

Upgrades (i.e. hardwood floors): $0

Extra Parking Stall: $25,000.00

Credits from the Developer: $0

Total Original Purchase Price: $424,900.00

Lift / Assignment Price (i.e. the Seller’s profit): $514,900 – $424,900 = $90,000.00 

PURCHASE PRICE CALCULATIONS

What the Assignee (New Buyer) Owes the Assignor (Seller/Original Buyer)

Assignment Price: $90,000.00 ***Typically due upon Completion***

Replacement Deposit (i.e. Original Deposit paid by the Seller/Original Buyer, say 20%): $79,800.00 ***Typically due with an Accepted Offer***

Total Assignment Amount (i.e. what the New Buyer owes the Seller): $169,800.00 ***This (likely) cannot be mortgaged***

What the Assignee (New Buyer) Owes to the Developer

Original Purchase Price + Extras: $424,900.00

LESS:

Replacement Deposit: ($79,800.00)

Credits from the Developer: ($0)

Assignee Obligation to Developer (i.e. what the new Buyer will pay the Developer): $345,100.00 ***This can be mortgaged***

What the Assignee (New Buyer) Owes in Added Fees

Applicable 5% GST (on Original Contract Price): $21,245.00

Property Transfer Tax (on Seller’s New Asking Price): $8,298.00

Lawyer Fees: $1,500.00

Total Added Fees: $31,043.00 ***These fees cannot be mortgaged and are due on Completion***

IN SUMMARY

Total Amount the Assignee (New Buyer) will Pay: $545,643.00

Total Mortgage-able Amount: $345,100.00

Total “Cash” Needed by the New Buyer: $200,543.00 

Note that the cash needed for an assignment purchase is more than you would need for a typical $515k purchase – and therein lies the problem for most Buyers.

Kristi Holz FAQs

What are Special Levies for Condos?

The potential for special levies are an important consideration for any Strata buyer, and is something that should be considered when it comes to your expectations as a future owner as you’re reviewing the strata documents for any building. A special levy is defined by the BC Government here:

A special levy is money collected from strata lot owners for a specific purpose and for shared common expenses. It is money collected from the strata lot owner in addition to the monthly strata fee. A special levy must be approved by at least a 3/4 vote of the strata corporation owners. Sections can also have special levies. Strata lot owners must pay special levies when:

  • the expenditure has not been included in the annual budget because it was either not anticipated or because of the infrequency of the expense
  • there are insufficient funds in the contingency reserve fund (CRF) or a decision is made not to use money from the CRF

Special levies are used to pay for major or unexpected building maintenance in buildings, for instance, the roof, plumbing, exterior, windows, balconies, parkade membranes, elevators, etc.

No building has enough money in their Contingency Fund (CRF) to cover the entire cost of major projects. BC Strata Bylaws state the Strata has to maintain a certain amount in the CRF, so the building wouldn’t be allowed to deplete the fund too much anyways (without replacing the money ASAP).

The need for a Strata to charge a Special Levy to Owners is typically discussed in regular Strata Meetings, with the Strata Council doing research to determine what repair is needed, who will be hired to complete it and how much it’ll cost. The decision regarding the amount of the Special Levy and the timeline as to when it’s due is voted on an Annual General Meetings (AGMs) or Special General Meetings (SGMs) which are meetings where owners are given advance notice of the date and topics to be voted on. Owners can vote no to a Special Levy, though that isn’t positive for the maintenance building or the value of your investment. If too many people vote no (more than 25% of Owners voting), the Strata Council would have to reconfigure their plan and present different options to Buyers at a future AGM or SGM (this may mean getting further quotes or decreasing the size of the repair, which isn’t always a good thing). Special Levies are often due within a few months of being voted on, and can be split into multiple payments to reduce the burden on owners. Each owners share of the Special Levy is determined by the amount of sqft each owner owns in relation to the total building (otherwise known as Unit Entitlement – this amount is detailed in the AGM or SGM Notice).

Special Levies can be anything from a couple hundred dollars to over $100,000 (seriously!) depending on what needs to be done in the building.

What if you can’t afford a special levy?

Unfortunately, you’ll have to find a way to pay it. Whether that’s taking out a loan, borrowing from family, selling the unit or re-mortgaging, these funds are due. If the Strata doesn’t receive your levy funds, they can fine you and eventually force a sale to recover the funds.

Be prepared for special levies

Every building will see a Special Levy at some point, so you want to make sure that you’re prepared for it. I always tell my clients to keep a few thousand dollars set aside every year so that it’s not a shock to your bank account when a special levy is required. Some Strata’s are raising their monthly strata fees to help mitigate future Special Levies, but even then, you’ll have to be prepared for a higher monthly condo fee and the increased Strata fees won’t be enough to cover all major maintenance projects.

Check out my other post for more information about What to Look for in Strata Docs.

Kristi Holz FAQs

Down Payment vs Deposit

One of the biggest details Buyers need to prepare for before truly starting their search is their financing, and how much cash they’ll have towards the purchase, specifically for your down payment and deposit (with funds for property transfer tax and renovations close behind). 

I have a lot of clients who are confused about the difference between a down payment and deposit, so I wanted to go through the details here. 

What is a Down Payment? 

Your down payment is the amount of cash you’re putting towards to the price of the property. Your mortgage approval is based on, among other things, the amount of down payment you have. There are specific requirements in Canada for the amount of down payment needed depending on the type and price of the property. A down payment of less than 20% down means you need to pay mortgage insurance, which is a small insurance premium added to the cost of the mortgage.

Your full down payments funds aren’t needed until just before the Completion Date (which is the day the your purchase funds are sent to the Seller and the title of the property is transferred to you) however you’ll need to provide a portion of your down payment during the offer process as a “good faith” deposit. 

What is a Deposit? 

Every offer for a home (whether a pre-sale or a standard purchase) requires a deposit of “good faith” money indicating that you have interest in buying the property that also gives the home Sellers some insurance if the Buyer doesn’t complete the sale. This deposit forms part of your down payment. 

The deposit amount is typically around 5% of the purchase price and is typically due once the Offer to Purchase is a firm contract (i.e. when the Buyer submits a subject free offer, or when the Buyer removes the conditions on their offer), though the deposit may be due upon Offer submission. The deposit amount and deadline to submit will be specified in your Offer. 

Keep in mind, if you are buying a property with a 5% down payment, your deposit would be the entire down payment amount. 

When a Buyer submits their deposit, their Realtor submits the deposit to their office where it remains in the Brokerage bank account. A few days before the Completion Date, these funds are sent to the Buyer’s Lawyer to package the amount with the rest of their down payment and mortgage funds. 

One of the most important details of the deposit is that the funds need to be liquid if you will be putting in offers to buy properties. You will need to give your Realtor the deposit in the form of a bank draft, which means the money is removed from your account when you take out the bank draft. Keep in mind that you are on a timeline when you have an accepted offer on a property, so you need to do your due diligence and come up with your deposit before a certain date and time, otherwise the contract terminates. If your deposit funds are sitting in a different account of yours, or perhaps are sitting in some investment portfolios, it may take a few days for the bank to transfer the funds to an account where they can be removed. You don’t want this timeline to ruin your chances of officially buying a property! If a family member is paying your deposit, it would be beneficial to have them forward the deposit funds to you ahead of time so you have the funds sitting in your savings account and ready to be pulled when needed. If you bank with Tangerine you need to be aware that deposits cannot be pulled at a brick and mortar location so you need to order the deposit ahead of time and have it delivered to you. It can take a few days for the deposit to be delivered so ensure you understand the timeline before you offer.

For more information about your down payment and important information you should know, talk to your mortgage broker. For more information about the deposit process, talk to your real estate agent.

Kristi Holz FAQs

The Benefits of Staging

If you are thinking about selling your home, you should seriously consider staging the property in order to ensure the property looks it’s absolute best online and in person. A well marketed property can add tens of thousands of dollars to the value and type of Buyer who is interested in viewing the unit.

Staging properties ensures the property is bright, comfortable, curated for the right audience, and shows the space at its best. Staging also help properties look bigger (a vacant property is deceiving to the eye).

I think staging is so important that I will help every client stage their property on some level. I have a storage locker filled with items to fine tune your space (fake plants, towels, pillows, bedding, art, etc), and am happy to contribute to the cost of staging if the unit is vacant and needs a full stage.

Staging a Property you’re Living In

If you’re currently living in the property then there may still be some staging to do. Obviously, I’ll be asking you to clean and organize the property as much as possible, but I can bring in a few final items to help the space show its best.

I am a big believer that seeing greenery is soothing for the soul so I often bring in big and small fake plants to add life and colour to a space. I will have fluffy bedroom pillows and simple bedding to make the bedroom look lush and inviting. Fresh, matching towels can do wonders for a bathroom. And art for various spots in the home can add colour, life and interest.

If your home is mostly furnished, but we feel that a lounge chair can finish off the living room, or a desk fo an empty nook, then we can rent the pieces of furniture needed from a staging company.

If you have a lot of belongings, we will often move them for the professional photos so the photos can be as perfect as possible. For example, if you have a lot of small kitchen appliances sitting on counters, extra pieces of small storage furniture blocking the space or exercise equipment taking up room, we can remove them for the purpose of taking the picture, but you’ll be able to leave the items in your space as you use them on a regular basis!

BEFORE AND AFTER – I added some small touches to make the bathroom look bright and inviting.

Staging a Vacant Property

If your property is vacant I would highly suggest having the home staged, with the exception being a unit in decrepit shape that requires a full renovation to be livable. Though there is a cost to staging, hiring professional stagers ensures that it’s done properly and typically nets you more money and a faster sale thanks to increased interest from potential Buyers. Furniture will also encourage people to stay in your property longer, to sit on the couch and take in the view, and to consider different ways of furnishing the space.

Staging vacant properties is particularly important in the winter when the sun goes down so early leaving units dark and cold. Staging will add a variety of extra lighting to the space as well as a level of coziness that everyone is looking for in the winter.

BEFORE AND AFTER – We brought in professional stagers
BEFORE AND AFTER – we brought in professional stagers

Types of Home Staging

Professional Stagers

If you decide to stage the property, we will hire a professional staging company. One of their representatives will come into the space to view anf take measurements and then they’ll go back to their warehouse to choose furniture. We’ll schedule a day to have everything delivered and they’ll spend a few hours setting everything up. When the property is sold, the stagers will come back to pack everything up and move it out. Staging quotes typically include the furniture rentals for one month, mover fees for the move in and move out and their staging services. The cost to fully stage a 1 bedroom condo (living room, dining room, bedroom, bathroom, odds and ends) is about $2500 and goes up from there. Every month beyond the first month is charged strictly for the furniture rentals.

Virtual Staging

A newer type of staging is virtual staging, where the professional photos are sent to a graphic designer who alters the photos to make the property look furnished. This type of staging is generally charged on a per photo basis.

Personally, I would prefer to bring in real furniture as that gives you the benefit of a good online and in person presentation, but there are some cases where virtually staging photos may be better or preferred by the Seller, particularly if some rooms in an occupied house are empty or if a tenant lives sparsely.

If you decide to list your property with me we’ll do a walk through together to talk about what you should do to make your property look at good as possible, and what I can do to help. Here is more information about my marketing plan. Any questions? Get in touch at 778-387-7371 or kristi@realestatevancity.ca.

Kristi Holz FAQs

Ensure you have a Personal Insurance Policy

NOTE: This post is not a substitute for professional insurance or legal advice with regards to insurance polices and claims. Talk to the appropriate professional about your specific scenario and requirements.

One detail that is required but often overlooked is the importance of Owners having their own personal insurance policy. Of course, this is important for detached houses when you’re the sole owner, but is very important for Strata Owners to have a personal insurance policy in addition to the Strata insurance policy considering the changes to the Insurance Market across BC.

In 2019, Strata buildings started to see increased insurance deductibles for damage (for example, deductibles were commonly $10,000 before and now they’re often $100,000 or more), increased insurance costs overall, lack of 100% coverage and delayed approvals. The cost to repair any damages to your unit, other units and the building are far higher due to these insurance changes. Below is some information to know.

Say the deductible for water damage on the Strata’s insurance policy is $100,000 – you could be responsible for this amount if you cause a water damage issue or if the water damage issue originated in your unit. To protect your personal liability against claims or the risk of a  deductible, it is vital that you purchase a personal insurance policy to cover the strata deductibles and the cost of any damage you may or may not have caused.

In a Strata, who pays the costs with regards to an insurance claim depends on the level of damage, the Strata insurance policy and your personal policy. Here’s a helpful CHOA Article: Who Pays the Insurance Deductible and a follow up on this article, Clarification on Insurance Deductibles.

CHOA is the Condo Home Owners Association of BC, providing advice and resources to Strata’s and Strata Owners in BC. For more information: https://www.choa.bc.ca/. There are plenty more helpful articles to find in their “Resources” section.

Long story short, if you cause damage – and whether that is something you have done directly by leaving the bathtub running or a pipe/appliance in your unit bursting unexpectedly – you are responsible for the cost. If the cost of the damage is below the Strata water damage deductible, then you have to pay the cost of repairs, and any damage to your neighbours units may be your cost to repair as well. Your personal insurance policy should cover you for this amount. If the cost of the damage is above the Strata water damage deductible, then the Strata will pay the deductible (the cost will come out of the Contingency Fund, Operating Fund or may require a special levy from Owners) but the Strata can require that you reimburse them for the cost. Your personal insurance policy should cover you for this amount. If the issue was caused by the Strata (say a common pipe in the hallway explodes and damages your unit) then the repairs will be covered by the Strata, expect for any upgrades done in your unit. The Strata Insurance Policy will only cover the cost to replace original finishings, so if you replaced carpet with expensive hardwood, your insurance policy should cover you for the extra costs of your upgrades. The Strata Insurance Policy will likely not cover your costs to be relocated to a different unit during repairs, but your insurance policy should cover you for the cost of temporary relocation. Your personal insurance policy should also cover your for your personal belongings, liability in accidents, and more.

Insurance Policies are bland, yet complicated, with plenty of fine print that can really affect the use of your policy, so make sure you speak with an insurance advisor to understand the ins and outs of your policy and what would happen when there is significant damage.

Do your Due Diligence before Purchasing

Before purchasing your condo, get the Strata insurance summary from the Seller (who will get it from the property management company) and talk to a professional insurance agent. Send them a copy of the Strata Insurance Policy so they can help you understand the deductibles, how they are best covered, the extra coverage you may want and what it will cost you.

It is also valuable to review the date the policy will be renewed. If it’s in the next month or two, you may want to wait to find out what the new policy will be before making your purchase official as there could be some significant increases or changes to the policy.

Mortgage Lenders will require that the Strata has an active insurance policy and that you have a personal insurance policy in place before funding the mortgage on the Completion Date, so do your research prior to removing subjects to ensure you understand your options and the costs involved.