A condominium is a building or complex containing individually-owned apartments, but in BC, the terms strata lot and strata plan are used instead. A strata lot refers to a unit within a strata plan. Some places where you will find strata lots are apartment buildings, townhouse complexes, commercial spaces, and duplexes. The process of buying or selling a strata lot is in many ways similar to the process of buying or selling a house. Potential risks in both include real estate fraud or even a minor mistake that leaves your contract void and your wallet empty. You must hire a lawyer or notary to transfer ownership and to protect yourself during the transfer.
Both lawyers and notaries provide legal services to the public, but notaries are limited in that their work is restricted to non-contentious issues and they cannot go to court for their clients. Lawyers can represent clients on all legal issues, whether this takes them to court or otherwise. When it comes to buying and selling your home, notaries are able to prepare some of the documents needed to transfer legal ownership of the property. However, if anything goes wrong, you may need to engage a lawyer to provide advice or litigate (services unavailable from a notary). For this reason, it may make more sense to start with a lawyer from the outset.
There are varied costs associated with buying and selling a property. For purchasers, one of these is tax, which can include the property purchase tax (potentially waived for first time home buyers), GST, and PST. Although sellers do not have to worry about taxes, both they and purchasers should plan for real estate commissions and legal costs. In preparing the documents to transfer legal ownership, you will want to factor in land title searches, discharging the mortgage, a Statement of Adjustments, trust account fees, insurance, and any other paperwork necessary to ensure compliance with BC’s property laws.
Title insurance protects homeowners and their lenders from risks that can arise in any transfer of real property. It provides coverage for losses from title defects (even those pre-existing your purchase) that interfere with ownership such as easements, encroachments, unpaid liens, fraud and forgery, and zoning problems. When purchasing or refinancing, you can discuss title insurance with your lawyer. They will be able to show you the difference between two common policies – for lenders and for homeowners – and help you to ensure you are covered properly.
As a purchaser, you can expect more contractual protection than the seller. Still, your lawyer will need to review the contract to determine whether it is legally enforceable. If your lawyer finds that the seller is required to complete the contract, but the seller makes it clear that they are not going to, it will be in your best interest to take the steps necessary to demonstrate that, as the purchaser, you are ready, willing, and able to complete the transaction. In the event the seller does back out, your lawyer can then aid you in enforcing the terms of the contract, or, in the alternative, recover damages in court.
As a seller, you are unable to cancel a legally enforceable contract. However, the contract may include “subject to” provisions that make enforceability dependent upon the performance of specific terms. Further, your lawyer can review the contract and the circumstances of its execution to identify and capitalize on any weaknesses. Although it is typically more difficult to find flaws in standard form contracts, the addition of customized terms may mean that errors in the drafting have resulted in a loophole. You will need legal advice from a lawyer to help you determine if any issues exist, and more importantly, to ensure that any decisions you make will not open yourself up to liability for breach of the contract.
The standard contract of purchase and sale includes a clause called the “view date” that requires property to be in substantially the same condition on completion as when viewed earlier. If it is not in the same condition, a purchaser can take legal action against the seller for costs to restore or repair it to the condition it was in on the view date.
Developers often do not provide purchasers with a fixed completion date. The closing may run well past the date, even when one is provided. If obtaining financing, you will need to ensure that you have a lending commitment that can run longer – you will want to make sure you still qualify if interest rates go up. Another risk can arise when a developer does not provide what they promised. Broken promises do not always equal actionable defects. Further, if the developer is a shell company, you may have trouble recovering damages even for actionable defects that you may discover.
Typically, a seller must complete a detailed residential “property disclosure statement” to incorporate with the purchase or sale contract. This document allows potential purchasers to fully understand the property they are interested in, and can reduce the chance of misunderstanding further down the road. Typically, disclosure will include reference to any material defects such as asbestos insulation, unauthorized rental suites, renovations done without a permit, unregistered easements or encroachments, past mould or moisture issues, and previous use of the property for illegal purposes including marijuana growing operations. If a seller is dishonest or makes any attempts to conceal or misrepresent a problem, they can be liable for damages.
The Real Estate Services Act states that only licensed realtors can be involved in the purchase and sale of real estate in BC, but lawyers are generally exempt. However, most lawyers are not familiar with valuation issues, so a realtor may be better suited to advise on that topic. For sellers especially, the marketing and networking services that realtors possess may be of real value and well worth the cost.
Listing contracts are a form of legal agreement that once signed, and if enforceable, can only be cancelled with the mutual consent of both parties. In some cases, a seller will be able to cancel a listing with their realtor prior to the expiry of the contract. However, if the seller is inclined to list it again with another realtor, they will have to wait for a specified period prior to re-listing. In other cases, a seller who cancels a listing contract may be forced to pay two commissions – one to the original realtor; and one to the realtor they switched to prior to the legal end date of their original listing contract.