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Posts tagged ‘rules’

What is a Strata Duplex – And Why Are They So Great?

I’ve always been a fan of strata duplexes – and I’ve never understood why some people shy away from them. Often, I find the same people who would not buy a duplex would quite readily buy a townhouse, which seems counter-intuitive to me.

A strata duplex is a duplex which is registered under the Strata Property Act. The purpose of such registration is to allow each side to have a separate title, and therefore, enable each side to belong to different owners. You could think of a strata duplex as a 2-unit condo or townhouse complex. Each side is a separate strata lot (like each unit in a condo building), and the common property is the exterior of the building including the roof, and sometimes, a common driveway. Usually the yard area is designated as limited common property: common property designated for the exclusive use of a certain strata lot.

The difference between a strata duplex and a condo or townhouse lies in the way the Strata Property Act affects the owners. Typically, strata duplexes are much less formal than condos or townhouses. Technically, they are subject to the same rules and regulations as any other strata – they must have a council, records, bylaws, collect strata fees, and contribute to a contingency fund. However, in practice, most strata duplexes do none of this. Beyond splitting the cost for insurance (a fire/earthquake policy covering the exterior of the building and common property liability) and common property maintenance and repairs (cleaning gutters, roof maintenance, etc), there is very little strata-like business that goes on in a strata duplex.

Strata duplexes are great because they are often larger and cheaper than a comparable townhouse, and don’t have some of the potential headaches that come with strata property ownership. Instead of 50 other owners to deal with and make happy, there are two. Good neighbour policy will prevail in most cases and the owners will come to an agreement about repairs and maintenance. In addition, you will often find that strata duplexes have much larger lots than the tiny postage-stamp that you’d have in a townhouse.

Sometimes, you can find a half duplex with a rental suite in it, making it ever-more-affordable and potentially attractive from an investor’s standpoint. It’s important to note, however, that most suites in duplexes are unauthorized.

If you’re considering buying a townhome or condo, you should look into a half duplex – you might be surprised to find a great alternative. If you decide to buy a half duplex, it would be wise to inquire with the owner of the other half about maintenance responsibilities. Obviously, it’s no good to replace just your half of the roof if the whole thing is getting to the point of replacement and the other owner refuses or doesn’t have the money. You’ll want to ensure the other owner is on the same page as you about replacing it.

If you’ve got a strata duplex to sell, and want an agent who understands this market segment, I’d love an interview. For more information about strata duplexes, including current listings, contact me.

Tim Ayres – Sooke Real Estate Professional

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New Canadian Mortgage Qualification Rules Announced Today

Flaherty Puts The Squeeze On Mortgages

Following a couple months of speculation, Finance Minister Jim Flaherty brought in some new regulations designed to tighten up lending practices and cool off the housing market in Canada. The government didn’t go so far as to reduce maximum amortization from 35 to 30 years, or increase minimum down payment requirements higher than 5%, but did take the following three actions:

  • Borrowers must now qualify for a five-year fixed rate, even if they are applying for a variable rate mortgage. Variable rate mortgages are based on the prime rate, which is at a rock-bottom 2.25% currently, and is expected to rise over the next 12-18 months. By qualifying buyers at the higher 5-year fixed rate, it is hoped that a cushion will be created such that borrowers can still afford the payments when the prime rate increases, as it will inevitably do.
  • Home owners who want to take out some equity from their homes when they refinance their mortgage will no longer be able to take out up to 95% of the lending value of their homes, only up to 90%. This is designed to prevent home owners from using their homes as an ATM and getting in over their heads if their property value declines. Probably not a bad idea, but it will prevent some home owners from paying off high-interest debt with low-interest mortgage funds. Overall, I’m happy about this one.
  • Purchasers of non-owner-occupied real estate, ie, investment properties, will now need 20% down instead of 5%. The government says this is to prevent speculation by investors. I’m of two minds on this move. It will certainly put a squeeze on buyers of investment properties, which may in turn lead to fewer rental properties available and hence a corresponding rise in rents.

The reader needs to bear in mind that the above rules are for CMHC-insured mortgages only. Private insurers like Genworth and AIG Guaranty may be more flexible. Mortgage insurance is mandated on all mortgage loans in excess of 80% loan to value ratio, which offers the lender protection should the borrower default. This way, lenders are able to offer borrowers lower rates because they do not have to compensate for the additional risk of a high-ratio mortgage.

Also, most lenders qualify a buyer on a 3- or 4-year fixed rate already when applying for a variable rate mortgage, so this won’t be a huge change for most institutions.

The new rules are set to come into force April 19th. I would expect a surge in activities in the market as buyers and investors try to get in under the deadline, even though most residential, owner-occupier borrowers won’t be too affected by the changes. All they will hear is “harder to get a mortgage” and they’ll rush out to get pre-qualified and then go shopping.

Tim Ayres – Sooke Real Estate Professional

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Strata Mondays #3 – Maintenance Responsibilities

In my continuing series about strata property, Strata Mondays, I answer a different question about condos, townhouses and other strata property in Victoria, Sooke, and British Columbia. Make sure you subscribe via RSS or E-mail to get each new post.

Spiderman Survives the Recession

Spiderman Survives the Recession

Q. Who is responsible for the exterior maintenance of a strata complex (including washing windows)?

A. The easy answer here is it depends, but usually it’s the strata corporation who is in charge of the exterior maintenance of a strata complex like a condominium or townhouse.

When you own a condo or townhouse, you own the strata lot and a share of the common property of the strata corporation. Your strata lot is basically everything inside the walls of your unit and sometimes a parking space and/or storage locker. The common property is the strata building itself including the roof, windows, balconies, exterior walls, driveways, landscaping, hallways, elevators, and so on. Everyone pays strata fees, the amounts proportional to the size of their strata lot, which are used to insure, maintain and repair the common property.

The BC Strata Property Act, Part 2, Section 3 says:

Responsibilities of strata corporation

3 Except as otherwise provided in this Act, the strata corporation is responsible for managing and maintaining the common property and common assets of the strata corporation for the benefit of the owners.

Usually this means that the strata corporation would be responsible for paying to have the exterior of the building cleaned and the windows washed. Most responsible complexes have this done a couple of times a year. However, sometimes there are bylaws in place that place the duty to maintain the exterior of the strata buildings on the shoulders of the individual owners. A good example of this would be a detached townhouse complex where each owner would be responsible for replacing his or her own roof, since it only directly benefits that owner.

Part 5, Division 1, Section 72 of the BC Strata Property Act says: (emphasis mine)

Repair of property

72 (1) Subject to subsection (2), the strata corporation must repair and maintain common property and common assets.
(2) The strata corporation may, by bylaw, make an owner responsible for the repair and maintenance of

(a) limited common property that the owner has a right to use, or
(b) common property other than limited common property only if identified in the regulations and subject to prescribed restrictions.

(3) The strata corporation may, by bylaw, take responsibility for the repair and maintenance of specified portions of a strata lot.

The Strata Property Act Standard Bylaws say: (emphasis mine)

Repair and maintenance of property by owner

2 (1) An owner must repair and maintain the owner’s strata lot, except for repair and maintenance that is the responsibility of the strata corporation under these bylaws

(2) An owner who has the use of limited common property must repair and maintain it, except for repair and maintenance that is the responsibility of the strata corporation under these bylaws.

and;

Repair and maintenance of property by strata corporation

8 The strata corporation must repair and maintain all of the following:

(a) common assets of the strata corporation;
(b) common property that has not been designated as limited common property;
(c) limited common property, but the duty to repair and maintain it is restricted to

(i)  repair and maintenance that in the ordinary course of events occurs less often than once a year, and
(ii)  the following, no matter how often the repair or maintenance ordinarily occurs:

(A)  the structure of a building;
(B)  the exterior of a building;
(C)  chimneys, stairs, balconies and other things attached to the exterior of a building;
(D)  doors, windows and skylights on the exterior of a building or that front on the common property;
(E)  fences, railings and similar structures that enclose patios, balconies and yards;

(d) a strata lot in a strata plan that is not a bare land strata plan, but the duty to repair and maintain it is restricted to

(i)  the structure of a building,
(ii)  the exterior of a building,
(iii)  chimneys, stairs, balconies and other things attached to the exterior of a building,
(iv)  doors, windows and skylights on the exterior of a building or that front on the common property,
(v)  fences, railings and similar structures that enclose patios, balconies and yards.

So, while the standard bylaws and the Act say that it’s the strata corporation’s responsibility for exterior maintenance,  it’s possible that your strata complex may have enacted a bylaw that requires the owners to wash their own windows, maintain their own landscaping, or perform other exterior maintenance. To be sure, you’ll have to read your strata corporation bylaws carefully.

If you have a question about strata property, or any other real estate matter, please e-mail me at Tim@TimAyres.ca or fill in my contact form. I can also be reached by phone at 250-885-0512

Tim Ayres – Sooke Real Estate Professional

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