Jul 18, 2019

Pitfalls in Transactions Involving Strata Condominiums #516

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By Oana Hyatt,
B.Sc.(Pharm), LL.B.

A recent Civil Resolution Tribunal decision1 highlights some important practice points for licensees in transactions involving strata condominiums.

The buyer of a strata condominium claimed against the seller's agent in misrepresentation and false advertising arising from the description of the building as having a "fully rainscreened exterior" in the MLS® listing. The buyer was surprised to have to pay a $4,700 special levy some seven months after purchasing the unit, for further repairs to the exterior wall cladding. The buyer's agent and the seller were not sued.

The seller's agent was successful in defending the claim, on the basis that he had relied on the seller's information that the building was fully rainscreened, and this reliance was reasonable in the circumstances. The seller's agent did not have copies of the strata minutes at the time he prepared the MLS® listing, and the Tribunal found there was no intentional attempt to misrepresent. The Tribunal found it was not reasonable for the buyer to rely on the MLS® listing description, in light of: a) the buyer's failure to request and review strata minutes before entering into an unconditional contract; b) recent strata minutes, which recorded reports of problems with some of the building's exterior wall cladding that had been re-coated instead of replaced a few years earlier; and c) the standard MLS® listing disclaimer (that the information, while deemed correct, was not guaranteed).

A similar, older Supreme Court case2 came to the same conclusion. In that case, the buyer was faced with a $60,000 special levy to repair what turned out to be a "leaky condo." The Court found the buyer had a duty to review the strata minutes and could not solely rely on representations made by the seller in the Property Disclosure Statement, which turned out to be inaccurate.

When acting as sellers' agents, licensees should be mindful of the source of any information they convey to potential buyers or their agents. Sellers' agents should indicate the source of any such information in writing. It might be prudent to obtain all the strata documents early on, to review them carefully, and to discuss any issues that arise in them with the sellers, prior to preparing the MLS® listing.

When acting as buyers' agents, licensees should ensure that buyers have as much information as possible before removing subject conditions and entering into an unconditional deal. It may take as long as 18 days to receive a full set of strata documents from the strata corporation or strata manager, so buyers' agents should be mindful of the potential necessity of a lengthy subject removal period. Buyers' agents should also make it clear to buyers that the buyers need to review the strata documents themselves, prior to removing subject conditions, and should document this advice in writing.

Oana Hyatt
B.Sc. (Pharm), LL.B.

 1.Russell v. Macdonald Realty Ltd, 2019 BCCRT 738.
 2.Saks v. Brooke, 2000 BCSC 1745.

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Author profile photo
By Oana Hyatt,
B.Sc.(Pharm), LL.B.

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