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Important Changes to The Residential Tenancy Act

And What Landlords, Buyers, and Tenants Should Know

The Residential Tenancy Act in BC has recently undergone some significant changes impacting landlords, buyers, and tenants. This is not an exhaustive breakdown of the changes but these are the key changes that could affect the everyday real estate transaction.

Notice Periods
The most significant change is the extended notice period for tenants. Landlords are now required to give a four-month notice to vacate for personal or caretaker use, up from the previous two months. This change came into effect on July 18th, 2024.

It's important to note that notice is still effective on the final day of your rental period (the day before rent is due). So, if you are in a month-to-month lease paying rent at the beginning of the month and receive notice on September 10th, you won't be required to vacate until January 31st, 2025.

However, it seems the Government of BC acted recklessly by announcing these changes without properly consulting the industries impacted. Initially, the four-month notice period also applied to landlords serving notice on behalf of new buyers intending to move into the home and requesting vacant possession. The issue with including primary residence purchases is that rate holds—when a buyer’s lender pre-approves them at a certain interest rate—are typically valid for only 90-120 days, with rare exceptions. For example, if a buyer was just pre-approved at the end of August, their rate hold would expire by the end of December, leaving them vulnerable to rate shifts that could affect their mortgage qualification. Unfortunately, major banks, being national entities, are unlikely to adjust their policies based on one province’s legislative changes so they would not provide any workarounds. While I understand their intention to enhance tenant protections, the originally introduced extended notice period would disproportionately penalize first-time buyers, who have no options to bridge their mortgage from an existing property. 

The solution? After lobbying from mortgage brokers and the real estate industry, the BC Government announced an amendment reducing the notice period for landlords instructed to provide notice for a purchaser when they or their close family member will live in the property, from four months to three months. This amendment was effective August 21st.

So, if you are in a month-to-month lease and your landlord, after a buyer has removed subjects and instructed them to provide notice to vacate, serves that notice on September 2nd, you would be required to vacate by December 31st, 2025.

Fixed-term tenancies can be served notice to vacate, but the three-month notice still applies, and the effective date to vacate cannot be before the end of their fixed term.

Web Portal: A New Tool for Transparency
Landlords are now required to use the Landlord Use Web Portal to generate the Notice to End Tenancy. This creates a tool for regulators to register and track evictions, increasing transparency in the process. Additionally, notices generated due to a new buyer requesting vacant possession will now require a copy of the Contract of Purchase and Sale to be included.

Initial Length of Use
They have increased the length of time a landlord must use a rental unit for personal or caretaker use following the eviction of a former tenant. This period is up from 6 months to 12 months. If a landlord fails to demonstrate personal use or caretaker use for 12 months, they may be liable to pay an evicted tenant 12 months’ rent as compensation.

Dispute Period
The deadline for a tenant to dispute has also increased to;
-21 days when receiving 3 months notice
-30 days when receiving 4 months notice.

The clock starts as soon as the notice is deemed received. (more info about serving notice here)

Landlords: Navigating the New Landscape
Even with the latest amendment reducing notice to three months, selling a unit with a tenant has gotten stickier. Currently, inventory is above seasonal averages, and most investors are on the sidelines due to high interest rates which means the active buyers are looking for vacant possession not taking over tenants.

Landlords should be aware of the challenges they may face when selling a tenanted property, including:
-smaller buyer pool due to expiring rate holds, risks assuming tenancy
-long completion
-not staged well
-inflexible showing times

In a busier market, your property will still move, but what are you leaving on the table?
In slower markets, your property sitting on the market will only lead buyers to look for more of a deal.

Buyers: Understanding the Risks
Don't shy away from a property just because it is tenanted, but make sure you understand the risk of buying a tenanted property. If you're getting good value, need a long completion, or have found a unique property then I understand but otherwise, why deal with the additional stress of a tenanted property?

Tenants: Leverage the New Rules
Yes, your notice period has extended, which is valuable to help you find a home in a typically terrible rental market. But the blessing in this amendment is your increase in leverage. Once you know of your landlord’s intention to sell; using the knowledge that a vacant home will sell easier, you may be able to get more than the Tenancy Act entitles you to...
How you ask?

Cash for Keys, baby! A Potential Win-Win Solution
The term "Cash for Keys" refers to an agreement where a tenant agrees to vacate a property on a specific date in exchange for a payment from the landlord. This arrangement can be beneficial for both parties:

Sellers/Landlords  have a vacant property that they can stage and market which will no longer deter buyers who are averse to the completion length.

Tenants could leave on their own terms with more money in their pocket to help ease the cost of moving and off-set your potential increase in rent.

Final Thoughts
These changes to the Residential Tenancy Act have shifted the landscape for landlords, buyers, and tenants in BC. It's important to be informed about these changes and understand how they may impact your real estate decisions and the best way to make sure you stay informed is to work with a professional that is on top of the latest regulations and helps you make informed decisions.

https://calendly.com/kadelacasse_realtor/


Again, this is not an exhaustive breakdown; you can find much more information regarding Bill 14 by typing "bill 14 residential tenancy act" into your favourite search engine.

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SOLD Beautiful Mount Pleasant Couch House

I love helping turn Mt Pleasant renters into Mt Pleasant homeowners✨

 These buyers filled their home buying bingo card in a very short amount of time including three inspections, having to walk away from an accepted offer and competing against 8 other offers.

This meant they had narrowed down their livable compromises and the deal breakers through tough decisions including just how important staying in Mount Pleasant was.

They were seasoned buyers after less than 2 months of shopping. So, when this place popped up, they were in the next day to view and sent an offer that evening that was strong enough to deter the seller from waiting for their open house.

They secured a beautiful 6 year old home in a small strata in Vancouver's best neighbourhood.
No shared walls, so much storage and an attached garage.

Well done R & A 

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Mount Pleasant Market Update




If you’re buying a condo or thinking of listing, you should be watching the stats on a local level. 

Nothing new here, Mount Pleasant condos are a hot commodity. And with the skytrain extension, new St Pauls Hospital and office development booming in the area, I can’t see demand slowing anytime soon.

It may seem counter productive but with the possibility of more interest rate increases on the horizon; a prudent buyer will stay active or get active in this market. Why? One or two more hikes will not have the same affect on the market as the 8 straight increases between March 2022 and January 2023 BUT another increase in July combined with the typical summer lull from folks travelling may just open up a window for opportunity. At the very least, you could see less competition.

How about some good news for the small budget buyer? There are pockets of older buildings that can still bring great value per sqft if you can sacrifice luxuries like in-suite laundry for location. Of course it all depends on your personal priorities.

First time buyers; Unfortunately this neighbourhood is not going to get more affordable so starting where you can instead of waiting for the dream place is the way in. 

Kade

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Time for more bedrooms or an office? A garage? A yard? It is a great time to move up in space and in value!

Not all markets are the same and not all products are the same. In down or stale markets, the bigger ticket items take a harder hit and this is when you can get the most value moving up in the market.

Three Reasons why this market is the best time to upsize!

PACE
You will have more time to strategize, negotiate and plan. In the hot market that ended in March of 2022, the typical buyer had to see more homes and inevitably lost out on many of those that sold too quickly or lost out in multiple offers. You saw the home Saturday and offers were Monday. In the current market, while we are struggling with an inventory issue, there is much less competition and most sales are occurring between the seller and one buyer. Meaning less blind bidding and more time for due diligence.

PRICE
It's important to look at the big picture when considering upsizing. Yes, in East Vancouver based on HPI Benchmark price data, if you sold your condo in March of 2022 you could expect to have made 7-12% more than January of 2023; so that's 50k less proceeds from the sale in January of 2023!

That's a hard pill to swallow.

BUT a townhouse would have cost you about 15% more that month as well, that's $150k that you're saving by buying a townhouse now. So moving up to a townhouse just cost you $100k less than it would have in March of 2022.
The detached scenario is even better for buyers; detached home prices fell 14.5% which is $283k based on the benchmark price. So jumping up to a single family home from a condo you're saving about $230k by upsizing in todays market. And from a townhouse to detached home, still a massive $130k less.

FLEXIBILITY

Ask anyone that tried to size up or down in the white hot market, it was extremely stressful. Trying to buy with a subject to sell? No chance, not even for a premium. Buyers had to bring their highest and best offers and take the dates the sellers wanted. Even sellers that gave themselves a 3 or 6 month buffer in their sale completion were struggling to buy before they had to move. Today when you find a home you want to buy, more likely than not you will have a chance to negotiate terms that work with your situation. 

No matter the market, if you present and price your home well, it will sell!
Who you work with matters.

---

Let's chat!

Kade 
Text or call me @ 604-401-9199
Email me @ kadelacasse@gmail.com 



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Most Rental and Age Restrictions are no longer valid with the passing of historic legislation last month!

David Eby followed through on the promise he made in his leadership campaign and introduced Bill 44 which has amended the Strata Property Act so that is no longer legal for Strata’s to adopt bylaws which restrict rentals or impose a minimum age for owners or residents below 55 years (senior housing). This Bill 44 was effective as soon as it passed on November 24th and any bylaws that were previously in place are now unenforceable. 

Owners will still need to follow their Municipal bylaws when it comes to short term rentals. A strata can not restrict rentals but they can refuse permission to obtain a short term rental business license as required in Vancouver when renting for a period of less than 30 days. 

The Premier stated that 2900 homeowners asked for exemptions from the speculation and vacancy tax based on the fact that their Strata would not allow them to rent their unit out. 2900 homes could be added to the rental pool, a rental pool which is in dire need after an over 40% increase in rents year over year in some parts of BC. 

 If you are a buyer in this current market, make sure you go back and look at the units you crossed off of your list because of the age restrictions or rental restrictions. You can now look a bit more freely knowing that if life throws you a curveball; you won’t be as stuck as you may have been in a Strata that doesn’t allow rentals or children.

For homeowners in a previously restricted building, your options just opened up big time. Talk to your Realtor about how this affects the value of your home as well as your Mortgage broker. Depending on your situation, maybe you have grown out of your studio apartment, you may be able to keep this unit and rent it out while you upsize into something bigger and start earning passive income!

Either way, your home will have many more eyes on it when it comes time to sell.


Reach out if you have any questions, let's chat about how this affects the value of your home!

-Kade

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We are less than two months away from the Cooling-Off Period that the government hinted at in 2021. I’m going to break this down for you as of the beginning of November 2022 but as with many regulatory changes; it may take some time to figure out how this change will effect Real Estate practice and strategy moving forward.

The seller’s market of 2020 and 2021 was an awful time for buyers. Subject-free offers were the hot ticket for sellers and desperate Buyers were feeling pressured to remove their subjects in order to stay competitive. The BC Government aiming to protect those consumers introduced the idea of the cooling off period which we are now calling the Home Buyer Rescission Period (HBRP).

The HBRP comes into effect on January 1st, 2023 and will be applicable to most Real Estate transactions in BC. There are a few exemptions the notable ones being;
1)leaseholds
2)pre-sale homes which are regulated under the Real Estate Development Marketing Act (REDMA) and already allow buyers an automatic 7-day right of rescission period.

Okay so what is the HBRP?

The HBRP and amendment to the Property Law Act state that a buyer is allowed to rescind their offer at any point during a 3-business day period starting on the first business day after the offer is accepted. So if a buyer’s offer is accepted on Thursday and assuming there are no holidays; they have until 11:59pm on the following Tuesday to rescind the offer in writing. The penalty for rescinding an offer is 0.25% of the purchase price paid by the Buyer to the Seller. 

Currently, deposits are typically presented when the deal is firm (subjects are removed or the offer was subject-free).
Time will tell what new standards the HBRP will bring to the Real Estate transaction but I foresee a first 0.25% deposit along with the offer and the remaining deposit due upon a firm deal. The new amendment also allows a brokerage to release the 0.25% to the seller and any remaining deposit to the buyer within the rescission period. That way the seller feels comfortable that they will not have to chase down their 0.25% upon rescission as previously both parties had to agree in writing in order for the deposit to be paid out of the Trust account.

This rescission period does not replace the need for other subjects and subjects will run concurrently with the 3 business day window. In order to ensure access for an inspector or appraisal, the subject should still be written into the contract. But, unlike typical subjects which allow the benefitting party to back out of a deal for a specific reason (ie. failed inspection or financing/appraisal issue), the buyer does not need to provide a reason for exercising this right of rescission.

Most importantly; the buyer is not allowed to waive this option. This makes sense as to allow it would render this regulation completely ineffective. Buyers would feel pressured to waive it in order to compete in the next competitive Vancouver Real Estate market.

It may feel like too little too late but while new construction of condos dropped 46% in Metro Vancouver in the first half of 2022 compared to 2021 according to CMHC; we still have a supply issue on our hands and we have not seen our last Multiple Offer-Over Ask competitive market.

While there are ways an educated buyer and a prudent buyer’s agent can lessen the risks of a subject-free offer; I think subject-free offers should be the exception and not the rule for the average buyer. Time will tell how effective this regulation is but I support the government’s goal and hope buyers feel more protected in competitive markets moving forward.

If you have any questions about the new rescission period or buying process, reach out!

Kade Lacasse
Vancouver Realtor
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Days on Market (DOM)- How many days the listing has been live or was live before it sold. Important stat but should be taken with a grain of salt as sellers will re-list their home when the listing is stale and this will restart the DOM count, bringing the listing to the top of the pile once again.

Open House- Window of time where the home will be shown to anyone that would like to have a look around. This will be hosted by a licensed agent but not necessarily the listing agent.

Open House by appt- Same as an open house but for more serious buyers who are either engaged with a Realtor or have contacted the agent directly to schedule an appointment.

Offers as they come- The seller will be reviewing offers as soon as they are received and can accept an offer the first day the listing is live. This is the typical listing strategy.

Holding Offers- The seller has set a date and time in which they have decided to look at offers (ie. 4pm Tuesday January 10th) . This is performed in writing and via a document called “Direction Regarding Presentation of Offers” (DRPO). What is not often understood is that the seller can change this direction (in writing) at any point. They can add a DRPO after originally taking offers as they come OR they can decide to look at strong offers presented before the offer deadline (Bully Offer). If they do choose to look at Bully Offers, they must notify everyone that requested to stay updated on the property in writing that they are moving up the offer deadline. So if you like a property, it’s best to let your agent know so they can express interest in writing and stay updated on the status.
This strategy is used when sellers are expecting multiple offers and in recent years has been combined with a listing price that is lower than the seller is willing to accept.
See my blog on Invitation to Treat for more details

Offer- A completed “Contract of Purchase and Sale” signed by the buyers stating the names of the buyers, sellers, the address of the home, offer price, terms and how long it is open for acceptance. Once the offer is sent, if the other seller signs without any changes, you have an accepted offer.  If they sign but change any terms, this is considered a counter-offer and the changes will need to be signed by the buyers in order to be considered a fully executed accepted offer.

Completion- aka Closing- The date on which the money goes from the buyer’s lawyer or notary to the seller’s lawyer or notary and the Title is officially registered in the Buyer’s name. The buyer becomes responsible for the property at 12:01 am on the completion day which is why we advise our clients to have the home insured for completion day not possession day.

Adjustment- The date that the lawyers use to make adjustments between the buyer and seller for the other costs associated with the property. For example, the seller will be responsible for their share (100/365 days) and the buyer responsible for the remainder (265/365 days) of the Property Tax or Strata fees. The adjustment date is typically the same as the possession date.

Possession- The date and time in which the buyer is entitled to physical possession of the property (assuming there is no tenancy in place).

Firm Deal- An accepted offer which is subject free or the buyer and seller have removed their subjects; the deal is now firm and binding meaning that the parties must perform their obligations set out in the contract (buyer releasing funds for completion and the seller providing a free and clear title and possession) or face legal consequences.

Conditional Offer- an accepted offer that contains Subjects (aka conditions). While there is a conditional offer in place, the seller may accept back-up offers.

Back-up Offer- an accepted offer between a second buyer and the seller that is subject to the first accepted offer falling through. 

Subjects- these are clauses in the contract that allow the benefitting party to walk away from the sale if their subject is not satisfied within the time specified. Typically subjects are for the benefit of the buyer and include financing, inspection, document and title review, etc. but can be for the benefit of the seller.

Deposit-aka earnest money- Money provided by the buyer to secure the sale. This is usually about 5% of the purchase price, due once the deal is firm and deposited into the buyer’s agent’s brokerage trust account. If the buyer is unable to perform their contractual obligations, the seller will be entitled to the deposit but the buyer may be liable for even more than the deposit should the seller have incurred additional damages.
The deposit is considered part of the down payment at completion.

Down Payment- Initial money the buyer pays towards the home (not including the closing costs) to complete the purchase. Purchase price - mortgage= Downpayment 

Appraisal - In terms of Real Estate, an appraisal is when an unbiased and impartial professional determines the value of a home or property. An appraisal can be physical, where the appraiser comes on-site to view the home OR a desk appraisal where they use recent comparable sales to determine the value. Required by lenders for home purchases and home-owners that are looking to re-finance as the lender wants to make sure the value of the home covers their risk, should the borrower default.

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Listing Low: An Invitation To Treat

We've all seen the headlines of these homes selling for $300k, $500k or more over asking price in Vancouver, Metro Vancouver and other areas of BC. So what's the deal?

First thing I want to say is, in our current market Asking Price is BS 85% of the time.
I tell my clients to ignore it or at the very least, take it with a big dry grain of Maldon.

Where in the past asking price has typically been an indication of the Seller’s expectations; the go-to marketing strategy in the Vancouver market is to use a low asking price as an invitation to treat.

What is an invitation to treat? An invitation to treat is when one party delivers information in order to entice another party to make an offer. The originial party is not, and has no intention to be, legally bound by this invitation.
So when that townhouse is listed for $990,000 depsite an identical unit in the same complex having sold for $1,268,000 3 weeks ago; the seller is inviting buyers to bring their best offer but is not legally bound to accept any of those offers, whether they meet or exceed the asking price.

Something that catches my clients off guard about this? If the seller doesn’t get that $300k over asking they wanted, THEY WILL DECLINE ALL OF THE OFFERS and re-list the day after offers were reviewed, raising the price by $300k. Yes they can do that. That’s often when we get to see the true asking price and one of the reasons I say Asking Price is BS only 85% of the time.


In this example, they list the property at $960,000. The agent and seller decide to hold offers off until the following Tuesday. Buyers with low budgets will think this place is a steal under a million and will want to see it along with the townhouse shoppers that missed out on the neighbour's listing last month. Showing appointments will be booked, open houses will have lineups pouring onto the streets and the agent at the open house will tell every buyer and agent just how busy it's been.

And damn, Vancouver loves a line. Makes me think of a restaurant I used to work at that had an amazing breakfast with waffles (yum) and lavender lattes (not for me but you do you, hon) and they served Mon-Fri with no wait because locals and tourists alike were 3 blocks down the street waiting in line for the other belgian waffle, lavender latte spot because *get this* it was known for how long of a wait it was to get a table.

Back to the towhnouse, we now have the frenzy of activity for viewings and when the home shows well there will be mulitple offers. Tuesday rolls around and they get 12 offers, 9 of which are way under market hoping for a miracle and 3 serious offers at around 1.2 million. The listing agent leverages the 3 top offers against each other and the home sells for 1.3 million. $310k over asking and a new record in the complex.

There we have it, a home sold in market but advertised as $310k over asking.

This technique is certainly seeing results and I can't blame the Seller or listing agent for going this route. These sellers want the best and quickest sale of their home and I'm assuming you will too when you sell your next home. But would that unit have sold for 1.3 million if they listed it at 1.26? Maybe, because there were still 3 buyers willing to pay at least 1.2 million. 

Bottom Line; as a buyer, you can't control how a seller chooses to list or market their home. What can you do?
Don't take it personally! Adjust your expectations, stop believing the over-ask hype and have a chat with your trusty Realtor about whether this home is priced in market and if it will actually sell within your budget.

Happy to answer any questions about this pricing strategy, the buying and offer process or anything else Vancouver Waffle Spot or Real Estate related.
Use the Let's Connect form below or text/call direct at 604-401-9199.


- Kade Lacasse | Vancouver Realtor

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Leasehold; Too Cheap To Be True?


In the first three weeks of working with new clients in the Vancouver market, like clock work; they'll send me an amazing property that popped up in their budget. "Is this place for real? Ideal location, 2 balconies and we'd have a guest room! Tell us this is for real!"


Short Answer: Let’s jump on a call.

Long Answer: It is for real but it may not be for you…

These properties are almost always Leasehold Pre-paid Strata which differ from your typical style of ownership in BC (Freehold or Freehold Strata). Freehold is where you own the land and improvements or Freehold Strata where you own your unit and your share of the common assets (see Strata Finances 101 for more).

When you purchase a leasehold strata; you do not own the land or the building but are purchasing the rights to exclusively occupy your unit or home through a lease granted by the landlord. The initial length of the term can vary but is typically 99 years and can be bought or sold like any other home up until the expiration date. The landlord could be the City of Vancouver like the publicly owned land in South False Creek and the River District or privately owned land.

The lease may be pre-paid or not pre-paid and due monthly along with your monthly maintenance fees. Upon expiration of the lease, the leaseholder and landlord will either renegotiate a new term or an end to the tenancy depending on the details of the lease.

The positives; Leasehold properties are valued below Freehold properties giving buyers with smaller budgets the opportunity to avoid a commute, stay close to the neighbourhoods they’ve previously rented in and afford a home that is bigger with room to grow for a family. Also, if rentals are allowed then, depending on the area and your downpayment, you may be able to turn a leasehold into a cash-flowing asset*.

The negatives; Leasehold properties will not appreciate at the same rate as Freehold. Where Freehold properties in Vancouver have doubled since 2015, some Leasehold properties with longer terms have seen appreciation from 20-50% while those nearing their expiration in False Creek have seen modest appreciation and even a possible loss with the uncertainty of renewal and the cost of renewal. Leaseholds are also harder to sell as not every buyer is interested in that product.

Barriers; financing is more difficult with leaseholds than freehold. Your lender may have different minimums for downpayment as well as maximum amortization terms (the length of your mortgage) equalling higher payments. Chat with your Mortgage Broker about whether your finances line-up for a Leasehold **


With the above in mind, buyers with a healthy budget that are looking for a way into the market to move up the property ladder or investors looking to leverage credit for equity short-term instead of long term cash-flow should stick with Freehold. But, Buyers with a tighter budget who have location and size as the top priorities should take a serious look at leasehold properties. Your mortgage payments are contributing to your principal and your equity is growing year-over-year even with modest appreciation so they are still a much better alternative to renting.

As always, get a hold of me with any questions by filling in the Let's Connect form below or text/call me directly at 604-401-9199 and let's talk freehold vs. leasehold.


- Kade Lacasse | Vancouver Realtor


* A Cash-flowing asset is one in which the revenue (rent) exceeds the expenses (mortgage+fees)

** If you don’t have a great broker that you can ask about how leaseholds may or may not work for you financially, send me a text at 604-401-9199 and I’ll get you connected Because You Deserve a Knowledgable Mortgage Broker!

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Strata Finance 101


Let’s set the stage; you see a stunning listing on REW.ca, you send it to me (your reliable and responsive Realtor), we go view it and you decide YOU WANT IT. Exciting, let’s get to work!

It’s a 35 year old building with 60 units spread out over 4 floors so we have some due diligence to do in order to ensure this purchase would be a sound investment.


Why? Because when you buy into a strata, you own;


The strata lot which is defined by a strata plan. (Usually a strata lot’s boundaries are at the center of walls, ceilings and floors, but these boundaries will be different if the strata plan shows a different boundary.)

AND a share of the common property and assets (which includes any liability) of the strata corporation that is based on their unit entitlement which is based on the square footage of your unit vs. the total square footage of the strata plan.

It is almost as if you're buying a business as well as your strata lot so the structure and the finances are very important to consider. 



Strata Maintenance Fee 

Due monthly, at minimum this fee funds the annual operations budget by way of the operations fund but should also have an amount set aside to contribute to the Contingency Reserve Fund (CRF). Very rarely will this amount go down and you should prepare for this to increase by at least 1 or 2% annually.

While a low Strata fee may seem attractive, this is only part of the overall financial picture and a low fee may mean below average contributions to the CRF. A 'pro-active Strata' will use the maintenance fee to be diligent about building maintenance and make healthy contributions to the buildings CRF over time which will mean less out of pocket for owners in the long-run. 


Operating Fund

The operating fund is used to run the building including scheduled repairs and maintenance, shared utilities, insurance premiums, etc. and is funded directly by the monthly maintenance fees based on the annual budget proposed and passed by vote at the Annual General Meeting. An older low-rise building’s annual operating budget is about $6/sqft.


Contingency Reserve Fund (CRF)

The CRF is like the strata corporation’s savings account and is used to fund any unexpected or large expenses and projects. By law, this account needs to be at least 25% of the Annual budget (otherwise there may be a drastic increase in maintenance fees or a special levy in order to reach 25%)

Each Strata will have a spending restriction that caps the amount the council may spend on unexpected expenses and amounts above that will require a majority vote at a General Meeting to approve.

The CRF may also be used to bump up the operating fund if that Strata is over budget for the year and the operating fund is inadequate for operating expenses.

An average CRF of an older low-rise building is 97% of the annual operating budget.



Special Levy or Assessment 

This is a payment owed by each owner based on their unit entitlement. A special levy needs to be voted by a 3/4 majority at an Annual General Meeting or a Special General Meeting. This is used to fund necessary projects that either the CRF will not cover or that the owners vote to pay out of pocket to maintain the level of the CRF. The person who owns the strata lot when the vote is passed for a levy is the person responsible for paying that levy, even if they sell the strata lot before the payment is due. Although you may not have to pay a special levy that was recently passed, it is important to note that a special levy was either needed OR was the preferred method of funding a project by the majority of the building because you will be responsible for any special levies passed while owning the lot (whether you vote for it or not).



To determine the above, we are given access to the finances, budget, any recent engineering reports, and Council minutes from the meetings in the last two years of the Strata Corp. When possible we do this before we write an offer or we write it in the offer as a condition, meaning we need to receive and approve these documents before you as the buyer are under legal obligation to fulfill the contract (firm deal).


We also want to evaluate the age of the most substantial items;

Elevator, Parking, Roof, Plumbing and Envelope. 


If the CRF is healthy but none of these have been replaced recently or there is mention in the minutes about upcoming work on these big ticket items that has yet to be voted on; PAY CLOSE ATTENTION.


On the other hand, if the CRF is depleted due to recent upgrades and the big ticket items are in good condition, the strata is contributing over 10% of the annual operating budget to build it back up then this building and Strata may still be a sound investment.


This is just the tip of the due diligence iceberg; another great reason to work with a knowledgable Realtor.

If you found this helpful, send it to a friend who also needs a little Strata Finance 101.


Let's talk Strata bb.


Kade Lacasse





More Information; Government of BC-Understanding Stratas

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Important Changes to The Residential Tenancy Act

And What Landlords, Buyers, and Tenants Should Know

The Residential Tenancy Act in BC has recently undergone some significant changes impacting landlords, buyers, and tenants. This is not an exhaustive breakdown of the changes but these are the key changes that could affect the everyday real estate transaction.

Notice Periods
The most significant change is the extended notice period for tenants. Landlords are now required to give a four-month notice to vacate for personal or caretaker use, up from the previous two months. This change came into effect on July 18th, 2024.

It's important to note that notice is still effective on the final day of your rental period (the day before rent is due). So, if you are in a month-to-month lease paying rent at the beginning of the month and receive notice on September 10th, you won't be required to vacate until January 31st, 2025.

However, it seems the Government of BC acted recklessly by announcing these changes without properly consulting the industries impacted. Initially, the four-month notice period also applied to landlords serving notice on behalf of new buyers intending to move into the home and requesting vacant possession. The issue with including primary residence purchases is that rate holds—when a buyer’s lender pre-approves them at a certain interest rate—are typically valid for only 90-120 days, with rare exceptions. For example, if a buyer was just pre-approved at the end of August, their rate hold would expire by the end of December, leaving them vulnerable to rate shifts that could affect their mortgage qualification. Unfortunately, major banks, being national entities, are unlikely to adjust their policies based on one province’s legislative changes so they would not provide any workarounds. While I understand their intention to enhance tenant protections, the originally introduced extended notice period would disproportionately penalize first-time buyers, who have no options to bridge their mortgage from an existing property. 

The solution? After lobbying from mortgage brokers and the real estate industry, the BC Government announced an amendment reducing the notice period for landlords instructed to provide notice for a purchaser when they or their close family member will live in the property, from four months to three months. This amendment was effective August 21st.

So, if you are in a month-to-month lease and your landlord, after a buyer has removed subjects and instructed them to provide notice to vacate, serves that notice on September 2nd, you would be required to vacate by December 31st, 2025.

Fixed-term tenancies can be served notice to vacate, but the three-month notice still applies, and the effective date to vacate cannot be before the end of their fixed term.

Web Portal: A New Tool for Transparency
Landlords are now required to use the Landlord Use Web Portal to generate the Notice to End Tenancy. This creates a tool for regulators to register and track evictions, increasing transparency in the process. Additionally, notices generated due to a new buyer requesting vacant possession will now require a copy of the Contract of Purchase and Sale to be included.

Initial Length of Use
They have increased the length of time a landlord must use a rental unit for personal or caretaker use following the eviction of a former tenant. This period is up from 6 months to 12 months. If a landlord fails to demonstrate personal use or caretaker use for 12 months, they may be liable to pay an evicted tenant 12 months’ rent as compensation.

Dispute Period
The deadline for a tenant to dispute has also increased to;
-21 days when receiving 3 months notice
-30 days when receiving 4 months notice.

The clock starts as soon as the notice is deemed received. (more info about serving notice here)

Landlords: Navigating the New Landscape
Even with the latest amendment reducing notice to three months, selling a unit with a tenant has gotten stickier. Currently, inventory is above seasonal averages, and most investors are on the sidelines due to high interest rates which means the active buyers are looking for vacant possession not taking over tenants.

Landlords should be aware of the challenges they may face when selling a tenanted property, including:
-smaller buyer pool due to expiring rate holds, risks assuming tenancy
-long completion
-not staged well
-inflexible showing times

In a busier market, your property will still move, but what are you leaving on the table?
In slower markets, your property sitting on the market will only lead buyers to look for more of a deal.

Buyers: Understanding the Risks
Don't shy away from a property just because it is tenanted, but make sure you understand the risk of buying a tenanted property. If you're getting good value, need a long completion, or have found a unique property then I understand but otherwise, why deal with the additional stress of a tenanted property?

Tenants: Leverage the New Rules
Yes, your notice period has extended, which is valuable to help you find a home in a typically terrible rental market. But the blessing in this amendment is your increase in leverage. Once you know of your landlord’s intention to sell; using the knowledge that a vacant home will sell easier, you may be able to get more than the Tenancy Act entitles you to...
How you ask?

Cash for Keys, baby! A Potential Win-Win Solution
The term "Cash for Keys" refers to an agreement where a tenant agrees to vacate a property on a specific date in exchange for a payment from the landlord. This arrangement can be beneficial for both parties:

Sellers/Landlords  have a vacant property that they can stage and market which will no longer deter buyers who are averse to the completion length.

Tenants could leave on their own terms with more money in their pocket to help ease the cost of moving and off-set your potential increase in rent.

Final Thoughts
These changes to the Residential Tenancy Act have shifted the landscape for landlords, buyers, and tenants in BC. It's important to be informed about these changes and understand how they may impact your real estate decisions and the best way to make sure you stay informed is to work with a professional that is on top of the latest regulations and helps you make informed decisions.

https://calendly.com/kadelacasse_realtor/


Again, this is not an exhaustive breakdown; you can find much more information regarding Bill 14 by typing "bill 14 residential tenancy act" into your favourite search engine.

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SOLD Beautiful Mount Pleasant Couch House

I love helping turn Mt Pleasant renters into Mt Pleasant homeowners✨

 These buyers filled their home buying bingo card in a very short amount of time including three inspections, having to walk away from an accepted offer and competing against 8 other offers.

This meant they had narrowed down their livable compromises and the deal breakers through tough decisions including just how important staying in Mount Pleasant was.

They were seasoned buyers after less than 2 months of shopping. So, when this place popped up, they were in the next day to view and sent an offer that evening that was strong enough to deter the seller from waiting for their open house.

They secured a beautiful 6 year old home in a small strata in Vancouver's best neighbourhood.
No shared walls, so much storage and an attached garage.

Well done R & A 

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Mount Pleasant Market Update




If you’re buying a condo or thinking of listing, you should be watching the stats on a local level. 

Nothing new here, Mount Pleasant condos are a hot commodity. And with the skytrain extension, new St Pauls Hospital and office development booming in the area, I can’t see demand slowing anytime soon.

It may seem counter productive but with the possibility of more interest rate increases on the horizon; a prudent buyer will stay active or get active in this market. Why? One or two more hikes will not have the same affect on the market as the 8 straight increases between March 2022 and January 2023 BUT another increase in July combined with the typical summer lull from folks travelling may just open up a window for opportunity. At the very least, you could see less competition.

How about some good news for the small budget buyer? There are pockets of older buildings that can still bring great value per sqft if you can sacrifice luxuries like in-suite laundry for location. Of course it all depends on your personal priorities.

First time buyers; Unfortunately this neighbourhood is not going to get more affordable so starting where you can instead of waiting for the dream place is the way in. 

Kade

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Time for more bedrooms or an office? A garage? A yard? It is a great time to move up in space and in value!

Not all markets are the same and not all products are the same. In down or stale markets, the bigger ticket items take a harder hit and this is when you can get the most value moving up in the market.

Three Reasons why this market is the best time to upsize!

PACE
You will have more time to strategize, negotiate and plan. In the hot market that ended in March of 2022, the typical buyer had to see more homes and inevitably lost out on many of those that sold too quickly or lost out in multiple offers. You saw the home Saturday and offers were Monday. In the current market, while we are struggling with an inventory issue, there is much less competition and most sales are occurring between the seller and one buyer. Meaning less blind bidding and more time for due diligence.

PRICE
It's important to look at the big picture when considering upsizing. Yes, in East Vancouver based on HPI Benchmark price data, if you sold your condo in March of 2022 you could expect to have made 7-12% more than January of 2023; so that's 50k less proceeds from the sale in January of 2023!

That's a hard pill to swallow.

BUT a townhouse would have cost you about 15% more that month as well, that's $150k that you're saving by buying a townhouse now. So moving up to a townhouse just cost you $100k less than it would have in March of 2022.
The detached scenario is even better for buyers; detached home prices fell 14.5% which is $283k based on the benchmark price. So jumping up to a single family home from a condo you're saving about $230k by upsizing in todays market. And from a townhouse to detached home, still a massive $130k less.

FLEXIBILITY

Ask anyone that tried to size up or down in the white hot market, it was extremely stressful. Trying to buy with a subject to sell? No chance, not even for a premium. Buyers had to bring their highest and best offers and take the dates the sellers wanted. Even sellers that gave themselves a 3 or 6 month buffer in their sale completion were struggling to buy before they had to move. Today when you find a home you want to buy, more likely than not you will have a chance to negotiate terms that work with your situation. 

No matter the market, if you present and price your home well, it will sell!
Who you work with matters.

---

Let's chat!

Kade 
Text or call me @ 604-401-9199
Email me @ kadelacasse@gmail.com 



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Most Rental and Age Restrictions are no longer valid with the passing of historic legislation last month!

David Eby followed through on the promise he made in his leadership campaign and introduced Bill 44 which has amended the Strata Property Act so that is no longer legal for Strata’s to adopt bylaws which restrict rentals or impose a minimum age for owners or residents below 55 years (senior housing). This Bill 44 was effective as soon as it passed on November 24th and any bylaws that were previously in place are now unenforceable. 

Owners will still need to follow their Municipal bylaws when it comes to short term rentals. A strata can not restrict rentals but they can refuse permission to obtain a short term rental business license as required in Vancouver when renting for a period of less than 30 days. 

The Premier stated that 2900 homeowners asked for exemptions from the speculation and vacancy tax based on the fact that their Strata would not allow them to rent their unit out. 2900 homes could be added to the rental pool, a rental pool which is in dire need after an over 40% increase in rents year over year in some parts of BC. 

 If you are a buyer in this current market, make sure you go back and look at the units you crossed off of your list because of the age restrictions or rental restrictions. You can now look a bit more freely knowing that if life throws you a curveball; you won’t be as stuck as you may have been in a Strata that doesn’t allow rentals or children.

For homeowners in a previously restricted building, your options just opened up big time. Talk to your Realtor about how this affects the value of your home as well as your Mortgage broker. Depending on your situation, maybe you have grown out of your studio apartment, you may be able to keep this unit and rent it out while you upsize into something bigger and start earning passive income!

Either way, your home will have many more eyes on it when it comes time to sell.


Reach out if you have any questions, let's chat about how this affects the value of your home!

-Kade

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We are less than two months away from the Cooling-Off Period that the government hinted at in 2021. I’m going to break this down for you as of the beginning of November 2022 but as with many regulatory changes; it may take some time to figure out how this change will effect Real Estate practice and strategy moving forward.

The seller’s market of 2020 and 2021 was an awful time for buyers. Subject-free offers were the hot ticket for sellers and desperate Buyers were feeling pressured to remove their subjects in order to stay competitive. The BC Government aiming to protect those consumers introduced the idea of the cooling off period which we are now calling the Home Buyer Rescission Period (HBRP).

The HBRP comes into effect on January 1st, 2023 and will be applicable to most Real Estate transactions in BC. There are a few exemptions the notable ones being;
1)leaseholds
2)pre-sale homes which are regulated under the Real Estate Development Marketing Act (REDMA) and already allow buyers an automatic 7-day right of rescission period.

Okay so what is the HBRP?

The HBRP and amendment to the Property Law Act state that a buyer is allowed to rescind their offer at any point during a 3-business day period starting on the first business day after the offer is accepted. So if a buyer’s offer is accepted on Thursday and assuming there are no holidays; they have until 11:59pm on the following Tuesday to rescind the offer in writing. The penalty for rescinding an offer is 0.25% of the purchase price paid by the Buyer to the Seller. 

Currently, deposits are typically presented when the deal is firm (subjects are removed or the offer was subject-free).
Time will tell what new standards the HBRP will bring to the Real Estate transaction but I foresee a first 0.25% deposit along with the offer and the remaining deposit due upon a firm deal. The new amendment also allows a brokerage to release the 0.25% to the seller and any remaining deposit to the buyer within the rescission period. That way the seller feels comfortable that they will not have to chase down their 0.25% upon rescission as previously both parties had to agree in writing in order for the deposit to be paid out of the Trust account.

This rescission period does not replace the need for other subjects and subjects will run concurrently with the 3 business day window. In order to ensure access for an inspector or appraisal, the subject should still be written into the contract. But, unlike typical subjects which allow the benefitting party to back out of a deal for a specific reason (ie. failed inspection or financing/appraisal issue), the buyer does not need to provide a reason for exercising this right of rescission.

Most importantly; the buyer is not allowed to waive this option. This makes sense as to allow it would render this regulation completely ineffective. Buyers would feel pressured to waive it in order to compete in the next competitive Vancouver Real Estate market.

It may feel like too little too late but while new construction of condos dropped 46% in Metro Vancouver in the first half of 2022 compared to 2021 according to CMHC; we still have a supply issue on our hands and we have not seen our last Multiple Offer-Over Ask competitive market.

While there are ways an educated buyer and a prudent buyer’s agent can lessen the risks of a subject-free offer; I think subject-free offers should be the exception and not the rule for the average buyer. Time will tell how effective this regulation is but I support the government’s goal and hope buyers feel more protected in competitive markets moving forward.

If you have any questions about the new rescission period or buying process, reach out!

Kade Lacasse
Vancouver Realtor
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Days on Market (DOM)- How many days the listing has been live or was live before it sold. Important stat but should be taken with a grain of salt as sellers will re-list their home when the listing is stale and this will restart the DOM count, bringing the listing to the top of the pile once again.

Open House- Window of time where the home will be shown to anyone that would like to have a look around. This will be hosted by a licensed agent but not necessarily the listing agent.

Open House by appt- Same as an open house but for more serious buyers who are either engaged with a Realtor or have contacted the agent directly to schedule an appointment.

Offers as they come- The seller will be reviewing offers as soon as they are received and can accept an offer the first day the listing is live. This is the typical listing strategy.

Holding Offers- The seller has set a date and time in which they have decided to look at offers (ie. 4pm Tuesday January 10th) . This is performed in writing and via a document called “Direction Regarding Presentation of Offers” (DRPO). What is not often understood is that the seller can change this direction (in writing) at any point. They can add a DRPO after originally taking offers as they come OR they can decide to look at strong offers presented before the offer deadline (Bully Offer). If they do choose to look at Bully Offers, they must notify everyone that requested to stay updated on the property in writing that they are moving up the offer deadline. So if you like a property, it’s best to let your agent know so they can express interest in writing and stay updated on the status.
This strategy is used when sellers are expecting multiple offers and in recent years has been combined with a listing price that is lower than the seller is willing to accept.
See my blog on Invitation to Treat for more details

Offer- A completed “Contract of Purchase and Sale” signed by the buyers stating the names of the buyers, sellers, the address of the home, offer price, terms and how long it is open for acceptance. Once the offer is sent, if the other seller signs without any changes, you have an accepted offer.  If they sign but change any terms, this is considered a counter-offer and the changes will need to be signed by the buyers in order to be considered a fully executed accepted offer.

Completion- aka Closing- The date on which the money goes from the buyer’s lawyer or notary to the seller’s lawyer or notary and the Title is officially registered in the Buyer’s name. The buyer becomes responsible for the property at 12:01 am on the completion day which is why we advise our clients to have the home insured for completion day not possession day.

Adjustment- The date that the lawyers use to make adjustments between the buyer and seller for the other costs associated with the property. For example, the seller will be responsible for their share (100/365 days) and the buyer responsible for the remainder (265/365 days) of the Property Tax or Strata fees. The adjustment date is typically the same as the possession date.

Possession- The date and time in which the buyer is entitled to physical possession of the property (assuming there is no tenancy in place).

Firm Deal- An accepted offer which is subject free or the buyer and seller have removed their subjects; the deal is now firm and binding meaning that the parties must perform their obligations set out in the contract (buyer releasing funds for completion and the seller providing a free and clear title and possession) or face legal consequences.

Conditional Offer- an accepted offer that contains Subjects (aka conditions). While there is a conditional offer in place, the seller may accept back-up offers.

Back-up Offer- an accepted offer between a second buyer and the seller that is subject to the first accepted offer falling through. 

Subjects- these are clauses in the contract that allow the benefitting party to walk away from the sale if their subject is not satisfied within the time specified. Typically subjects are for the benefit of the buyer and include financing, inspection, document and title review, etc. but can be for the benefit of the seller.

Deposit-aka earnest money- Money provided by the buyer to secure the sale. This is usually about 5% of the purchase price, due once the deal is firm and deposited into the buyer’s agent’s brokerage trust account. If the buyer is unable to perform their contractual obligations, the seller will be entitled to the deposit but the buyer may be liable for even more than the deposit should the seller have incurred additional damages.
The deposit is considered part of the down payment at completion.

Down Payment- Initial money the buyer pays towards the home (not including the closing costs) to complete the purchase. Purchase price - mortgage= Downpayment 

Appraisal - In terms of Real Estate, an appraisal is when an unbiased and impartial professional determines the value of a home or property. An appraisal can be physical, where the appraiser comes on-site to view the home OR a desk appraisal where they use recent comparable sales to determine the value. Required by lenders for home purchases and home-owners that are looking to re-finance as the lender wants to make sure the value of the home covers their risk, should the borrower default.

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Listing Low: An Invitation To Treat

We've all seen the headlines of these homes selling for $300k, $500k or more over asking price in Vancouver, Metro Vancouver and other areas of BC. So what's the deal?

First thing I want to say is, in our current market Asking Price is BS 85% of the time.
I tell my clients to ignore it or at the very least, take it with a big dry grain of Maldon.

Where in the past asking price has typically been an indication of the Seller’s expectations; the go-to marketing strategy in the Vancouver market is to use a low asking price as an invitation to treat.

What is an invitation to treat? An invitation to treat is when one party delivers information in order to entice another party to make an offer. The originial party is not, and has no intention to be, legally bound by this invitation.
So when that townhouse is listed for $990,000 depsite an identical unit in the same complex having sold for $1,268,000 3 weeks ago; the seller is inviting buyers to bring their best offer but is not legally bound to accept any of those offers, whether they meet or exceed the asking price.

Something that catches my clients off guard about this? If the seller doesn’t get that $300k over asking they wanted, THEY WILL DECLINE ALL OF THE OFFERS and re-list the day after offers were reviewed, raising the price by $300k. Yes they can do that. That’s often when we get to see the true asking price and one of the reasons I say Asking Price is BS only 85% of the time.


In this example, they list the property at $960,000. The agent and seller decide to hold offers off until the following Tuesday. Buyers with low budgets will think this place is a steal under a million and will want to see it along with the townhouse shoppers that missed out on the neighbour's listing last month. Showing appointments will be booked, open houses will have lineups pouring onto the streets and the agent at the open house will tell every buyer and agent just how busy it's been.

And damn, Vancouver loves a line. Makes me think of a restaurant I used to work at that had an amazing breakfast with waffles (yum) and lavender lattes (not for me but you do you, hon) and they served Mon-Fri with no wait because locals and tourists alike were 3 blocks down the street waiting in line for the other belgian waffle, lavender latte spot because *get this* it was known for how long of a wait it was to get a table.

Back to the towhnouse, we now have the frenzy of activity for viewings and when the home shows well there will be mulitple offers. Tuesday rolls around and they get 12 offers, 9 of which are way under market hoping for a miracle and 3 serious offers at around 1.2 million. The listing agent leverages the 3 top offers against each other and the home sells for 1.3 million. $310k over asking and a new record in the complex.

There we have it, a home sold in market but advertised as $310k over asking.

This technique is certainly seeing results and I can't blame the Seller or listing agent for going this route. These sellers want the best and quickest sale of their home and I'm assuming you will too when you sell your next home. But would that unit have sold for 1.3 million if they listed it at 1.26? Maybe, because there were still 3 buyers willing to pay at least 1.2 million. 

Bottom Line; as a buyer, you can't control how a seller chooses to list or market their home. What can you do?
Don't take it personally! Adjust your expectations, stop believing the over-ask hype and have a chat with your trusty Realtor about whether this home is priced in market and if it will actually sell within your budget.

Happy to answer any questions about this pricing strategy, the buying and offer process or anything else Vancouver Waffle Spot or Real Estate related.
Use the Let's Connect form below or text/call direct at 604-401-9199.


- Kade Lacasse | Vancouver Realtor

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Leasehold; Too Cheap To Be True?


In the first three weeks of working with new clients in the Vancouver market, like clock work; they'll send me an amazing property that popped up in their budget. "Is this place for real? Ideal location, 2 balconies and we'd have a guest room! Tell us this is for real!"


Short Answer: Let’s jump on a call.

Long Answer: It is for real but it may not be for you…

These properties are almost always Leasehold Pre-paid Strata which differ from your typical style of ownership in BC (Freehold or Freehold Strata). Freehold is where you own the land and improvements or Freehold Strata where you own your unit and your share of the common assets (see Strata Finances 101 for more).

When you purchase a leasehold strata; you do not own the land or the building but are purchasing the rights to exclusively occupy your unit or home through a lease granted by the landlord. The initial length of the term can vary but is typically 99 years and can be bought or sold like any other home up until the expiration date. The landlord could be the City of Vancouver like the publicly owned land in South False Creek and the River District or privately owned land.

The lease may be pre-paid or not pre-paid and due monthly along with your monthly maintenance fees. Upon expiration of the lease, the leaseholder and landlord will either renegotiate a new term or an end to the tenancy depending on the details of the lease.

The positives; Leasehold properties are valued below Freehold properties giving buyers with smaller budgets the opportunity to avoid a commute, stay close to the neighbourhoods they’ve previously rented in and afford a home that is bigger with room to grow for a family. Also, if rentals are allowed then, depending on the area and your downpayment, you may be able to turn a leasehold into a cash-flowing asset*.

The negatives; Leasehold properties will not appreciate at the same rate as Freehold. Where Freehold properties in Vancouver have doubled since 2015, some Leasehold properties with longer terms have seen appreciation from 20-50% while those nearing their expiration in False Creek have seen modest appreciation and even a possible loss with the uncertainty of renewal and the cost of renewal. Leaseholds are also harder to sell as not every buyer is interested in that product.

Barriers; financing is more difficult with leaseholds than freehold. Your lender may have different minimums for downpayment as well as maximum amortization terms (the length of your mortgage) equalling higher payments. Chat with your Mortgage Broker about whether your finances line-up for a Leasehold **


With the above in mind, buyers with a healthy budget that are looking for a way into the market to move up the property ladder or investors looking to leverage credit for equity short-term instead of long term cash-flow should stick with Freehold. But, Buyers with a tighter budget who have location and size as the top priorities should take a serious look at leasehold properties. Your mortgage payments are contributing to your principal and your equity is growing year-over-year even with modest appreciation so they are still a much better alternative to renting.

As always, get a hold of me with any questions by filling in the Let's Connect form below or text/call me directly at 604-401-9199 and let's talk freehold vs. leasehold.


- Kade Lacasse | Vancouver Realtor


* A Cash-flowing asset is one in which the revenue (rent) exceeds the expenses (mortgage+fees)

** If you don’t have a great broker that you can ask about how leaseholds may or may not work for you financially, send me a text at 604-401-9199 and I’ll get you connected Because You Deserve a Knowledgable Mortgage Broker!

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Strata Finance 101


Let’s set the stage; you see a stunning listing on REW.ca, you send it to me (your reliable and responsive Realtor), we go view it and you decide YOU WANT IT. Exciting, let’s get to work!

It’s a 35 year old building with 60 units spread out over 4 floors so we have some due diligence to do in order to ensure this purchase would be a sound investment.


Why? Because when you buy into a strata, you own;


The strata lot which is defined by a strata plan. (Usually a strata lot’s boundaries are at the center of walls, ceilings and floors, but these boundaries will be different if the strata plan shows a different boundary.)

AND a share of the common property and assets (which includes any liability) of the strata corporation that is based on their unit entitlement which is based on the square footage of your unit vs. the total square footage of the strata plan.

It is almost as if you're buying a business as well as your strata lot so the structure and the finances are very important to consider. 



Strata Maintenance Fee 

Due monthly, at minimum this fee funds the annual operations budget by way of the operations fund but should also have an amount set aside to contribute to the Contingency Reserve Fund (CRF). Very rarely will this amount go down and you should prepare for this to increase by at least 1 or 2% annually.

While a low Strata fee may seem attractive, this is only part of the overall financial picture and a low fee may mean below average contributions to the CRF. A 'pro-active Strata' will use the maintenance fee to be diligent about building maintenance and make healthy contributions to the buildings CRF over time which will mean less out of pocket for owners in the long-run. 


Operating Fund

The operating fund is used to run the building including scheduled repairs and maintenance, shared utilities, insurance premiums, etc. and is funded directly by the monthly maintenance fees based on the annual budget proposed and passed by vote at the Annual General Meeting. An older low-rise building’s annual operating budget is about $6/sqft.


Contingency Reserve Fund (CRF)

The CRF is like the strata corporation’s savings account and is used to fund any unexpected or large expenses and projects. By law, this account needs to be at least 25% of the Annual budget (otherwise there may be a drastic increase in maintenance fees or a special levy in order to reach 25%)

Each Strata will have a spending restriction that caps the amount the council may spend on unexpected expenses and amounts above that will require a majority vote at a General Meeting to approve.

The CRF may also be used to bump up the operating fund if that Strata is over budget for the year and the operating fund is inadequate for operating expenses.

An average CRF of an older low-rise building is 97% of the annual operating budget.



Special Levy or Assessment 

This is a payment owed by each owner based on their unit entitlement. A special levy needs to be voted by a 3/4 majority at an Annual General Meeting or a Special General Meeting. This is used to fund necessary projects that either the CRF will not cover or that the owners vote to pay out of pocket to maintain the level of the CRF. The person who owns the strata lot when the vote is passed for a levy is the person responsible for paying that levy, even if they sell the strata lot before the payment is due. Although you may not have to pay a special levy that was recently passed, it is important to note that a special levy was either needed OR was the preferred method of funding a project by the majority of the building because you will be responsible for any special levies passed while owning the lot (whether you vote for it or not).



To determine the above, we are given access to the finances, budget, any recent engineering reports, and Council minutes from the meetings in the last two years of the Strata Corp. When possible we do this before we write an offer or we write it in the offer as a condition, meaning we need to receive and approve these documents before you as the buyer are under legal obligation to fulfill the contract (firm deal).


We also want to evaluate the age of the most substantial items;

Elevator, Parking, Roof, Plumbing and Envelope. 


If the CRF is healthy but none of these have been replaced recently or there is mention in the minutes about upcoming work on these big ticket items that has yet to be voted on; PAY CLOSE ATTENTION.


On the other hand, if the CRF is depleted due to recent upgrades and the big ticket items are in good condition, the strata is contributing over 10% of the annual operating budget to build it back up then this building and Strata may still be a sound investment.


This is just the tip of the due diligence iceberg; another great reason to work with a knowledgable Realtor.

If you found this helpful, send it to a friend who also needs a little Strata Finance 101.


Let's talk Strata bb.


Kade Lacasse





More Information; Government of BC-Understanding Stratas

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