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Strata rules oversee common facilities

Strata rules must be approved by vote

Tony Gioventu
The Province

Dear Tony:

Our highrise building has a recreation room that can be rented for private parties and is used for social events and meetings in our community. As a result of several owner events where there have been additional janitorial costs, our strata council has decided to close off the recreation room.

Our community plans potluck gatherings for most holidays and festivals like Valentine’s Day, St. Patrick’s Day, Easter and Christmas.

Our council tends to rule the building with a number of policies and change them without any consultation of the owners. How do we change this behaviour to ensure fair access to our recreation room?

Nina R. 

Dear Nina:

The use of common facilities is regulated and managed through bylaws or rules. Once a bylaw or rule has been properly approved or ratified by the owners at a general meeting, the strata council must enforce those bylaws and rules and is required to convene a meeting of the owners to approve any amendments.

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If council approves a rule at a council meeting, that rule is in place until the next general meeting where the owners are required to ratify the new rule by majority vote or it will cease to have effect.

Rules are a very useful form of governance in strata corporations as they may be created by council by majority vote at a council meeting, or the owners may petition to demand a special general meeting to approve a new rule or add a new rule to the agenda of the next general meeting.

Rules are not filed in the land title registry. They apply only to the use and enjoyment of common property, and may include user fees to cover the costs of recreational facilities, key fobs, the recovery of operating costs for electric-vehicle charging stations and other common facility costs. If the strata corporation is going to impose user fees, deposits or charges for common area facilities or services in a rule, the rule must be first ratified by the owners at a general meeting.

Strata councils routinely try to impose building policies on owners and tenants and on fellow council members to avoid the scrutiny and approval of owners at general meetings. There is no ability in the Strata Property Act to enforce a building-use policy unless it has been ratified as a rule or approved as a bylaw. 

Many strata corporations have adopted and used rules effectively. To ensure your owners and occupants are aware of the rules, confirm you have a consolidated set that is published and available.

While we often assume rules are general use and easy to create, they must still comply with all enactments of law, the human rights code and the Strata Property Act and Regulations. A legal review of bylaws and rules is recommended at least every five years or when there are changes to legislation.

© 2019 Postmedia Network Inc.

Red tape is a major influence in Vancouver’s housing scarcity

Bureaucratic roadblocks hinder housing supply

Neil Sharma
Canadian Real Estate Wealth

Bureaucratic roadblocks continue to have a major influence on Metro Vancouver’s housing supply, as these intricacies have led to massively overdue project approvals, according to the recently released Market Intel real estate report by MLA Canada.

Burnaby, Vancouver, and the District of North Vancouver are the areas hit the hardest by these delays, with development approval timelines being among the longest (at nearly 2 years) in the region.

n addition, construction costs have increased by almost 50% on average over the past 5 years. This burden is almost always absorbed by the end consumer, the MLA study noted.

“2019 is expected to be highly competitive, but an overall balanced market with nominal price escalation will provide purchasers with choice and value,” MLA Canada chief advisory officer and partner Suzana Goncalves said.

One bit of good news is an increased volume of new stock incoming. MLA Intel is expecting 13,975 pre-sale units to be released this year, considerably above the 11,584 in 2018.

However, the study quickly added that B.C.’s population will experience consistent growth for the next several years, with roughly 50,000 new residents in 2019 alone.

“With job opportunities remaining high compared to other provinces, interprovincial migration will likely remain constant over the next three years. As housing starts are expected to decline in Metro Vancouver over the coming two years, this adds pressure to the housing market.”

MLA Canada executive director and partner Cameron McNeill urged the government at every level to “be progressive in our solutions to provide housing – the long-term viability of our cities depend on it.

“BC’s fundamentals remain stronger than elsewhere in the country. This means pressures on our housing market will continue, particularly with population increasing and housing starts declining.”

Copyright © 2019 Key Media Pty Ltd

Redfin comes to Canada with full-service agents in Toronto

Redfin in Vancouver coming soon

Steve Randall

One of America’s fastest-growing real estate firms has now launched in Canada.

Redfin positions itself as a “technology-powered residential brokerage with a mission to redefine real estate” to favour consumers; and has expanded swiftly in the US with 85 markets. It has also launched a homebuying service and mortgage operations south of the border.

For Canada, the firm has begun with a Toronto launch Tuesday. Vancouver will follow in the spring with further cities expected to be added later.

“I’m not sure when I’ve seen the people at Redfin as excited as we are today to open for business in Toronto,” said Redfin CEO Glenn Kelman. “Many of us have lived, worked or traveled in Canada, and we’re excited to give the people here our best service, good value, and all the benefits of our technology.”

Tech savings cut costs The firm says that its efficiency savings through using technology means they can offer a 1% listing fee for sellers and can refund of portion of its commission to its homebuying clients.

“Our technology makes it easier to buy and sell for clients, and our business model rewards agents for delivering the best service,” said Blair Anderson, who will run Redfin’s real estate operations in Toronto. Anderson brings over a decade of local real estate experience to the Redfin team.

Although tech is at the heart of the firm, it employs its own real estate agents who are salaried and paid a bonus based on customer satisfaction. Customer feedback is published on agents’ profiles.

Search portal Along with its Toronto launch, the firm has also launched its redfin.ca search site and mobile apps where customers can search all the agent-listed homes for sale in most provinces and see sale prices of homes in the GTA.

“Canadians are discerning and tech-savvy, and I suspect they’ll be very receptive to Redfin’s unmatched combination of agent service, technology and value. Especially given today’s shifting Canadian real estate market, buyers and sellers will appreciate the transparency of the data Redfin provides on recent home sales and market trends,” Anderson said.

Copyright © 2019 Key Media Pty Ltd

New brokerage entices recruits with unique incentives

Low commissions and rebates a hit

Neil Sharma

There’s a new realty brokerage in town and it’s already a hit with consumers.

Justo Inc. has only been operating in the Greater Toronto Area since September, but the reception it has received from consumers has been resoundingly positive. One reason is that the brokerage returns 50% of the buyer’s fee. For example, if a home is sold for $750,000, the buyer receives $9,375.

The brokerage has been a success with agents, too. Although the commission fee is lower than the industry standard 2.5%, agents recoup that money by having all of their marketing expenses paid for, in addition to the brokerage providing them voluminous qualified leads.

“We produce all the leads and take care of the costs the agents would have to cover if they were working on their own,” said Vicki Schmidt, Justo’s co-founder, COO and broker of record. “We give them access to a territory where they can do the things they enjoy about real estate, instead of paperwork, lead generation and marketing, which we also take care of for them.”

Agents are given vast territories—outside of Toronto, it could be entire suburbs; inside it could be Forest Hill, Rosedale, or the downtown condo market—and they have the option of managing their own teams.

“They focus on gaining expertise in their markets and being very involved in the day-to-day,” said Schmidt. “If someone is a lead territory manager, they can build a team underneath them in that territory and have other opportunities for residual income, so sky’s the limit in terms of what they can build in their large territories. It can be very financially lucrative being that they’re managing clients and a team with real presence inside a designated market.”

That Justo also pays for everything from agents’ marketing to staging, virtual tours, professional photography, and more, agents are free to focus on the qualified leads provided by the brokerage. And while the brokerage is keen on accommodating its agents, it does the same for the public.

“The public’s response has been overwhelmingly positive since we launched in September, and our clients are very engaged with the model and love the transparency and fresh approach to real estate, as well as the savings,” said Schmidt. “Our listing fee is half of what a typical listing fee is; we offer additional services to buyers and sellers—for the former it’s paying for home inspections and lawyer fees and for the latter it’s the staging, virtual tours and we bring in professional photographers. We do these things so that we can get more buyers to access the property.”

It appears to be working. The brokerage is inundated with inquiries and its staff is busy preparing clients’ listings. Another reason Schmidt believes the community has been so welcoming is that the price of homes has shot up in the GTA over the last few years and every penny saved goes a long way. It’s through innovative offerings like lower agent commission fees and cashback incentives that the brokerage keeps its pipeline brimming.

“A realistic income for our agents would start around $100,000 annually and could easily reach $400,000-plus, depending on the market and the agent’s conversion rates, but they can expect to convert more transactions because they’re receiving more qualified leads.”

Copyright © 2019 Key Media Pty Ltd

Canada’s housing starts remained steady in January

Vancouver housing starts were hold-steady

Steve Randall
Canadian Real Estate Wealth

The trend for Canadian housing starts was steady in January with 208,131 units improving on December’s 207,171 units.

CMHC’s latest 6-month moving average shows that things have snapped the recent trend towards fewer starts.

“After recent declines, the national trend in housing starts held steady in January and remained above historical average,” said Bob Dugan, CMHC’s chief economist. “While single-detached starts continued to trend lower in January, this was offset by an uptick in the trend for multi-unit dwellings in urban centres.

Vancouver – a tale of two cities The second half of 2018 had seen Vancouver’s housing starts in decline so January’s hold-steady is welcome although they were focused on apartments in the cities of Vancouver and Burnaby, accounting for more than half of new construction in the CMA last month.

Toronto – cost of borrowing to weaken demand The trend in Toronto was lower overall with single-family and apartment starts both reduced from December. But this impact was reduced by a significantly better showing for rowhouses which converted pre-sales into starts. 2019 is set for lower starts overall though as pre-sales were weakened by the higher cost of borrowing.

Ottawa – lowest starts for 2 decades For Ottawa, there was a decline in starts across all home types as builders focused on units already under construction. The trend measure of starts was the lowest in more than 2 decades.

Quebec – should see stronger starts in 2019

While starts remained low in Quebec, immigration and the aging population should see starts pick up from a slow start. This is expected to be focused on the multi-family rental sector.

January standalone data The standalone monthly SAAR of housing starts for all areas in Canada was 207,968 units in January, down from 213,630 units in December. The SAAR of urban starts decreased by 2.1% in January to 190,912 units. Multiple urban starts increased by 0.7% to 146,353 units in January while single-detached urban starts decreased by 10.4% to 44,559 units.

Rural starts were estimated at a seasonally adjusted annual rate of 17,056 units.

Copyright © 2019 Key Media Pty Ltd

Stress testing is a much-needed ‘margin of safety’ – OSFI

The B-20 stress test an element of caution

Ephraim Vecina

Amid multiple criticisms of the tighter mortgage qualification rules introduced last year, the OSFI’s assistant superintendent stood by the B-20 mandated stress testing as a necessary element of caution.

“The stress test is, quite simply, a safety buffer that ensures a borrower doesn’t stretch their borrowing capacity to its maximum, leaving no room to absorb unforeseen events,” Carolyn Rogers said last week, as quoted by The Globe and Mail.

“This is simply prudent. It’s prudent for the bank and it’s prudent for the borrower, too.”

Rogers noted that while the regulatory regime should adapt to any market changes as appropriate, there are multiple factors to take into account.

“The simple design of the stress test – adjusting the interest rate upward for the purposes of qualifying a borrower’s capacity – might make it look like it’s simply there to front run a potential interest rate increase,” Rogers explained.

“But borrowers face other risks that can impact their ability to pay their mortgage that I mentioned earlier: changes to income or changes to expenses other than their mortgage. It’s prudent to have a buffer for these changes, as well,” she added. “A margin of safety in these conditions is prudent.”

Robert Kavcic, senior economist with the Bank of Montreal, argued that the federal administration should revisit B-20, as the strict rules were meant for an era with record-low interest rates, a time when adding 2% to the BoC’s benchmark would place the rate into the central bank’s neutral territory.

“So, while the BoC is still plodding its way to neutral, the residential mortgage market is now, at least from a qualification perspective, well into restrictive territory,” Kavcic explained. “You can see this as well by looking at the five-year fixed mortgage rate – adjusting it for OSFI lifts the qualifying rate well above the long-run highs.”

“But, with the well-purposed spirit of the measure in mind, there might be a case to be made for the qualification rate to be scaled back in lock-step with underlying rate increases, especially now with those rates near neutral.”

Copyright © 2019 Key Media Pty Ltd