Litigation against Strata Corporations: The Impact on Purchasers and Real Estate Transactions

Litigation against Strata Corporations:  The Impact on Purchasers and Real Estate Transactions

In addition to any concern or interest a purchaser may have with respect to litigation by or against a strata corporation for a property they are interested in buying, if a strata corporation is involved in litigation, purchasers, mortgage brokers and realtors should be aware of the potential complications that can arise in the completion of the transaction.  

As part of the lawyer’s process in acting for a purchaser, the lawyer obtains a Form B Information Certificate from the Strata Corporation which provides some basic information about the strata corporation including, among other things, the balance of the contingency fund, strata fees paid with respect to the unit and whether strata fees are up to date.  

In addition to those items, the Form B Information Certificate includes a question of whether the strata corporation is involved in litigation.  If this question is answered in the affirmative, there can be difficulties with obtaining financing for the purchase of the property.  In some cases, such outstanding litigation can be a concern for both the lender as well as mortgage default insurer (if applicable).  

In circumstances where there is outstanding litigation, it is very important to identify these issues and raise them with the lender and mortgage default insurer as early as possible and prior to removing a financing condition.  Where approval of such circumstances is obtained prior to removing the financing condition, it will help prevent issues arising when the closing date is looming.  

In situations where these issues are not brought to the attention of the lender and default insurer ahead of time, there is a potential for the lender to refuse to fund with very little notice thereby potentially leaving the purchaser in default of his or her contractual obligations to complete if they are unable to secure financing at such a late date.    

This article includes general information only and should not be relied upon.  It is recommended that you should seek specific legal advice relating to your transaction.  If you have questions about this or any other real estate matter, please contact Trever Florko of Century 21 Assurance realty (contact info below) or Una Gabie at Pushor Mitchell LLP by phone at (250)869-1230 or gabie@pushormitchell.com. 

TREVER FLORKO - Realtor
Century 21 Assurance Realty (Kelowna)
Cell: (250) 859-5990
Office: (250) 869-0101
Fax: (250) 869-0105
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