Understanding the types of Ownership in Shuswap Stratas & Sicamous Condos
As a puchaser understanding what you are buying is crucial to you securing what best suits your budget and your lifestlye when purchasing a Sicamous Strata or Condo.
To help break it down there are many different types of condos or recreationak developments in the Shuswap you could be looking at, although by looking at the building or resort you cannot tell the difference. Understanding how different these properties are is really important to making the best decision for you.
Freehold - Strata Title:
The Shuswap condos that are strata titled are governed by the BC Strata Title Act. When you want to buy a strata condo you can typically can go to the bank and mortgage the property – just like purchasing a house. You own your unit and then you have interest in the land & buildng outside of your unit this is the common property, which you own with the other condo unit owners (You pay monthly condo fee's for costs based on your unit entitlement).
Typically financing was not an issue however recently in Sicamous I have seen denials on financing and deals cave due to the CMHC requirements tightening . CMHC backed loan is when the government secures the portion of the loan they consider high ratio so they underwrite to secure a portion of the mortgage which they consider (high ratio). So you do need to be aware that if you need a high ratio mortgage which is CMHC insured (you are putting less than 20% down) if there are any restrictions such as age or rental restrictions they may not approve the building for a mortgage, yes you may be golden but they will not lend on that building so you will not be able to take out a mortgage on it. There are things you need to be aware of when looking at buying a condo in Sicamous.
Other important information and documents you will need to understand when buying a Sicamous condo :
What is a Form B? Depreciation Report or Reserve Fund Study - What is it and does the building have one ? When you see building remediated , what does this mean ? Bylaws and Rules - Are these important ? Yes and knowing how they will affect you. Special Assessments - are there any approved or expected ? What are they ?
Many condo buyers believe the monthly condo fee's would cover everything for the building which may arise, which this is NOT the case, it all depends on the age and health of the building and because depreciation reports just became mandatory in 2013 there are many factors in understanding what you are buying and each building hasn't necessarliy done a depreciation report, these condos are all unique and stand on their own merits of how each is different and not a one size fits all. There could be future special assessments and we would need to look at each building individually to determine that.
Leasehold - 99 year leases
In the 1970s the rental vacancy rate was very low, so the BC Govt passed legislation to prevent the conversion of rental buildings to strata titled condos. Many many years ago someone found a loophole in the law which allowed converting an apartment building to a 99 year leasehold. In an essence you do not own the land in leasehold of which the building sits on it is leased through the agreement for 99 years. I have sold many of these in recreational property, where developers structured this way to get around the bylaws in the interior of BC. Leasehold condos in the Shuswap means you do have a freehold title registered in the developer or corporation name for the land with the individual owners as registered leases but most of these are not mortgage(able) unless a very large portion is put down up to 30- 50% in some cases and very dependant on the individual lender, more likely if the lease is held by a public company. If it is private, financing is very difficult to obtain. Cash buyers needed most of the time for these types of properties. From my experience the value of these properties tends to not rise as fast and decreases more as the lease renewal date gets closer. The overall value will not be as high as freehold titled property and also more difficult to sell, days on market could be longer as you need a specific buyer.
You and your neighbour collectively own the company (Co-Op) that owns the property. The people who own shares in the company typically live in the building or there are many of these recreational properties throughout the Shuswap. Most have first rights of refusal which means the development gets to know the terms and price and offer to anyone through the corporations lawyers to the other owners in the develoment before they "approve" the sale. There are monthly fee's similar to other strata's. One way in which they differ from strata is that new members MUST be approved by the Co-op Board of Directors and can be turned down. Difficult to finance more than likely a Cash buyers are needed for these types of properties.
Just as it sounds you own a quarter share typically in these types of units. You get 12 weeks of use each year , typically 1 week per month with the other 3 owners getting the same use. You share in the costs as 1/4 also. Some offer reduced rates on green fees if they are in a resort area or they can offer to rent out (similar as a hotel) when not in use with a portion going back to the owners.
If you are looking to buy a condo in Sicamous I would suggest work with an expert. I have sold hundreds of condos over my 22 + year career and can explain all of these terms and types in detail to you. I can help explain to you the differences and make sure we are getting what suits you and your lifeststyle.
I look forward to helping you ! See you in the Shuswap!