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Is there an advantage for the developer to choose to develop a strata development vs. a freehold development?


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#1 sebberry

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Posted 08 February 2012 - 12:30 PM

Stratas make sense for apartment style condo buildings where there is a lot of shared, common infrastructure such as a roof, walls, hallway carpeting, plumbing, etc...

I've noticed however that there are quite a few SFH developments where the houses are on a strata instead of freehold.

Is there an advantage for the developer to choose to develop a strata development vs. a freehold development?

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#2 MarkoJ

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Posted 08 February 2012 - 02:53 PM

Yes....there is one massive advantage that trumps everything else. The common lane doesn't have to comply with municipal street widths. For example, there is a new subdivision in Cadboro Bay called "Cadboro heights," and if you put in a Saanich spec road versus the common lane there would be no lots left.

Let's say you can put in a municipal road and have 10 lots at $500,000 market value or 14 bare land strata lots at $480,000 (small discount for bare land, if any)...the gross difference in what the developer can gross is large.

I am not a huge fan of bare land strata but they are the new reality.

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#3 sebberry

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Posted 08 February 2012 - 03:04 PM

Thanks Marko, I knew there would be a reason.

It could save a lot of people a lot of strata-headaches if municipalities would change this regulation.

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#4 MarkoJ

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Posted 08 February 2012 - 03:08 PM

Thanks Marko, I knew there would be a reason.

It could save a lot of people a lot of strata-headaches if municipalities would change this regulation.


This would have the uninvited consequence of no new development. Development costs are astronomical and few developers could make freehold developments work in this day and age - especially close to the core.

Happy Valley bit of a different story.

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#5 Bernard

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Posted 08 February 2012 - 05:23 PM

Bare land stratas allow for smaller lots as well, you can get more density which matters more in the core where there are no longer large tracts of land to develop.

For a municipality there is a benefit, no need to service the street and sidewalks, ever.

#6 rjag

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Posted 08 February 2012 - 07:24 PM

Yes....there is one massive advantage that trumps everything else. The common lane doesn't have to comply with municipal street widths. For example, there is a new subdivision in Cadboro Bay called "Cadboro heights," and if you put in a Saanich spec road versus the common lane there would be no lots left.

Let's say you can put in a municipal road and have 10 lots at $500,000 market value or 14 bare land strata lots at $480,000 (small discount for bare land, if any)...the gross difference in what the developer can gross is large.

I am not a huge fan of bare land strata but they are the new reality.


We looked very hard at Cadboro Heights and what turned us off was the fact it was a strata...if it was freehold we would have probably purchased.

#7 sebberry

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Posted 08 February 2012 - 07:42 PM

Does the developer collect a portion of the strata fees for a period of time after the development was built?

If the municipality was to permit the required density for the developer to make money, would a freehold development not work?


EDIT: Of course I'm assuming that a bareland strata would have the same right to enact bylaws that a condo strata would...

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#8 MarkoJ

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Posted 08 February 2012 - 09:58 PM

We looked very hard at Cadboro Heights and what turned us off was the fact it was a strata...if it was freehold we would have probably purchased.


I look pretty hard as well (my father is a builder) and met with the developer. The problem for us is if we build first it could take another two years from when the home is ready for sale to subdivision completion. Selling a new house with construction all around is not ideal.

Also developer is building out on the two best lots :)

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#9 MarkoJ

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Posted 08 February 2012 - 10:08 PM

Does the developer collect a portion of the strata fees for a period of time after the development was built?

If the municipality was to permit the required density for the developer to make money, would a freehold development not work?


EDIT: Of course I'm assuming that a bareland strata would have the same right to enact bylaws that a condo strata would...


The problem is still the minimum road width.

To answer your second question: "In accordance with section 12 of the Strata Property Act of British Columbia the Developers shall make a contribution to the Contingency Reserve Fund of the Strata Corporation at the date of the first conveyance of a proposed strata lot to a purchaser in the amount of 5% of the projected budget."

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#10 G-Man

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Posted 08 February 2012 - 10:13 PM

I would guess that the muni could change the rules if they so wished. Roads in Saanich seem wastefully wide for the most part.

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#11 sebberry

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Posted 08 February 2012 - 10:38 PM

The problem is still the minimum road width.


Sorry, maybe I'm not reading something right.

If the municipality would allow the developer to reduce the road widths to the point that the required density for profitability could be achieved, would this not be better that sticking everyone with the burden of a strata?

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#12 MarkoJ

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Posted 09 February 2012 - 07:46 AM

Sorry, maybe I'm not reading something right.

If the municipality would allow the developer to reduce the road widths to the point that the required density for profitability could be achieved, would this not be better that sticking everyone with the burden of a strata?


It would be better for the developer and the buyers if road widths were reduced to allow for freehold; however, maybe from the municipality perspective they don't mind bare land strata because it is less maintenance for them?

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#13 sebberry

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Posted 09 February 2012 - 09:55 AM

maybe from the municipality perspective they don't mind bare land strata because it is less maintenance for them?


Ah, of course. I hadn't thought about it from that angle.

Thanks :)

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#14 Bernard

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Posted 09 February 2012 - 01:59 PM

Municipalities have road right of way minimums for purposes of emergency access.

Bare land strata councils operate the same as other stratas in most respects, but are limited on any say over non-common property You have a slightly larger set of rights to your lot in a bareland strata than a conventional strata

#15 sebberry

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Posted 09 February 2012 - 04:12 PM

Municipalities have road right of way minimums for purposes of emergency access.


I guess they have smaller fire trucks for emergencies on bareland stratas then? :P

Bare land strata councils operate the same as other stratas in most respects, but are limited on any say over non-common property You have a slightly larger set of rights to your lot in a bareland strata than a conventional strata


That's interesting because I still see things like pet size limitations in MLS descriptions for houses on bareland stratas. I'd also like the ability to run a business from home, but I suspect since access would be via a common strata road, there could be restrictions on that too.

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#16 Bernard

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Posted 09 February 2012 - 04:18 PM

I guess they have smaller fire trucks for emergencies on bareland stratas then? :P



That's interesting because I still see things like pet size limitations in MLS descriptions for houses on bareland stratas. I'd also like the ability to run a business from home, but I suspect since access would be via a common strata road, there could be restrictions on that too.


These are not roads but driveways, the standard for emergency vehicles is that of a private driveway. If there is a problem, the liability lies with the strata and not the municipality.

Unless there is a separate covenant of some sort, I do not think you can restrict what you do. I have to admit I have never had many dealings with bareland stratas so I only know what I have read, not what I have worked on/reviewed.

#17 MarkoJ

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Posted 09 February 2012 - 05:00 PM

I've looked at a few bare land strata lots recently and in the disclosure statement it typically says "The bylaws of the Strata Corporation are those contained in the Schedule of Standard Bylaws as set forth in the Strata Property Act," or "The developer does not intend to introduce any rules," or something along those lines.

However, I did come across a bare land strata last year (Rhoda Lane - Gorge Waterfront) that has a pet restriction which was kind of funny as the lots were 7,000 to 10,000 sq/ft and the homes were big too.

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#18 sebberry

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Posted 09 February 2012 - 05:18 PM

"The developer does not intend to introduce any rules," or something along those lines.[/FONT][/COLOR]


The developer might not but just wait until a pack of crabby old council members start pushing for new bylaws :(

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#19 arfenarf

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Posted 10 February 2012 - 10:32 AM

I walked away from a little charmer in Esquimalt because the strata (four houses) limited dogs to 40 pounds. I have made the mistake of accepting someone's assurances that an exception would be made. Once. I was out of pocket thousands of dollars as a result and will never, never assume the best of a strata again.

(Good thing I love that critter. He's the world's most expensive dog at this point.)

#20 sebberry

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Posted 10 February 2012 - 10:45 AM

The even scarier thing is having the by-laws change on you.

ie.. move in with large dog, by-laws change to only permit cat-sized dogs, your large dog dies and now you're forced to either move or get a dog with a brain only slightly larger than a chicken's.

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