A resident in Vancouver’s West End walks down the street. The developer thirst for property in the area, dominated by low-rise, multifamily buildings, is so high that some residents say they are being harrassed to sell.Kerry Gold/The Globe and Mail
Residents in the West End, many of them elderly, say that some unscrupulous property investors are harassing them in an attempt to get them to sell their strata condos.
In some of Vancouver's overheated residential areas, owners of strata properties are under tremendous pressure to sell. One homeowners' group says that has led to bad behaviour by a small number of developers and real estate companies to force strata owners out of their buildings.
Tony Gioventu, executive director for the Condominium Home Owners Association of BC, has been advising condo owners who say they are being harassed. He says the bullying tactics started around the time the province made changes to the Strata Property Act with Bill 40, removing the requirement that all owners agree to liquidate in order to sell a building. Now, only 80 per cent of strata owners need to agree in order to start the process. That legislative change has opened the door to investors with underhanded tactics, he says. Elderly residents living on low incomes are the easiest targets. One tactic, Mr. Gioventu says, is to buy up units to obtain majority power and then try to use them as rentals. They will suggest to the minority group of owners that the new tenants may be difficult or even unsavoury.
"I'm hearing of everything from physical threats to verbal threats and harassment to threats from lawyers, and third-party agents – all kinds of aggression and attacks being targeted at the senior community and remaining owners, trying to force them out at lower-than-reasonable prices. This is the side of industry that is really appalling," Mr. Gioventu says, stressing this is not behaviour typical of the development industry – it is something new.
"It's a form of what they call 'block busting,'" he says. "If you want to redevelop a neighbourhood or buy into a building and take control, just install drug-dealer tenants or whatever it takes to make circumstances unlivable. I hate to say it, but there are unscrupulous people out there."
In one situation, an investor purchased most of the units in a larger West End building. The investor, who now holds the majority of votes on the condo board, suggested that maintenance fees would have to triple. The majority of the building residents are seniors living on pensions who won't be able to afford higher fees.
The purchase offers, Mr. Gioventu says, are almost always lower than market value. The minority owners showed Mr. Gioventu the offers they'd received from the investor.
"They are about 30 per cent above assessed value, but really, that's about 30 per cent below market value. So it's not really fair.
"And he told them if they didn't take it within 30 days, he would do everything he could to make their lives unbearable."
For old strata-condo buildings, the pressure is on like never before.
Kirk Kuester, executive managing director at Colliers International, says the older strata buildings have become a bigger focus for his firm.
"We have never been busier putting out proposals and meeting with strata corporations and educating them on the process associated with this Bill 40 legislation," he says.
"There is an abundance of older wood-frame tired buildings not at their highest and best use. And because of the economics of multifamily real estate development in Vancouver, when condo values have moved as much as they have over last couple of years, they are pulling land values up with them all the time. It puts all of these buildings at risk.
"It depends what side of the fence you are sitting on. Some [strata owners] are licking their chops. Others don't care."
With the new strata legislation, he's heard of investors taking over just enough of the units to make it impossible for the other owners to form an 80-per-cent majority.
"There are people that are quietly out and about in some of these prime areas, and they are identifying prime buildings and trying to aggregate 21 per cent. So guess what? You and I live in a building and there are 100 suites. And we quietly watch 20 of our neighbours accept offers from a mysterious buyer and it's ultimately one buyer. One buyer now has 21 per cent of the control. There is no more 80 per cent happening.
"They essentially freeze the strata."
That tactic drove one group of strata residents into a panic to sell. In the West End, a senior who lives alone said a small developer has bought the majority of units in their small building and is pushing the remaining seniors to get out. We are seated in her spacious, bright apartment just off Robson, where, like many of her neighbours on the street, she's lived for three decades. The woman, in her 70s, didn't want to be identified because she fears for her safety. One agent warned her that if she didn't move, the majority owner could triple her maintenance fees. He suggested that undesirable rental tenants could soon move into the building. He also asked her how she'd feel living next door to constant construction sounds, because the majority owner of her building also owns several buildings on the block.
The woman says she has several agents calling her constantly. When she refused to sell to one agent who'd called, he started yelling expletives at her on the phone. In tears, she phoned police.
"There's been a lot of harassment," says the woman, who says she has health problems. "I love my place. The building is in good condition."
However, she now has to choose between a life of being bullied, which, she says, is "incredibly stressful," or moving out, so she can find peace again. The problem is, there is nothing for her in the same neighbourhood. Like her neighbours who've sold, she'd have to move out of her community.
Another resident of the same building said the investor had divided the homeowners from the start.
"He made the first buyer and the second buyer all sign non-disclosure agreements, because he didn't want us talking to each other," says the woman, who says she's too old to fight. "He's smart. He took us down one by one, broke up the group, and got us all paranoid and scared. We're pretty much living in fear.
"When it came down to the last five of us, I could tell everyone was scared. And everyone was sort of panicking because they didn't want to be the last one out, because he could make our lives miserable."
Lawyer Oscar Miklos is representing a group of strata residents that is being harassed by a new investor in their building. He says strata owners will always get a better deal if they stick together as a group.
"Sometimes, these people are very asset-rich but cash-poor … and they don't have the benefits of having a lawyer on their side. And certainly, if that's the case, then that does create a problem for them because they are victimized or prone to this type of bullying tactic.
"The developers can team up, so to speak, with their own real estate agents and the realtors can get involved as well – and depending on who the realtor is, and how aggressive, sometimes they can be the assistant to the developer and use these type of tactics."
Mr. Miklos says strata owners facing unfair actions by a majority owner can seek help through the new Civil Resolution Tribunal, where they can represent themselves. It is like a small claims court for strata property owners, but it will also handle block-busting tactics and failure to follow strata bylaws, such as pushing for rentals when the bylaw says none is allowed.
Tom Reinarz is a retired builder who's lived in his West End house for 40 years. He took a break from painting his house – an "oasis," as he describes it – to talk about the changes. He has two tenants who've been with him 17 years, but at other buildings, he's seeing unfair rent increases. Buildings along his street have been bought up in the past few years. He says he's "upset" at the inflow of money coming into the city, with little regulatory controls.
"You feel like these are people who have no tie to the West End, no tie to Vancouver … It's just the way it's done. It's so disturbing.
"It's changing already. You see different people, people who have more money move in, and people that have less money – and they have to go to Burnaby or wherever – further out. So the whole thing is completely out of control."
Kerry Gold