by Robert L. Tyler
When new legislation came into effect in Manitoba on February 1, condo owners wishing to sell faced new hurdles. Understanding and manoeuvring these can seem daunting, however, when properly understood, the new hurdles make a lot of sense.
Sellers would be wise to consult the services of an experienced REALTOR® in condominium sales. An experienced REALTOR® can be very helpful in doing the upfront “heavy lifting” to create the necessary environment for a binding sale.
The first task for a condo seller is to assemble all disclosure documents required by the new legislation. Disclosure documents have always been required, however, new items have been added to the pile, including a detail disclosure form to be completed and signed by the seller. Additionally, copies of certain survey plans from the Property Registry are now necessary to enable the buyer to identify the exact location of the unit being purchased.
A reserve fund study of the condominium complex is also a new requirement. Not all condominium corporations have reserve fund studies completed at this time. The deadline for completion is February 1, 2018.
Sellers should find out from the condominium corporation or its property management company when to expect the reserve fund study. A REALTOR® can help you market your condo before you receive a reserve fund study. If it is expected during the marketing time for your condo, in some instances, it may be wise to defer the sale until the study is available and analyzed.
The reserve fund study will identify the condition of the building and establish an ideal balance for the reserve fund account. If the condominium’s reserve fund account is underfunded, it may have to be reflected in the price of the unit. If it is well funded, it should be more attractive to a prospective buyer and may attract a higher sale price.
All buyers of condo units will now have a seven day cooling off period, rather than 48 hours as it was previously. This is a period of time which begins the moment the offer to purchase is accepted, and ends seven days after all of the required disclosure documents are delivered to the buyer. The contract is not enforceable against the buyer if the buyer elects to cancel the contract during this cooling off period.
Another hurdle to consider is the right that every buyer now has with the new legislation to an additional seven day cancellation period, if a material change occurs in relation to any of the information in the disclosure documents before the possession date. A material change in the disclosure documents is not easy to determine.
If new information becomes available regarding:
• A budget matter.
• The reserve fund study or account.
• A change in the property management company or in the agreement with that company.
• Or a change in other governance related matters, etc., and if that change in information is material in nature such that a reasonable buyer would likely back away from the deal because of it, that change in information must be disclosed to the buyer before the possession date using a specific notice form. The determination of whether a change in the information is material will often require the assistance of an experienced condo REALTOR® or your lawyer. If it is material, it must be disclosed. If a change is immaterial, it doesn’t need to be disclosed.
Failure to disclose a material change could entitle the buyer to sue for damages after the fact for the increased costs due to the change. No seller would wish to become obligated to reimburse the buyer for damages for the financial impact of an undisclosed material change in the disclosure information.
It is wise to sit down with an experienced condo REALTOR® to discuss these challenges before placing your condominium property on the market. Experienced REALTORS® can provide much needed guidance and advice when selling a condo, even more so now with the new legislation in place.
Note: This summary is of a general nature only and is not exhaustive of all possible legal rights or remedies, which may vary in the circumstances. Readers should consult their own legal representatives for specific advice on similar matters.
(Robert L. Tyler is a partner with the law firm Aikins, MacAulay & Thorvaldson LLP and practices in the area of real estate law.)