Prospective purchasers of real estate in Whistler and Pemberton have a somewhat bewildering myriad of “due diligence” issues to consider before they should feel comfortable closing their deals. Fortunately, experienced realtors familiar with our market here address these matters well.
1. Title: Check non-financial charges (“encumbrances”) on the Land Title Office’s title to ensure the intended use or occupancy of the property, regardless of the present use, is not restricted in some unanticipated way by the presence of wording in “easements”, “rights of way” or “restrictive covenants”. In Whistler, the distinction between “Phase 1” and “Phase 2” properties is an excellent example, with the latter only allowing personal use through advance booking for 28 days in summer and 28 days in winter.
2. Strata: Review strata minutes, bylaws, financial statements and strata plans for indicators of possible future special levies, restrictions on use and occupancy, or illegal additions to the subject unit (amongst many other issues). The hot topic right now is whether the strata has voted to defer a “Depreciation Report” or to order one.
3. Leasehold: If the title is not freehold, read the ground lease’s terms for its length, renewal provisions and restrictions on usage.
4. GST: This federal tax of 5% (down from 12% as of spring, 2013) applies to newly built or “substantially renovated” units, as well as to commercial properties. Residential properties used for short-term rentals often attract GST, and the assistance of knowledgeable accountants is critical in determining the applicability of this tax.
5. Ownership: Early consideration of how to take title is important, whether it be individually, through a company, or a trust (and even in different combinations). In addition, consider addressing whether title should be held in fractional interests or together as “joint tenants” (with right of survivorship).
6. Parking: With stratas in Whistler, parking can be a major issue, depending on the location and number of stalls associated with the strata unit. Is the parking limited common property (attached to the unit) or common property (possibly subject to the whims of the strata council), or even a separate strata?
7. Foreclosures: Despite the experience south of our border, courts here are obligated to sell foreclosed properties at close to their market value. Offers are subject to court approval, so acceptance by the foreclosing lender is only a first step. No subject conditions are accepted, and therefore the property is purchased “as is, where is”, and competing sealed bids at the court hearing can drive up the price.
8. Site Survey: Other than for condos, one should procure a survey showing the location of the building(s) in relations to the property lines, prepared by a registered surveyor. If the seller does not have one, it might be found in municipal records, and if not then with sufficient lead time one may be ordered. Title insurance can be obtained both to cover the absence of a survey and address any imperfection with one.
9. Building Inspections: The use of Property Condition Disclosure Statements (now very common if property being sold by realtors) has greatly improved the due diligence process in buying properties, but independent investigations should still be made of the condition of the target property. Local building inspection services can often, though not always, reveal the presence of mold, rotting support, and inadequate electrical systems (amongst many other problems).
10. Statutory Searches: Ensure a final occupancy permit from municipal hall has been issued, and look at the filed plans to figure out (if possible) what unauthorized changes seem to have been made after the permitting-process ended. Ask about outstanding “Work Orders” (not always registered on the title) and about possible or proposed changes in density or use of the neighbouring areas. Tourism Whistler fees apply to “Tourism Accommodation” properties but also to some not “TA” zoned.
In conclusion, the above due diligence list illustrates the crucial role realtors and lawyers have in the successful conclusion of a real estate transaction in Whistler and Pemberton.
Peter D. Shrimpton Barrister & Solicitor, Notary Public
The information above is for educational purposes only. It is not intended to replace the advice of a realtor or lawyer. To address specific situations, please engage an experienced realtor or lawyer. Copyright 2013 Mountain Law Corporation.
Link to website: http://www.mountainlaw.com/en/