For one of my repeat Clients this quarter, I helped a Buyer for a condo property in Canmore, and I wanted to share some details from the unique experience.
The purchase wound up being extremely successful: they got the property they wanted (at $50K under the initial list price, too!). But for a few moments, things were looking dicey due to some issues with the condo corporation and how it was managed.
This experience was a tricky one, but thanks to a solid understanding of how condominium purchases and sales work, plus some well-done negotiating, I was able to help my buyer client come out on top with funds to cover potential future issues.
Today, I’d like to break down this experience and share how we were able to make things end up favourably. As always, if you are considering a condo purchase in Canmore, Banff or Cochrane, please feel free to reach out to me directly if you aren’t working with an agent. No question is too small, and I’m always available via text, call or email to help!
This property is fantastic! A typical downtown South Canmore gem: a quarter fourplex-style townhome, on the preferred South side. This property has sweeping direct views of Three Sisters from the large patio, as well as from the living room through vaulted floor-to-ceiling windows. Two generous bedrooms, two bathrooms, a professionally renovated kitchen and a ton of storage.
This property was one of the earlier redevelopments in this area of town, where we see old detached homes from the 50s, 60s, 70s on large lots turned into four townhomes, back to front. Built in 1994, this charming home even has a wood burning stove – perfect to cozy up to after a day at the ski hill.
My clients are a lovely family who has enjoyed spending time in Canmore for over a decade since they purchased their first property in town. Savvy folks, they purchased an income property to work hard for them whenever they couldn’t be there. And – it happened to appreciate very well for them over the course of their ownership.
About a year ago, they reached out to me to help them Sell, so they could purchase a residential property to be their own special place (that they didn’t have to rent at all). After a quick and successful sale, we’ve been watching for the right property to come along. After missing out in a couple of multiple-offer situations, this perfect property came up – and due to some unique circumstances, we were able to get it for $50K under the initial asking price. I’m always happy to see that!
When reviewing the condominium documents during our two week condition period, some issues came to light. While the building looked pretty good, it seemed the condo board had neglected to adequately fund their reserve over the years. This isn’t uncommon with older buildings; the first owners enjoy brand-new units, and vote to keep fees low – for as long as they own. We see this a lot in Banff and with older buildings from the 70s, 80s, 90s. Too much time on the ski hill and not enough focus on the budget!
Half of the windows needed to be replaced (to the tune of $30,000). The exterior needed to be repainted. The roof needed an inspection. One walkway was rotting to sawdust and needed replacement. Those beautiful mature trees everyone falls in love with? It costs money to trim those back!
The board was mulling – and the term mulling is important as I will explain below – a special assessment of $8,500-$10,000 per unit. To be determined and confirmed sometime in the very near future.
Now, this isn’t a traditional condo. As it is only four units, it operates much less formally than a building with 100+. Heck, I’ve had clients purchase these and immediately become president – simply because there was no other option! There can be 30+ documents for buyers to review with larger buildings. With this small condo, we had maybe 5 pages to go off of.
Having been a condo owner, board member, and treasurer – in addition to being an Associate Broker – I know a lot about how condo corporations are meant to work. A key item that can affect buyers and sellers is the timing and declaration of a special assessment. This is when the board makes a cash call to pay for large, unexpected items or to bolster their reserve fund. If an assessment is called prior to the close date, it is the responsibility of the Seller. If an assessment is called after the close date, it is the responsibility of the Buyer.
In this case, the board was speaking openly about their need for cash. What it was for, how much it would cost – even the fact that they planned to pay for it with a special assessment. But – they were only mulling it over. It had not been officially “called.” In any traditionally run condo, there wouldn’t even be a mention of these things until the board was 100% sure it would be called. That’s because it effectively sets in stone who will be responsible.
So who needs to pay the $8,500 cash?
In any real estate transaction, often it comes down to a case of chicken and who is going to blink first. Will it be the Seller, or the Buyer? Sellers may often assume that if a Buyer doesn’t notice a problem, or if a problem isn’t mentioned, it won’t fall on them to correct the issue. That’s where I come in.
In this case, I was able to connect with the members of the board directly and get deeper information on exactly where things stood with regards to the assessment and repairs. I pressed the Sellers agent to provide further answers and documentation to try and determine where exactly things could stand in the process. The board wouldn’t own up to the fact that an assessment was 100% impending; they would only say that they had discussed it, and shopped some quotes, but they wouldn’t stand firm on a position which would have dollars-and-cents consequences in this transaction.
My Clients were ready for the worst – they loved the property so much that they were willing to proceed with the purchase, regardless of if they had to eat the future cash call or not. Ouch. We discussed how I would approach the situation, and I made the final call to the Seller before conditions were due to be waived…
I leaned on the Sellers’ agent hard – just hard enough to ensure my Client got exactly what they needed – and secured an $8,500 credit back from the purchase price to the Buyer after closing – for potential future costs.
Its safe to say my Clients were thrilled with the outcome!
If you’re considering a condo purchase in Canmore or Cochrane, make sure your experience is a positive one. Obviously this was a unique situation – but unique situations seem to come up more often than one would think.
I always advise my Buyer Clients to make conditional offers. Its important for you as a purchaser to have time to confirm your financing, review the relevant condo documents, and have a professional inspection if desired. Unless you feel extremely comfortable, theres nothing wrong with doing your due diligence as a Buyer – especially when the property in question is valued in the hundreds of thousands of dollars.
As always – I’m here to help and happy to answer any questions you have on purchasing property, Canmore or Cochrane, and specific listings you’re seeing that are of interest to you.