Highest and best use
June 2015

Welcome to our June 2015 newsletter. The Canadian women’s team made it to the quarter-finals of an exciting World Cup, what an excellent showing on home turf!

This month we discuss Highest and Best Use, along with sharing a few interesting condominium related website links.

As always, I look forward to your thoughts and comments.

All the best, 
Ernie Paustian
Ernie Paustian


Highest and best use

Alberta and British Columbia first enacted condominium and strata legislation almost 50 years ago, with the original projects now approaching the half century mark. There are also many condominium conversions with improvements that were 50 or more years old at the time of conversion. As the improvements continue to age, consideration should be given to the long term viability of the existing Strata Corporation, along with the potential for redevelopment.

Depreciation Reports are typically completed based on the assumption that the improvements comprising the strata complex will be around in perpetuity, there is no legislative requirement for consideration of a property’s Highest and Best use.

From the Appraisal Institute of Canada definitions: “Highest and Best Use: The reasonably probable use of a property, that is physically possible, legally permissible, financially feasible and maximally productive, and that results in the highest value.” (source)

In Alberta, the condominium status of a building or parcel may be terminated by special resolution and in British Columbia, the vote to cancel the strata plan must be passed by a unanimous vote. Both provinces also provide an option for termination by an application to the Court.

While the Highest and Best use determination for an existing strata project might indicate its redevelopment potential, there is no requirement for unit owners to choose this path. In fact, they may choose to keep and maintain their existing condominium complex for many years in the future.

Regardless of the Highest and Best use, unless termination is approved and finalized, the Strata Corporation has a duty to continue with the maintenance, repair and replacement of the common property. It would stand to reason that if termination of the Strata Corporation is not imminent, a depreciation report should be prepared in accordance with the applicable provincial legislation.

Some condominium related links:

Fire chief proposes new measures to prevent condo fires.

Bylaw amendment required to stop balcony smoking.

Victoria condo powers up with strata-initiated solar project.

Get legal advice when dealing with ‘types’ Bylaws.

Thank you for taking the time to read our newsletter. At Delta Appraisal, we work with Property Managers and Council Members to set realistic budgets and to prioritize maintenance and repair projects. Our functional Depreciation Reports are unbiased as we are not competitors in maintenance, project or property management.

For more information about Delta Appraisal and our easy to read Depreciation Reports or to request a no-cost, no-obligation proposal, please contact us.

 

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