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Strata Insurance

Have you ever wondered what type of insurance you require when purchasing a strata unit?
Q. Recently we bought a strata unit and we were advised to get liability insurance. We understand that there is strata insurance already in place that contains liability insurance and we are wondering why we should get our own as well?
- J & A
A. Hello J & A,
I have asked Terry McCarthy, CIP from Payne, Travis & Associates to explain strata insurance. Terry is a Chartered Insurance Professional with 15 years experience in handling strata building claims.

Individual strata unit owners are strongly encouraged to purchase their own Condo insurance coverage which covers their contents, any tenant improvements and additional living expenses. This should also include liability coverage.

Strata Building Insurance carries deductibles as do other types of insurance. They can be quite large, typically $5,000, but some are $25,000 or more. They often have different deductibles for water losses and other types of losses such as fires. Keep in mind that strata building insurance only covers common property.

The strata act protects unit owners and tenants from action in the event of their negligence causing damage to the building. The new act, however, stipulates that if owner is found “responsible” for a loss causing building damage, they can be charged for the amount of the building deductible only. Then their condo policy will respond to the building deductible. If the damage they cause is in excess of the building deductible, then the building insurer must cover the excess. We find owners are found “responsible” if the cause of the loss occurs in their unit, for instance a pipe in the unit bursting and causing building damage. As long as the by-laws of the strata note that unit owners must pay for the building deductible then the owners insurance will respond. The unit owner will still pay the deductible noted on their own policy which is usually $500.

Unit owners can still be held liable for their negligence if damage is caused to contents or tenant improvements of other unit owners. This is dealt with by their liability coverage.
To conclude, I suggest that you always read the strata documents and bylaws to verify what type of insurance the Strata carries and how it will effect you if there is a claim made against you. Also, consult an insurance provider to determine whether or not you need to purchase any additional insurance to protect yourself and your contents in the result of loss or damage.
If you have more questions regarding property insurance contact:
Terry McCarthy, CIP Payne, Travis & Associates
Phone: (604) 951-3011


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What is a pre-sale?

Example scenario: When the developer intends to build an apartment building and applies for financing, the bank will grant financing under certain conditions. One of them will likely be a certain percentage of pre-sales the developer will need to secure before receiving the funds.
It is common practice for a developer to approach several real estate investors and offer them an opportunity to purchase units of the non-existent building at a discounted price, and on good terms.

Once the number of pre-sales is accomplished, the developer goes ahead with the construction, which will likely take two years or longer to complete. During construction, their marketing team offers the remainder of the units for sale at market value to the public.

If you are a RE investor, you know that it is preferable to be buying at the pre-sale prices, not market value prices.

The question is, how do you get the invitation to buy a pre-sale?
In the past many years, investors have made substantial income by buying at wholesale prices and selling at retail prices even before they needed to complete their purchase. I saw many of them lining up and sometimes even camping overnight in front of the sales center to get a chance to buy at lower prices, but not everyone was lucky enough. You needed to be well-connected to get an opportunity, and you had to act fast.

Today is a bit of a different story. Several projects in the Lower Mainland and Fraser Valley offer really good prices and incentives to secure a unit now and complete the purchase two or three years later. The list of incentives varies from one project to the next. Besides attractive prices, you can get low deposit amounts (5-15%), low or no assignment fees, free updates, a mortgage rate buy-down program, extra parking and more.

A month ago, I helped a few of my clients purchase a presale in Surrey that sold out in 2 days, and I know of another good developer that will be offering a few units for sale as well.

If you would like to know more about these opportunities, I would encourage you to call or email me, and I’ll be happy to send you details on those projects.
Kind regards,
Tibor Bogdan
Century 21 Creekside Realty Ltd.
45428 Luckakuck Way #190, Chilliwack, BC V2R 3S9
cell: 604-855-2521
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