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Should You Buy In A Remediated Building In B.C.?

08/26/2014 07:13 EDT | Updated 10/26/2014 05:59 EDT
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If you've been looking at B.C. real estate listings for any length of time, you've likely seen the phrase "remediated" at least once, especially if you're considering older construction. This phrase can have negative connotations because it implies that something was once wrong with the building. Most cost-conscious buyers don't want to be blindsided by a special assessment to cover major renovations or other issues with the building.

So, should you consider buying a condo in a remediated building? That depends.

Some strata buildings constructed between the late 1980s and the early 2000s in Vancouver, Vancouver Island, and the Lower Mainland suffer from "leaky condo syndrome," meaning water can get into the exterior building envelope and cause mould or rot. Many of these buildings have been remediated at significant cost to the building's strata.

If the remediation refers to envelope and membrane issues, then in my opinion it would be fine to purchase in that building. Once the work is done, it is under warranty and is essentially a new building. The advantage to older remediated buildings is the price point, which may be lower than a new building and may offer a more spacious living area.

However if, for example, the building were a former marijuana grow-op house that has been remediated, I would stay away from it. In this instance, there could be a lot of structural damages and mould that may linger after the building has been supposedly remediated. In the future, you will be legally obligated to disclose the building's status as a former grow-op to prospective buyers, so that could make it harder for you to resell the property in the future.

As founder of the mortgage rate comparison website LavaRates.ca, I can also tell you that financing the purchase of a grow-op can be much harder than financing a more conventional real estate property.

Only a couple of A-lenders will offer mortgages on previous grow-ops, and they require quite a bit of documentation, such as proof of air inspections and environmental assessments. If you're prepared to pay cash for a former grow-op, then you won't need to worry about mortgage financing. Still, I'd encourage you to keep a healthy contingency fund in case issues with mould or structure require additional funds to repair.

Lenders may also ask for more forms on a remediated "leaky condo" building. Form B (the strata corporation's information certificate) is a given. Lenders may also ask for AGM minutes from when the vote took place to remediate the building. They would also require certificates of completion and warranty from the service provider.

Ultimately, it's up to you as the buyer to decide how much risk you're willing to assume on a real estate purchase. I'd encourage you to do your homework and gather as much information as possible to ensure that you're making a sound financial decision.