Download We have had a number of occasions in the office where an agent

Special Assessment
Condos
We have had a number of occasions in the office where an agent acting for the buyer has been
asked to sign a supplementary agreement assigning the proceeds of any litigation to the seller
from any remediation lawsuit.
Please remember that at law the proceeds of any litigation as well as any costs or special
assessments for costs follow ownership unless the contract between buyer and seller
provides otherwise.
This means that if you are listing a condo this should be one of the first questions you ask. Please
note your seller may well have agreed with a previous seller to assign such proceeds, has
forgotten about the obligation, and is legally required to pass on that obligation to the next buyer.
If this matter is raised after the offer is made the new buyer has no obligation to assign
the proceeds.
If you are acting for a buyer then you should make sure the buyer gets legal advice with respect
to any assignment form they are asked to sign as the terms can vary. For example some
assignment forms I have seen state that if the seller does not pay any costs then the buyer only
has the right to terminate the agreement and collect any proceeds. This means that if the
litigation is unsuccessful or the costs exceed the proceeds ( not a rare event ) then the buyer
would be responsible not the seller.
Michael Holmes B.A., L.L.B.
Owner and Manager
250-475-5713
I recommend that the following clause be added as a term to the Contract of Purchase & Sale.
“The seller and buyer will sign an assignment of proceeds agreement in the form attached
as “Schedule A” to this contract of Purchase of Sale on or before the completion. This
contract is subject to the lawyers for the buyers and sellers approving the assignment of
proceeds agreement within 7 days of acceptance. This condition is for the benefit of both
parties.”
Schedule A
Page 1 of 3
ASSIGNMENT OF PROCEEDS AGREEMENT
BETWEEN:
(the “Seller”)
AND:
(the “Buyer”)
BACKGROUND
A. The Seller and the Buyer have entered into a contract dated _______________, for the
purchase and sale of property legally described as:
P.I.D.
Strata Lot ____ of Lots ____, ____, and ____, Victoria City, Strata Plan __________
(the “Strata Plan”) TOGETHER WITH AN INTEREST IN THE COMMON PROPERTY IN
PROPORTION TO THE UNIT ENTITLEMENT OF THE STRATA LOT AS SHOWN ON
FORM 1
(the “Strata Lot”)
B. The Strata Lot is one of ____ strata lots comprising the Strata Plan.
C. The Strata Corporation for the Strata Plan (the “Strata Corporation”) has recently completed
extensive repairs to the building envelope to correct water ingress and consequential damage;
D. The Strata Corporation for itself and as the representative of the owners of the units in the
Strata Plan has commenced legal proceedings (the “Lawsuit”) to recover all or a portion of the
cost of the repairs;
E. The owners of the units in the Strata Plan, including the Seller, were assessed and have paid a
special levy to pay for the repairs and to provide initial funding for the Lawsuit;
F. Damages recovered through the Lawsuit by settlement, mediation or trial will not be
recovered by the Strata Corporation or be distributed by the Strata Corporation until an uncertain
future date, which may not occur for several years;
With Optional Buyer’s Holdback Clause 12
Schedule A
Page 2 of 3
NOW THEREFORE IN CONSIDERATION of the premises, promises, terms and conditions
of this Agreement, the Seller and the Buyer agree as follows:
1. The Buyer acknowledges and agrees that any money recovered through the Lawsuit and which
is payable in relation to the Strata Lot is the separate property of the Seller and belongs
exclusively to the Seller.
2. The Buyer hereby assigns and transfers to the Seller any and every interest or entitlement to
receive any part and all of the money recovered through the Lawsuit which the Buyer otherwise
be entitled to receive except for this Agreement.
3. In the event of any future resolution pertaining to the Lawsuit being presented at a general
meeting of the Strata Corporation, the Buyer agrees to cast the vote, personally or by proxy, for
the Strata Lot, as directed by the Seller.
4. In the event of any proposed settlement or compromise of the Lawsuit requiring the consent or
approval of the owner or owners of the Strata Lot, the Buyer constitutes and appoints the Seller
as his irrevocable proxy, agent and attorney, with sole and exclusive authority to approve or
reject any proposed settlement or compromise.
5. The Buyer hereby authorizes and directs the Strata Corporation and the strata council of the
Strata Corporation to communicate with the Seller about all aspects of the Lawsuit and provide
to the Seller any letters, notices or other communications thereafter received by the unit owners
at the Strata Plan, in connection with the Lawsuit, any compromise or settlement of the Lawsuit.
6. The Seller agrees to be solely and exclusively responsible for the payment of any future levies
or assessments in connection with the Lawsuit which are payable by the owners of the Strata Lot.
Such assessments include any portion of the monthly assessments which are payable in
connection with the Lawsuit by virtue of costs for the Lawsuit being included in an annual
approved budget for the Strata Corporation.
7. The Seller agrees to indemnify and hold the Buyer harmless for any special levies,
assessments or portions of monthly assessments payable in relation to the Lawsuit. The Buyer
will try to keep the Seller informed of any such special levies, assessments or portions of
monthly assessments so payable, by writing to the Seller as follows: If the Seller fails to make
any such levy, assessment or portion of monthly assessment when due, after receipt of notice of
the same, then the Seller shall irrevocably forfeit his right to recover any Lawsuit proceeds, and
such proceeds will be irrevocably assigned to the Buyer.
8. If the Buyer sells the property, the Buyer will impose this Agreement (including this Clause)
on the subsequent Buyer, with the intention that even though this Agreement may not be
registered, any and all subsequent Buyers will have notice of this Agreement and will become
bound by it.
Schedule A
Page 3 of 3
9. The Buyer will ensure that any subsequent Buyer of the Strata Lot from the Buyer will execute
a copy of this Agreement thereby agreeing to be bound by the terms of this Agreement as if such
subsequent Buyer was an original Buyer from the Seller and an original party to this Agreement.
Upon receipt of a copy of this Agreement accepted by a subsequent Buyer as binding upon the
subsequent Buyer in the same manner as if the subsequent Buyer were an original Buyer from
the Seller, the Seller releases the Buyer from any responsibility under this Agreement.
10. This Agreement ensures to the benefit of and binds the parties and their respective successors
and permitted assigns.
11. This Agreement and each of the documents contemplated by or delivered under or in
connection with this Agreement are governed exclusively by and are to be enforced, construed
and interpreted exclusively in accordance with the laws of British Columbia and the laws of
Canada applicable in British Columbia.
12. The Seller understands and acknowledges that there is a risk the Lawsuit may be
unsuccessful and result in a further special assessment. The Seller agrees that from the sale
proceeds $5,000.00 will be held back in the Seller’s lawyer’s trust account until the Lawsuit is
settled or adjudicated upon. If the Seller fails to pay any assessments related to the Lawsuit such
assessment will be paid from the $5000.00 holdback and the Seller will remain responsible for
any further deficiency.
DATED at the City of _________________, in the Province of British Columbia, this ____ day
of _________________, 20_____ .
EXECUTED IN THE PRESENCE OF
_________________________________
Witness
_____________________________
Buyer
_____________________________
Buyer
_________________________________
Witness
_____________________________
Seller
_____________________________
Seller
With Optional Buyer’s Holdback Clause 12
These clauses and documents are intended for use by Pemberton Holmes Ltd. real estate
agents in real estate transactions. Buyers and sellers; however should always be advised to
read contracts carefully and seek independent legal advice. Each real estate transaction
requires specialized knowledge and realtors are encouraged to review any clauses used with
their managing broker if they have any questions about their applicability to a particular
situation.