Strata Apartments as Investments

You might think that strata apartments are real estate.  And, mostly you'd be right.  But you're not Donald Trump.

Sometimes strata apartments are so embedded into complex building operation and management structures that they no longer have typical real estate characteristics.  You can't live in them or use them yourself, someone else decides when they're rented and at what rate, they get renovated at your cost without you input, you can only sell on conditions and you have to share (or pool) the returns with other owners/investors.

In such cases the apartment has (effectively) become the underlying asset in an investment product and is no longer real estate in the traditional sense.  

This doesn't matter much if the investment is providing fair returns.  But, when it's not things start to get messy and loss making owners look to their lawyers.

That's exactly what's happening right now in Toronto at the Trump International Hotel & Tower Toronto where a group of investor owners are suing everyone (including Donald Trump himself) over the representations, delays and returns from their strata apartment investments in that development.  They are arguing, amongst other things, that the development and investment was governed by securities laws (as well as real estate and other laws).

It's an interesting story and case which you can read about at the legal action website of the plaintiff's lawyers, Heydary Hamilton.

It's also novel and unusual that the primary documents in the case are being published in this way by (at least) one of the parties in the litigation.

I guess this is one situation where some strata owners would like to tell Donald Trump - 'You're Fired!'


Francesco ...