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Lender Confusion About AP "Wind Down" and Impact on Mortgage Renewal

I received the following message from an owner that was seeking to refinance his AP unit:
"I thought I would share a recent experience regarding our potential sale of the property.

We are renewing our mortgage for one of our units and looked at moving to another lender.

They had an appraisal of the property completed and the appraiser noted that the local media has reported that the strata has voted to 'WIND DOWN' the strata corporation and potentially sell to developers. 

The MLS listings for units in the complex indicate: 'Great investment. Potential Anchor Point Land Development proposals in the works. Priced below the proposed offering prices. Buy today and hold.'  This report assumes that the subject is in transition for development and as such has approximately 5 years remaining economic life. Redevelopment in the foreseeable future is highly likely."

The owners challenged this appraiser's interpretation of events. However, this future redevelopment potential caused a "red flag" for the underwriter (a major Canadian bank) and they decided not to fund the mortgage. Fortunately for these owners, they had other options (a different major Canadian bank with a slightly higher interest rate agreed to do the mortgage). But it is noteworthy and instructive that they ran into this difficulty. Their mortgage broker was a little perplexed and not sure why the underwriter considered it a risk.

So why might the development issue be a red flag for an underwriter? 

First, note that the media report referenced by the appraiser stated that AP3 had voted to "wind down" the strata. 
This is incorrect as there has been no such vote. My guess is that the underwriter may have been concerned that the unit would be tied up in litigation because of the reference to the winding down of the strata given that litigation has been the case with all the other strata windups I know of.

This potential financing/mortgage problem is something that all owners that have mortgages need to know about as it is a risk that has not previously been on anyone's radar. 

It bears repeating, again, that an assembly avoids this issue. 

Please encourage all owners to come together quickly to move the assembly forward to avoid this risk for owners in all three towers.

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