British Columbia is making changes to its Strata Property Act that will give strata owners more flexibility when their property reaches the end of its life cycle or when they decide they would like to sell the property.
The changes will allow strata owners to terminate ownership by receiving agreement from 80 per cent of all owners instead of the previous unanimous vote, which also required the signatures of all lenders and other registered charge holders. Until this point, B.C. was one of the few jurisdictions that still required a unanimous vote to terminate strata corporation.
“We made this change to give strata lot owners more freedom to choose what they want to do as their property nears the end of its life cycle,” said Rich Coleman, Minister of Natural Gas Development and Minister Responsible for Housing. “We don’t want people to be stuck in a situation where they’re paying for repairs on a property that’s not worth repairing, but they can’t terminate the strata because it’s really difficult to get a unanimous vote.”
When older strata corporations reach the end of their life cycle, building and common property components may begin to fail, leading to costly repair bills. In that case, selling the underlying property for redevelopment could be the best option for the group of lot owners. Oftentimes, the land value of the stratas is higher than the sum of the market value of each individual unit. More units can also be rebuilt on the property, adding to the housing supply.
The changes to the Strata Property Act allow for court oversight to protect any minority dissenting owners and registered charge holders. Since an appeal is not required, the court will automatically consider whether the proposed termination of corporation is significantly unfair to one or more unit owners or charge holders, including mortgage providers.
Changes to the Strata Property Act are based on recommendations made by the BC Law Institute. Following extensive public consultation, the changes were widely supported by strata owners.
“The regulations bringing the 80 per cent vote into effect are a positive step for strata corporations considering liquidation of their buildings for redevelopment,” said Tony Gioventu, executive director of the Condominium Home Owners’ Association (CHOA). “Requiring 80 per cent of the voting entitlement to support a liquidation enables owners to collectively negotiate for the best possible financial returns. The requirement for a court application to approve the decision will ensure protection of the public interest and minority rights.”