STRATA LAW Kevin Zakreski
BCLI Recommends Fine-Tuning Laws on Complex Stratas
E
arlier this Summer, the British Columbia Law Institute published its second report in the Strata Property Law Project–Phase Two, the Report on Complex Stratas. The report contains 68 recommendations to reform how the Strata Property Act and the Strata Property Regulation govern sections, types, and phases. While some thought was given to root-and-branch reform in each of those three areas, the report’s 68 recommendations opted instead to propose incremental improvements to the legal framework found in the Act and its regulation.
What Are Complex Stratas? Complex strata is a term meant to capture two trends in the real estate sector. • One trend is combining two or more different uses in a single strata property. The resulting mixed-use strata may be used, for example, for a combination of residential, commercial, office, industrial, recreational, or hotel uses. • The second involves the construction of larger residential developments embracing a number of architectural styles and amenities. Volume 26 Number 3 Fall 2017
…owners of different kinds of strata lots or strata lots used for different uses almost invariably have different interests and different needs for goods and services. The two trends have created some significant benefits for the strata property sector, such as enhancing the diversity of properties available and supporting urban planning goals. But they have also given rise to a host of legal issues concerning the organization, operation, and finances of a complex strata. The bulk of the report is concerned with three tools the Act uses to manage those legal issues. • S ections, essentially mini strata corporations • T ypes, strata lots identified in a strata corporation’s bylaws for the purpose of allocating specific expenses paid for out of the strata corporation’s operating fund • P hases, strata properties developed in segments over an extended time
What Legal Issues Do Complex Stratas Pose? Most legal issues facing complex stratas have to do with money. The Scrivener | www.notaries.bc.ca/scrivener
Sections, types, and phases were created to address those financial concerns. It is expensive to develop a sophisticated, architecturally varied strata. Most real estate developers wouldn’t be able to do it all in one go. Phases were introduced to combat that problem. By allowing the strata to be developed in segments over an extended time, phasing legislation expands the pool of developers able to create complex stratas. And once an architecturally varied or mixed-use strata has completed the development process, it can still generate significant financial issues. That is because owners of different kinds of strata lots or strata lots used for different uses almost invariably have different interests and different needs for goods and services. Trying to apply the Act’s default system for managing common expenses (which holds, as a leading judgment once put it, that strata lot owners are “all in it together”) would be unworkable for most complex stratas. Sections and types give owners in complex stratas a better way to manage common expenses. But even as sections, types, and phases solved some longstanding problems, they created new ones. Most of those problems are the result of complex legislative provisions; the report makes many suggestions for improvement. TABLE OF CONTENTS
69
