Strata property act changes could help ease Metro’s housing crisis

A recent change to B.C.’s Strata Property Act should help solve some of the legal issues that contribute to the Lower Mainland’s housing crisis. 


Although there are many opinions on the causes and solutions to the region’s housing problems, one fact on which everyone can agree is that many Lower Mainland municipalities are out of land – and the only way to build is up. The strata law change recognizes this fact.

While tracts of single-family homes continue to be bought and replaced by higher density strata complexes, lower density strata complexes, perfectly suitable for redevelopment remain untouched. In order for developers to buy a strata complex for redevelopment, they must buy all of the strata lots individually or, prior to the Strata Property Act change, all the owners had to agree to sell the complex as a whole. The more owners involved in any sale, the harder it was to reach a consensus. 


A developer interested in redeveloping a piece of land occupied by single-family homes might need to buy only a handful of lots. A developer interested in redeveloping an existing strata property on land of equal size might need to buy more than 20 strata lots. At some point, there were simply too many sheep to herd. 

Until recently, selling the strata complex as a whole in B.C. was equally problematic because a strata corporation was required to reach a unanimous vote, which in effect gave each owner veto power.

But changes to the Strata Property Act, which came into effect on July 28, allow owners to sell the complex as a whole after obtaining an 80% yes vote. The strata corporation will still have to obtain a court order confirming the resolution. At that time, those opposed to the sale will presumably have an opportunity to convince the court to override the will of the majority and refuse to allow the sale.

In considering whether to confirm the resolution, the court will take many factors into consideration. Specifically, the best interests of all owners, fairness to the charge holders and any ongoing uncertainty that might result. How these changes play out remains to be seen. Developers have already started buying strata lots, and expressing interest in buying existing strata complexes, with Vancouver’s West End a prime neighbourhood for such redevelopments.

Given the strata corporation’s total value is greater than the sum of its parts, it follows that strata-lot owners are set to receive offers that are well above what they could get selling their units individually for continued habitation. 

In a rising market, it is difficult to imagine a court would thwart the will of the majority to sell the strata complex at a significant premium. However, in a declining market, one could envision prejudice to creditors and other considerations that might tip the scales the other way.

The changes to the Strata Property Act are an example of an evolving policy. A policy that aims to benefit all stakeholders, including strata lot owners, developers and those looking to get into a market that is desperately short on supply.

 

Wes McMillan is a lawyer at Hakemi & Ridgedale LLP. His practice focuses on real estate and construction disputes

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