STRATA LIVING THE GOOD, THE BAD, & THE UGLY

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1 STRATA LIVING THE GOOD, THE BAD, & THE UGLY Townhouse and condominium apartment living is a great lifestyle enjoyed by a large percentage of homeowners. However, it is not for everybody. While similar to living on a lot in any subdivision governed by the city, a strata has its own set of governing rules enforced by the people who live there. While I point out all the potential problems, it is not to be negative, but more to help you make an informed choice and to help you avoid issues. Living in a house you are subject to the city rules, parking, grass cutting, appearance, noise, etc. In a strata, the council is empowered through its bylaws to enforce these same rules. The bad part for a small percentage is that they resent rules being enforced on them by fellow homeowners and fight the system. The fact is, if you disagree with a bylaw rule, the only way to change it is by a 3/4 majority vote at an Annual General Meeting. If there are bylaws you don't want to live with, thinking you can ignore it can be expensive. The ugly part of it is the fighting and breaking of the rules takes over their life and the best and most expensive example is one of my favourites "The Seagull Case". The short story is that the homeowner lived on the 19th floor and he enjoyed feeding the seagulls. Needless to say, the other owners from the 18th floor down felt the fallout because of his actions. The strata fined the 19th floor owner which he refused to pay and fought the strata. At the end of the day, the cost that he paid was $110,000 through arbitrations, legal fees, etc. and it never even made it to court. Strata law cases. One of the most important items is to get a minimum of 24 months of minutes, the bylaws and rules from the strata meetings. The secret to minutes is to highlight a problem and then follow it up to see what conclusion, if any, there is. Important: you also want to look for any water, structural problems, etc. and, if available, obtain current engineering reports. In some wood frame buildings, sundecks have been an ongoing problem that requires research, generally all problems show up in the minutes. SCROLL DOWN TO MY EXCLUSIVE CHECKLIST Contingency Fund: By strata law, a reserve fund should be between 25% - 100% of the yearly budget; anything under should be topped up by more fees or a levy. Over 100% can be allowed by special vote only. What I recommend is that to not just rely on the contingency reserve fund, start a savings program or a rainy day fund. The financial statement is also important. The amount in the contingency reserve fund versus possible expenditures, I can fully explain what to look for financially.

2 Minutes - What to Look For and An Explanation of: I recommend looking through at least 24 months of the strata minutes. Most often in the contract it will state the Seller to supply 24 months of minutes, rules and regulations at their cost though they may counter the offer and make it at buyer's cost. A typical minutes bylaws package for 24 months can cost approximately $80, but this can vary depending on size. The strata companies charge between $ $0.05 for photocopies of the documents which can add up plus if the documents are ordered rush they can charge higher fees. Practice Point: When going through the minutes, identify any concerns or issues and then follow through to see what action was proposed or what was done. For example, in January 2012 let's say there was a report of problems with water damage on some decks. In the following months this issue should show whether an engineer looked at it, if the developer came back to fix it, etc. If it is a routine problem, the minutes should say {ABC Deck Company} repaired the problem at a cost of $. If it is a serious structural damage issue, there may be a record of the council calling for a Special General Meeting proposing to authorize to raise money by special levy to pay for the problem. Well kept minutes provide a great history of the building and you must pay full attention to them. Special Assessment: I will not explain all of this as to address this should be determined by each set of circumstances, especially when a unit is sold in the middle of an assessment. You, as the Seller, may want money back if the amount you paid was more than needed. This must be written professionally as there has been cases of upset Sellers who paid the money but Buyer received the refund. SCROLL DOWN FOR MY FULL RESTRICTION OF USE SECTION Age Restrictions: I find there is a lot of confusion regarding this. If the strata unit is allowed to be rented, there can be no age discrimination unless the units are restricted to 55 years and older. When buying, it is not contrary to the code to restrict the age of people who occupy. Like all bylaws, a 3/4 vote at a General Meeting can change the rules, but anyone currently living there would be grandfathered. Pets: This can be very controversial. Some people will not buy a place unless they can have their pets, while others want to live where no pets exist. This is where the rules, bylaws and minutes are so important and you must have the opportunity to investigate fully. Legally speaking a strata council may, by way of a 3/4 vote at a General Meeting, change the pet bylaws. If pets are now disallowed, you would be grandfathered for as long as your pet lived, however, you would not be able to replace it. Bylaws can only be changed by a 3/4 vote at a General Meeting. Click here for an interesting lawsuit where they tried to replace the pets with similar looking pets.

3 Standard Pet Restrictions: If there is no bylaw, under the Strata Property Act the rule defaults to one dog or cat, up to two caged birds and a reasonable number of small caged animals, fish or other aquarium animals. Barbeques, Smoking, etc: These issues have become more controversial. Barbeques are often not allowed in condominium buildings and smoking on the deck or even in the unit is causing conflict. It is very important for the minutes to be reviewed if you have concerns about this. The minutes usually tell the story of the strata, what are issues and what are not. Parking Stalls and Storage: When buying a strata home, including these clauses is recommended if there are any questions: Subject to the Buyer verifying on or before that the parking stall(s) associated with the strata lot is (are) designated under the following arrangement: (e.g., as a separate strata lot, or as a part of the strata lot, or the common property of the strata corporation, or limited common property, or under a short term exclusive use agreement or special privilege, or under a lease between, as landlord, and, as tenant, or under a licence agreement between, as licensor [the person who gives the licence] and, as licensee [the person who takes the benefit of the licence], etc.). Subject to the Buyer verifying on or before that the storage locker(s) associated with the strata lot is (are) designated under the following arrangement: (e.g., as a separate strata lot, or as a part of the strata lot, or the common property of the strata corporation, or limited common property, or under a short term exclusive use agreement or special privilege, or under a lease between, as landlord, and, as tenant, or under a licence agreement between, as licensor [the person who gives the licence] and, as licensee [the person who takes the benefit of the licence], etc.). Parking: This is an ongoing issue at some stratas. Check the minutes and study the parking. Like buying a house, going to look at the parking first thing in the morning and again at night will give you a good idea of the parking situation at peak hours. RESTRICTIONS ON USE - FULL EXPLANATION Generally It is important you ascertain the current strata corporation bylaws and rules (referred to as regulations under the former Condominium Act) imposing any restrictions or prohibitions concerning a buyer's ability to rent or use the subject property. Such restrictions or prohibitions should be disclosed clearly and accurately on the Contract of Purchase and Sale. Restrictions vary from development to development. Never assume anything about issues that could affect your purchase. For instance, in many strata plans deposited before July 1, 2000, when the Strata Property Act came into force, you will find a declaration on or about page 2 of the strata plan, to the effect that the plan is "entirely for residential use". In the 2002 case of Winchester Resorts Inc. v. The Owners, Strata Plan VAS2188, a declaration on the strata plan said it was "entirely for residential use". At the same time, a zoning bylaw and a building scheme registered against title to an owner's strata lot,

4 permitted certain commercial activities. The court found that a declaration of this type had virtually no legal effect. In the Winchester case, the owner of a strata lot was permitted to carry on a fishing lodge business in accordance with the zoning bylaw and the terms of the building scheme, despite the "residential use" declaration on the strata plan. It is essential that the most current information, including bylaws, be obtained and, if there is an upcoming meeting regarding any change in bylaws and rules, that these changes be monitored and conveyed to the buyer. When dealing with strata properties, you should obtain a copy of the Property Disclosure Statement - Strata Title Properties to attach to the Contract of Purchase and Sale. Having this information available for all parties will facilitate negotiations on issues of concern (assessments, bylaws, maintenance fees, etc.). Bylaws are not enforceable if they contravene the Strata Property Act, the Regulation, the Human Rights Code (Code), or any other law. The Strata Property Act limits the enforceability of some bylaws and regulations made before it came into force. Bylaws and rules of existing strata corporations ceased to have effect January 1, 2002 to the extent they conflicted with the Strata Property Act or the Regulation. The Strata Property Act transition provisions make it very difficult to know whether older bylaws or rules are still in effect as well as the enforceability of older bylaws and rules. You should seek advice from a lawyer. A common misconception is that a developer or a strata council can waive the application of a bylaw. Buyers will therefore attempt to obtain the permission of the developer or strata council which authorizes a breach of a bylaw. Some bylaws specifically require that the strata council grant permission before an event may occur, such as an alteration to common property. However, where a bylaw prohibits or restricts an activity, such as prohibiting pets, children, hardwood floors or hot tubs, etc., neither the strata council nor the developer has the authority to grant permission for an owner to act in contravention of the bylaw. Age Restrictions When considering age restrictions, you should be careful to determine whether the strata corporation has passed and registered an age restriction bylaw. In some cases, developments are advertised as adult oriented or adult only; however the developer or the strata corporation has never passed and registered a bylaw that restricts age. If there is no age restriction bylaw, an advertisement that the development is adult oriented is not enforceable. Please always review the bylaws to determine whether the strata corporation has passed an age restriction bylaw. Do not rely on the lack of "adult only" signage or the presence of children to determine whether the strata development restricts the age of occupants. The Strata Property Act specifically states that a bylaw is not enforceable to the extent that it contravenes the Human Rights Code. In real estate matters, the Code distinguishes between selling dwelling units and leasing (or renting) them. The Code prohibits age discrimination against tenants unless the age restriction is 55 year of age or older. However, the Code effectively permits age discrimination against buyers in the sale of dwelling units. An age restriction bylaw does not mean that a person younger than the age contained in the bylaw cannot

5 buy the strata lot, only that he or she cannot occupy it. A bylaw restricting the age of persons who may reside in a strata lot does not apply to someone residing there when the bylaw is passed. Rental Restrictions A bylaw may either prohibit rentals of residential strata units or limit the number or percentage of residential strata units that may be rented or the period of time for which they may be rented. Rental bylaws do not apply to family members, who are defined to include a spouse, a spouse arising from a marriage-like relationship (including a same-sex relationship) which has lasted at least two years, a parent or child of the owner, or a parent or child of the spouse. With one exception, the Code prohibits age discrimination against tenants when renting or leasing dwelling units. The exception is if the rental unit is in residential premises in which every rental unit is reserved for rental to a person who has reached 55 years of age, or to two or more persons, at least one of whom has reached 55 years of age. In this case, such a rental restriction would also apply to a family member of the owner. This means that in all cases where a rental restriction is other than 55 years of age or older, such a restriction cannot legally be applied to a tenant. If a strata corporation passes a bylaw restricting rentals under the Strata Property Act, the date the rental restriction applies may vary from strata lot to strata lot. Where a strata corporation passes a rental restriction bylaw, there is a grace period of one year before the bylaw applies to any of the residential strata lots in the strata plan. If a tenant occupies a strata lot on the day that the bylaw is passed, the one year grace period for that strata lot starts to run when the tenant vacates the unit. If the developer filed a Rental Disclosure Statement that applies to the residential strata lot under consideration, the rental restriction bylaw may not apply to that strata lot, if the rental disclosure statement continues to be valid, and the strata lot has not been conveyed by the first purchaser. Once the first purchaser sells the strata lot, a rental restriction bylaw will apply to the strata lot, even though the Rental Disclosure Statement has not expired. In other words, as long as the Rental Disclosure Statement has not expired, the Rental Disclosure Statement prevents rental restriction bylaws from affecting strata lots that are owned by the owner developer or the first purchaser from the owner developer. The Regulations to the Strata Property Act extended the application of Rental Disclosure Statements filed under the Condominium Act to subsequent purchasers until January 1, As of January 1, 2006, if the Rental Disclosure Statements has not expired, regardless whether the Rental Disclosure Statement was filed under the Condominium Act or the Strata Property Act, a bylaw that restricts rentals does not apply only to the owner developer and the first purchasers from the owner developer. The term first purchaser describes a person who bought his or her freehold or leasehold interest in the strata lot from the developer. The term subsequent purchaser describes a person who bought from the first or any later purchaser. For example, if a developer sold a strata lot to Person A, who later sold it to Person B, then Person B is a subsequent purchaser.

6 In addition, an owner may apply to the strata corporation for an exemption from a rental restriction bylaw on the ground that the bylaw causes the owner hardship. When a buyer, such as an investor, purchases a strata lot for rental purposes, a rental restriction bylaw may affect the buyer's ability to rent the strata lot. Determining whether and when a rental restriction bylaw applies to a strata lot are complex questions involving legal analysis. Even though a strata corporation may not have approved a rental restriction bylaw at the time the investor is purchasing a strata lot, investors should be advised that a rental restriction bylaw could be passed in the future. Investors in strata lots should be aware that, unless they purchase the strata lot from the owner-developer, and there is a valid Rental Disclosure Statement, a rental restriction bylaw passed in the future will apply after the expiry of the grace period. Further information relating to rental restrictions, including detailed flow charts, is available in The Condominium Manual, 2nd ed. (2004), published by the British Columbia Real Estate Association and written by Mike Mangan, and in the British Columbia Real Estate Association's continuing education program Condo 202, Advanced Strata Law for REALTORS, written by T. Bennett, M. Mangan, and A. Murray. Pet Restrictions Section 3(4) of the Schedule of Standard Bylaws in the Strata Property Act prohibits pets, other than one dog or cat, up to two caged birds, and a reasonable number of small caged mammals, fish or other aquarium animals. This bylaw can be modified by the strata corporation. A bylaw prohibiting or restricting pets does not apply to a pet living with owners, tenants or occupants at the time when the bylaw is passed. Sales Restrictions Section 122 of the Strata Property Act allows a strata corporation to pass a bylaw governing activities relating to the sale of a strata lot, including locations for the posting of signs and times for the showing of common property and holding of open houses, but the bylaw may not prohibit or unreasonably restrict those activities. Miscellaneous Restrictions Strata corporations may restrict: use, as in what cannot take place (such as running a business); colour of window coverings - to allow for uniformity of window covering colour; waterbeds - outright prohibition, insistence on proof of insurance, or restriction on location within building; hot tubs - especially on roof decks (leaks or weight problems); hardwood floors - noise, especially in frame buildings in rare cases what colour flowers in gardens; and Christmas lights.

7 PROTECTING YOU - YOUR STRATA CHECKLIST Strata Plan # Complex Name Strata Lot # Civic Address Mgmt. Company Contact Tel Number CHECK APPROPRIATE BOX FOR EACH APPLICABLE ITEM BELOW Locker # Part of Strata Lot Separate Strata Lot Limited Common (LCP) Common Property Assigned (Strata Approved) Sub-lease Assignment Rented $ /mo. Parking # Part of Strata Lot Separate Strata Lot Limited Common (LCP) Common Property Assigned (Strata Approved) Sub-lease Assignment Rented $ /mo. Parking # Part of Strata Lot Separate Strata Lot Limited Common (LCP) Common Property Assigned (Strata Approved) Sub-lease Assignment Rented $ /mo CHECK ALL THAT ARE BEING PROVIDED Registered Bylaws Registered Strata Plan Registered Strata Plan Amendments Engineer Report Current Financial Statements Annual Budget (current fiscal year) Annual General Meeting(s) minutes Special General Meeting(s) minutes Information Certificate (Form B) PDS Title Search Completion Certificate Dated Minutes Amendments Insurance Cover Note Building Warranty Information Additional Fee Information Municipal occupancy/inspection permits STRATA COUNCIL MEETING MINUTES (Check all meeting minutes provided) Year January February March April May June July August September October November December Year January February March April May June July August September October November December POTENTIAL ISSUE CHECKLIST Year January February March April May June July August September October November December

8 Ensure you are satisfied with the Strata Council position on these issues that cause concern: Pets - Does it suit you? Smoking- On decks, Inside units Barbeques- Outside cooking Parking- is it adequate? Rentals- Allowed? Hardships? Strata Plan- Original Maintenance- Is it well maintained? Contingency- Large enough? Lockers- Available? Mixed Use- Can a business operate out of a Strata unit? Age Restriction