Creation of Strata Developments

This chapter explains the features that distinguish a strata development and how the strata scheme differs from a co-op development, or a typical development on first nations land. This chapter also explains the role of a strata plan and how to obtain a copy of the strata plan for any particular strata development.

 

Why Strata Developments?

Historically, the law allowed landowners to subdivide their land into two or more separate pieces. The owner of any piece of land also owned the buildings on it.

What if the owner of a building wanted to subdivide the building into several parts with different owners? Although an owner could subdivide land, the law did not easily permit the owner to subdivide a building into separately owned parts. 1

The strata concept is the solution. A strata development is a special way of subdividing a building, or sometimes land, into separate parts for individual ownership together with common property.

The Strata Property Act uses the term owner developer to describe the person who creates a strata development. 2 For simplicity, we will refer to the owner developer as the developer.

How to Obtain a Copy of a Registered Strata Plan

An owner can obtain a copy of the registered strata plan that contains his or her strata lot at the Land Title Office in the district where the strata development is located. The Land Title and Survey Authority of British Columbia (LTSA) publishes the locations and telephone particulars of the various Land Title Offices on the Internet at http://www.ltsa.ca/land-title/land-title-offices.

For the nearest Government Agent, call the Surveyor General’s Division at 250.952.5021 or the Land Title and Survey Authority Corporate office at 250.952.5021.

A person may also use a lawyer or notary, or a private land registry search service (see “Title Service” in the telephone directory) to obtain copies of documents registered at Land Title and Survey Authority offices. The cost of a search varies according to the nature of the information sought and the number of pages copied from the registry’s records.

Anatomy of a Strata Development

In very general terms, the following overview describes the principal features of a strata development. The rest of this manual explains these features in detail.

A strata development consists of strata lots, common property and sometimes common assets.

When a developer creates a strata development, it subdivides the relevant building, or in some cases land, into strata lots and common property. The parts created for individual ownership are called strata lots. This is what allows a person, for example, to own his or her apartment. Informally, we often call this part a “strata unit” or a “condominium.” The rest of the development consists of common property, in one form or another.

When a person acquires ownership of his or her strata lot, that person automatically also becomes a part-owner of the common property and any common assets. According to the Strata Property Act, that owner, 3 together with the owners of all the other strata lots, owns a proportionate interest in the common property as a tenant in common. 4 Each owner’s proportionate share is set out in a table called the Schedule of Unit Entitlement.

Except as permitted by the Strata Property Act, an owner cannot separate his or her interest, as the owner of a strata lot, from the owner’s proportionate interest in the common property and common assets. Any document that deals with the strata lot automatically also deals with the owner’s share in the common property and common assets of the strata corporation. This means, for example, that a strata lot owner cannot sell his or her proportionate interest in the common property and common assets while keeping his or her interest in the strata lot. 5

In a strata development, all the owners contribute to common expenses. Life in the development is mainly governed by the Strata Property Act and regulations, and by the bylaws and rules.

 

The Strata Concept

The owner of a strata property has less autonomy than someone who owns a conventional piece of real estate. An individual strata owner is always subject to the broader community interests of the strata development.

The Strata Property Act creates a democratic structure for the operation of a strata corporation. The strata development consists of strata lots together with common property and common assets. Every strata development has bylaws that reflect the strata community’s values. The bylaws govern how owners and tenants 6 may use their strata lots, the common property and common assets.

The owners of the strata lots are the members of the strata corporation. Every strata lot has a vote. Every year, eligible voters in the strata corporation elect a strata council to carry out the day-to-day work of the strata corporation. Major decisions that affect strata owners or their strata lots must be made by the eligible voters in general meetings. Among other things, the eligible voters may, with sufficient community support, direct the activities of the strata council, requisition special general meetings or place items on a general meeting’s agenda.

 

Two Important Rules

When using this book, it is useful to keep these two rules in mind.

1. A Strata is a Strata

A strata is a strata is a strata. This means that all the fundamental requirements of the Strata Property Act apply to every type of strata development. The same legal principles that govern, for example, a 500-unit apartment-style complex, apply equally to a 100-unit bare land industrial warehouse strata, and a two-unit strata duplex.

In some cases, the legislation adds special requirements for a particular strata development, but the legal fundamentals remain the same for all.

2. The Strata Scheme is Self-Enforcing

The strata scheme is self-enforcing. There is no government body that regulates compliance with the strata legislation. There are no strata police.

To enforce the Strata Property Act, an owner’s first step is political. The owner may use the machinery in the Act by which an owner may bring about a general meeting. Using the steps necessary to place an item on the meeting’s agenda, the owner may put forward a resolution to cause the strata council to do what is necessary for the strata corporation to comply with the legislation.

If, for some reason, the political remedy is not workable, the owner’s next step is legal. Any owner may apply to the Supreme Court of British Columbia for an order requiring the strata corporation to comply with the legislation. In addition, the Act permits owners and tenants to arbitrate certain disputes among themselves or with the strata corporation. 7

The Strata Plan

To subdivide a building, or in some cases land, into separate parts for individual ownership together with common property, the developer must deposit a document called a “strata plan” at the Land Title Office. 8

The plan must show which parts are strata lots for purchase by individual owners and which parts are common property. Although the requirements for depositing a strata plan are very technical, every plan must show, among other things, the following:

  • a unique registration number (e.g., Strata Plan No. VR 150),
  • the boundaries of the land,
  • the location of all buildings (except bare land strata developments), 9
  • a drawing distinguishing the strata lots from one another by numbers or letters in consecutive order,
  • the area of each strata lot in square metres,
  • a schedule of unit entitlement, 10
  • a schedule of voting rights if there is at least one non-residential strata lot, 11 and
  • any bylaws that differ in any respect from the Standard Bylaws. 12

The strata plan is an essential document for every strata owner. Appendix A contains sample excerpts from strata plans that illustrate some of these features. For more information about a strata plan, see Chapter 4, Strata Plan Types, Styles and Uses and Chapter 5, Freehold versus Leasehold.

 

Strata Versus Condominium

The terms strata and condominium are synonymous; they refer to the same thing. For example, these words may be used interchangeably when describing the strata concept, a condominium development or a strata lot. British Columbia is the only jurisdiction in British Columbia to use in its legislation the term strata instead of condominium.

Strata Versus Co-op

A strata development is not the same as a cooperative housing project. The legal structure of a housing cooperative is different in some important respects. The Cooperative Association Act governs a housing cooperative created under our provincial legislation. The Canada Cooperatives Act regulates a federally incorporated cooperative. 13

In a housing cooperative, a corporation is created to purchase, or lease, and develop land for housing. The corporation is called an association. The corporation owns the land or buildings, or, in some cases, leases the property from a leasehold landlord. An individual becomes a member of the cooperative by purchasing a share in it. Typically, ownership of a share in the association carries the right to occupy a unit in the cooperative’s housing complex. 14

From a co-op member’s perspective, the most significant difference between a strata development and a housing cooperative is the nature of the member’s interest in the project. In a strata development, an owner buys an interest in a strata lot. He or she owns the real estate. In a housing cooperative, a member does not own an interest in land; rather, the member only owns a share in the cooperative association. The co-op member does not own the real estate; the cooperative association owns it.

Strata Versus First Nation Development

With the exception of developments that are covered by modern treaties or other legislation, 15 the Strata Property Act does not apply to First Nations lands. At the date of this writing, there are two notable exceptions where, as a result of treaties, strata development may occur on First Nations lands. These are the Nisga’a 16 or Tsawwassen 17 First nations respectively.

Some First Nations in British Columbia have developed real estate projects on First Nations band lands. Outwardly, many of these developments may look like condominium projects, but they are not. Aboriginal law is complex and rapidly changing. The following explanation is general in nature because the focus of this book does not permit a detailed examination of this area of the law.

Under Canada’s constitution, “lands reserved for the Indians” are exclusively within the federal jurisdiction. 18 Accordingly, provincial and municipal laws do not apply if they deal directly with the use of First Nations lands. 19 Since the Strata Property Act is provincial legislation governing the use of land, it does not apply to First Nations lands.

Legal title to First Nations reserve land is held by the federal government for the “use and benefit of a band.” 20 Accordingly, First Nations lands are excluded from our provincial land title system. 21 Instead, the federal Department of Indian and Northern Affairs Canada operates its own Indian Land Registry.

In practice, a non- First Nation person cannot acquire fee simple title directly from a First Nation. Rather, a non- First Nation person may only lease First Nation land if various conditions are met. 22 A developer who creates a development on reserve land must first obtain a long-term lease (often called a “head lease”) 23 from the federal government. When the project is built, the developer sells a partial assignment of the developer’s rights under the head lease to a buyer. Note that a buyer does not acquire fee simple title but rather the right to occupy the premises under a long-term lease. 24

The legal specifics of real estate developments on First Nations lands vary from project to project. Although nearly all developments are governed by head leases, the terms of those leases vary widely. Each head lease is typically a complex, lengthy legal document with features unique to the particular development. Among other things, a head lease may:

  • include a rent review clause that exposes a buyer to rental increases in the future, 25
  • incorporate agreements with local governments for services, whose costs are passed on to the buyer,
  • be subject to a band’s zoning, assessment and taxation bylaws, or
  • require the purchaser to belong to a homeowner’s association, whose bylaws also affect the buyer.

Before buying a leasehold interest in First Nation land, a buyer should obtain legal advice from a lawyer experienced in such matters.

 

 

 

Notes:

  1. For information about the history of the strata concept, see D. J. Pavlich, The Strata Titles Act (Vancouver: Butterworths, 1978), p. 4. See also P. J. Rohan, ed., Condominium Law and Practice (New York: Mathew Bender, 1985), Vol. 1 at p. 2-1. For a comparison of the concept in different legal systems, see J. Leyser, “The Ownership of Flats:A Comparative Study” (1958) 7 Int. and Compr. L.Q. 31.
  2. Strata Property Act, s. 1(1) (definition of “owner developer”).
  3. The Strata Property Act, s. 1(1) defines the term owner to mean a person who is the registered owner of the fee simple interest in a strata lot in a Land Title Office or, in the case of a leasehold strata plan, a person who is registered as the leasehold tenant of the strata lot. For more information about an owner, see Chapter 8, Members.
  4. Strata Property Act, s. 66.
  5. The Strata Property Act, s. 251(2), (3).
  6. The Strata Property Act, s. 1(1) defines the term tenant to mean a person who rents all or part of a strata lot, and includes a subtenant. In the Act, however, the term tenant does not include a leasehold tenant in a leasehold strata plan as defined in section 199, or a tenant for life under a registered life estate.
  7. Strata Property Act, ss. 165177.
  8. Strata Property Act, ss. 2239.
  9. In a bare land strata plan, the boundaries of the individual strata lots are defined by survey markers.
  10. For information about a schedule of unit entitlement, see Chapter 15, Finances.
  11. For information about a schedule of voting rights, see Chapter 14, Voting.
  12. Strata Property Act, ss. 2244 and 245 and Strata Property Regulation, ss. 14.3 and 14.4. For information about bylaws, see Chapter 18, Need For Bylaws and RulesChapter 19, Statutory Bylaws And The Effect Of The Strata Property Act, and Chapter 20, Amending Bylaws.
  13. Cooperative Association Act, S.B.C. 1999, c. 28; Canada Cooperatives Act, S.C. 1998, c. 1.
  14. There does not appear to be a great deal of information available to the public about cooperatives in British Columbia. For information about the structure of cooperatives, readers may find assistance in M. Mangan, ed., Directors’ Liability in Canada (North Vancouver: STP Specialty Technical Publishers, 1994, loose-leaf), Chapter 8.
  15. First Nations Commercial and Industrial Development Act, S.C. 2005, c. 53. See also Lang Michener LLP, “First Nations Commercial And Industrial Development Act” (undated), online: < http://fnpo.ca/extras/FN%20Commercial%20and%20Industrial%20Development%20Act,%202008%20(LMichener).pdf> (date last accessed 28 July 2010). The First Nations Commercial and Industrial Development Act authorizes the federal government to overcome certain constitutional difficulties to facilitate development on reserve lands. In theory, the Act might be used to permit strata development on Indian reserve lands. At the date of this writing, there do not appear to be any projects, whether strata or not, authorized under the statute.
  16. Nisga’a Final Agreement Act, S.B.C. 1999, c. 2, s. 6 (definition of “Nisga’a Lands”); and see, for example, Strata Property Act, ss. 70199237, and 242.
  17. Tsawwassen First Nations Final Agreement Act, S.B.C 2007, c. 39, chapter 4.
  18. The Constitution Act, 1867, 30 & 31 Victoria, c. 3. (U.K.), s. 91(24).
  19. See, for example, Derrickson v. Derrickson, [1986] 1 S.C.R. 285, 1986, CanLII 56, (provincial Family Relations Act); Surrey (Dist.) v. Peace Arch Enterprises Ltd. (1970), 74 W.W.R. 380, 1970 CarswellBC 168 (C.A.) (municipal zoning and health bylaws) and Brantford (Township) v. Doctor, [1996] 1 C.N.L.R. 49; (1995), 29 M.P.L.R. (2d) 300 (Ont Gen. Div.) (provincial building code applied where its provisions only incidentally related to First Nations land).
  20. Indian Act, s. 18(1) (definition of “reserve”).
  21. There is a rarely used mechanism to bring First Nations lands into our provincial land title system, but it is complex and costly. For information, see W.J. Mackay et al., ed., Land Title Practice Manual (Vancouver: Continuing Legal Education Society of British Columbia, 2001, loose-leaf ), Tab 24A.
  22. Indian Act, ss. 37-41 and 58.
  23. When referring to a long-term lease on First Nation land, a developer may also sometimes informally use the term “ground lease,” usually because the developer has heard that phrase applied to long-term leases elsewhere in the industry. When used in this context, the phrase ground lease does not have the technical meaning that it does in a leasehold strata development. For information about a ground lease in a leasehold strata development, see Chapter 5, Freehold Versus Leasehold.
  24. For several helpful articles on Indian land developments, see “Indian Act Conveyancing” (Vancouver: Continuing Legal Education Society of British Columbia, April 14, 2000).
  25. See, for example, Musqueam Indian Band v. Glass, 2000 SCC 52.