Sections

A section is a form of mini-government within a strata corporation. As one judge described it, a section is, in essence, a mini-strata corporation. 1

The former Condominium Act permitted only two kinds of sections: residential or non-residential. 2 The Strata Property Act enlarges the opportunities to establish sections.

Section Prerequisites

Section 191 of the Strata Property Act permits a strata corporation to create sections to represent the respective interests of residential and non-residential strata lot owners.

In the case of residential strata lots, the corporation may also create sections to represent the respective interests the owners of different types of residential strata lots. The regulations define “types” of residential strata lots as: 3

  • apartment-style strata lots,
  • townhouse-style strata lots, or
  • detached houses.

This means, for instance, that a residential strata corporation may create separate sections respectively for apartment-style and townhouse-style strata lots in the strata plan.

In the case of non-residential strata lots, the corporation may create sections to represent the different interests of owners of strata lots used for significantly different purposes.

The Supreme Court of British Columbia has said, in passing, that the provisions 4 authorizing a strata corporation to create a section do not permit creation of sections according to which phase of the development a strata lot belongs. 5

Who May Create A Section?

Either the developer or the strata corporation may create a section. In addition, the Supreme Court of British Columbia may order the creation of a section where necessary to remedy significant unfairness. 6

Developer

The developer may create one or more sections for the strata corporation when the strata plan is filed in the Land Title Office. To create a section, the developer must amend the bylaws of the strata corporation to provide for the creation and administration of the section. 7 Upon filing the necessary bylaw amendment at the Land Title Office, a section is created with the name, 8

In addition, if the strata plan does not designate limited common property (“LCP”) for the use of the strata lots in a section, the developer can file a resolution of the strata corporation to designate certain common property as LCP for the use of all the strata lots in the section. 9

Strata Corporation

A strata corporation may also create one or more sections. To create a section, the strata corporation must amend the bylaws at a general meeting. The resolution to amend the bylaws to create and administer a section requires at least two separate votes. There must be a 3/4 vote by the eligible voters within the proposed section, as well as a 3/4 vote by the eligible voters of the strata corporation. When the strata corporation files the bylaw amendment at the Land Title Office, a section is created with the name, 10

The strata corporation may also pass a resolution by 3/4 vote to designate certain common property as LCP for the use of all of the strata lots in a particular section. 11

The Court

The Strata Property Act permits the Supreme Court of British Columbia to prevent or remedy significant unfairness where certain conditions exist. 12 If the court finds there is significant unfairness, the court may make any order it considers necessary to prevent or cure the problem. In Chow v. The Owners, Strata Plan LMS 1277, the Supreme Court of British Columbia found significant unfairness in the allocation of certain repair expenses. The court used its broad powers to order the creation of sections to represent the different interests of apartment and townhouse owners respectively. 13 In this case, sections allowed the strata corporation to allocate to each section those repair expenses unique to their respective type of strata lot.

Powers and Duties

The Strata Property Act provides that in any matter that relates solely to the section, the section is a corporation. 14 Nevertheless, “the strata corporation retains its powers and duties in matters of common interest to all owners.” 15

In matters relating solely to a section, the section has some of the same powers and duties as the strata corporation, as follows: 16

  1. (a) to establish its own operating fund and contingency reserve fund for common expenses of the section, including expenses relating to limited common property designated for the exclusive use of all the strata lots in the section,
  2. (b) to budget and require section owners to pay strata fees and special levies for expenditures the section authorizes,
  3. (c) to sue or arbitrate in the name of the section,
  4. (d) to enter into contracts in the name of the section,
  5. (e) to acquire and dispose of land and other property in the name of or on behalf of the section, and
  6. (f) to enforce bylaws and rules.

Given a section’s corporate duties, each section must establish its own operating fund and contingency reserve fund (CRF) for common expenses of the section. Additionally, the section must prepare its own budget and require owners in that section to pay strata fees, or special levies, approved by the section.

The section may enter into contracts in the name of the section, sue or arbitrate in the name of the section, and acquire or dispose of land and other property in the name of or on behalf of the section. The section, however, may not enter into contracts, or sue or arbitrate in the name of the strata corporation. The strata corporation has no liability for contracts made, or debts or legal costs incurred, by a section. 17

In addition, a section may amend and enforce certain bylaws, as explained later in this chapter. 18

A section may also use the arbitration provisions of the Strata Property Act to arbitrate a dispute with another section, or with the strata corporation. 19

The Uncertain Aspect Of A Section’s Authority

The Strata Property Act expressly gives some powers and duties to a section, but it is not clear to what extent this implies the existence of other, related powers and duties.

A section does not have all the powers and duties of a strata corporation. The Strata Property Act restricts a section’s authority to the powers and duties listed earlier in this chapter, and then only where the matter in question relates solely to the section. By contrast, the Act gives a strata corporation the power and capacity of a natural person of full capacity, limited only by the statute’s provisions. 20

While the Strata Property Act gives a section authority to do certain things, it is unclear to what extent this implies the existence of related powers and duties. For example, in matters relating solely to a section, the Act authorizes the section to require section owners to pay a special levy for expenditures that the section authorizes, as described in the list above. Does this power include the power to take collection proceedings, such as filing a lien?

In the case of a strata corporation, the Strata Property Act explicitly permits a corporation to collect an unpaid special levy by registering a lien at the Land Title Office against title to an owner’s strata lot. If the debt remains unpaid, the strata corporation may then ask the court to sell the strata lot to pay the amount due to the corporation from the sale proceeds. 21

Does a section have authority to take collection proceedings, such as filing a lien? In general, when a statute empowers someone, such as a section, to do something, all the powers that are necessary to enable the person to do that thing are also deemed to be given. 22 On the other hand, the Act does not expressly give a section the power to use lien proceedings to collect money due to the section. Where a remedy, such as the lien procedure, may deprive a person of his or her property, such as a strata lot, the courts typically require very explicit language in the statute authorizing the procedure.

Before creating a section, a strata corporation should obtain legal advice. A lawyer will typically point out areas where it is important to clarify how, or to what extent, the proposed section may do certain things. For instance, in the case of a section’s collection powers, a lawyer may suggest providing in the bylaws that, at the request of the section, the strata corporation shall enforce payment of section strata fees and special levies, and all at the section’s expense.

Administration

The Strata Property Act permits a section to govern its own affairs concerning matters that relate solely to the section.

Executive

The eligible voters in a section must elect a section executive. The executive effectively acts as the strata council for the section. The executive has the same powers and duties on behalf of the section as the strata council has on behalf of the strata corporation. Members of a section’s executive are also eligible to be elected to the strata council. 23

Expenses By The Strata Corporation For A Section

Perhaps the most common reason for creating a section is so the strata corporation can more easily allocate certain expenses to it.

Under the Strata Property Act, if an expenditure of a strata corporation relates solely to the strata lots in a section, then all of the owners in that section must contribute to the expense according to the schedule of unit entitlement. In other words, where the strata corporation incurs an expense that relates solely to the strata lots in the section, then the strata corporation must allocate that expense to the section.

This is the general rule for strata corporation expenses for a section. 24 The general rule applies unless an exception exists. In each case, before an exception occurs, specific criteria must be met. If an exception applies, the strata corporation must apportion the expense to only some, or perhaps to just one, of the strata lots in the section, as the case may be. For information about paying expenses where a strata corporation has a section, see Chapter 26, Paying for Repairs.

Bylaws and Rules

In some cases, the Strata Property Act permits a section to amend the bylaws respecting matters that relate solely to the section.

In addition, the executive of a section may make rules governing the use, safety and condition of land owned by the section or LCP designated for the exclusive use of all the strata lots in the section. 25

Bylaws

Recall that the strata corporation retains its authority in matters of common interest to all the owners, while the section governs in matters that apply solely to the section. 26 A strata corporation creates a section by amending the strata corporation’s bylaws to establish the section and provide for its administration. Thereafter, the section may further amend the bylaws, but only in matters that relate solely to the section. 27 Section 197 of the Strata Property Act says, in part:

Some people refer to the bylaws governing the section as the section bylaws. To amend a bylaw that relates solely to a section, the section must pass a resolution to amend the bylaws. With a couple of exceptions, the resolution must be approved by a 3/4 vote at a special general meeting of the section. 28

The first exception occurs in an entirely non-residential section, which may have a different than usual voting threshold. To adopt a bylaw amendment, something other than a 3/4 vote may be necessary if the section already has a bylaw which changes that voting threshold. If the bylaws require a different threshold for approving a resolution to amend the bylaws, then the section owners must pass the resolution according to that different threshold. The Strata Property Act says:

The next exception requires a unanimous vote, instead of a 3/4 vote. This exception applies where separate residential and non-residential sections exist in a strata plan composed of residential and non-residential strata lots. In that case, the Strata Property Act prohibits the residential section from amending its section bylaws before the second annual general meeting unless the residential section approves the resolution by unanimous vote at a special general meeting of the section. 29

Rules

The section executive may make section rules governing the use, safety and condition of: 30

  • land and other property acquired by the section, and
  • limited common property designated for the exclusive use of all the strata lots in the section.

The same provisions that apply when a strata corporation makes a rule also apply when the executive makes a section rule. 31 For information about these provisions, including certain limitations that usually apply to a rule, see Chapter 21, Rules.

Insurance

A section is limited to obtaining insurance only against perils that are not insured by the strata corporation, or for amounts that are in excess of amounts insured by the strata corporation. 32 For information about those perils for which a strata corporation must obtain insurance, see Chapter 16, Insurance.

Judgment Against a Section

A lawsuit or an arbitration may result in a judgment. If a judgment against the strata corporation relates solely to the strata lots in a section, the judgment is against only the owners of strata lots in the section. 33

According to the Strata Property Act, where this occurs, a strata lot’s share of the judgment is calculated in accordance with the following formula, 34 as if the amount of the judgment were a contribution to the operating fund and CRF:

formula_spa_195.png

This means that where, for example, a judgment against a strata corporation relates solely to a section, the judgment creditor may register the judgment against the title to some or all of the strata lots in the section. If the section wishes to pay the judgment, each section owner must contribute that strata lot’s proportionate share of the judgment, according to unit entitlement. On the other hand, if in the meantime a section owner wants to remove the judgment from that owner’s title, then that owner must pay the whole amount due under the judgment to the judgment creditor to remove it. 35

In the Strata Property Act, the provisions regarding judgment against a section are very similar, but not identical, to those governing a judgment against a strata corporation. 36 It is likely, but not certain, that the courts will approach a judgment against a section in the same way as a judgment against a strata corporation. In each case, the formula for calculating a strata lot’s share of a judgment, whether against the strata corporation or a section, is, in substance, the same. 37

For information about a judgment against a strata corporation, see Chapter 27, Lawsuits.


Notes:

  1. Lim v. The Owners, Strata Plan VR 2654, 2001 BCSC 1386 at para 48 per Boyd, J.
  2. Condominium Act, R.S.B.C. 1996, c. 64, ss. 51-52. See, for example, The Owners, Strata Plan No. 1086 v. Coulter et al., 2005 BCSC 216.
  3. Strata Property Regulation, s. 11.1.
  4. Strata Property Act, s. 191.
  5. The Owners, Strata Plan VR 2654 v. Mason, 2004 BCSC 685 at para. 55.
  6. Chow v. The Owners, Strata Plan LMS 1277, 2006 BCSC 335. Under section 164 of the Strata Property Act, the court in Chow ordered the creation of sections to represent the different interests of apartment and townhouse owners to remedy significant unfairness. In Chow, the court declined to follow Large et al. v The Owners, Strata Plan 601, 2005 BCSC 1128 where the court earlier held that it lacked authority to remedy significant unfairness by ordering the creation of sections; and Strata Plan BCS 3699 v. Burrard Development Inc., 2013 BCCA 356 ar para 25.
  7. For information about a strata corporation’s statutory bylaws, see Chapter 19, Statutory Bylaws And The Effect Of The Strata Property Act.
  8. Strata Property Act, s. 193(4).
  9. Strata Property Act, s. 192.
  10. Strata Property Act, s. 193(4).
  11. Strata Property Act, ss. 74 and 193.
  12. Strata Property Act, s. 164. For information about the significant unfairness remedy under the Strata Property Act, see Chapter 27, Lawsuits.
  13. Chow v. The Owners, Strata Plan LMS 1277, 2006 BCSC 335.
  14. Strata Property Act, s. 194(2).
  15. Strata Property Act, s. 194(1).
  16. Strata Property Act, s. 194(2).
  17. Strata Property Act, s. 194(3).
  18. Strata Property Act, ss. 197(2) and 194(2).
  19. Strata Property Act, s. 194(6).
  20. Strata Property Act, s. 2(2).
  21. Strata Property Act, ss. 116 and 117. For information about a strata corporation’s lien, see Chapter 15, Finances.
  22. Interpretation Act, R.S.B.C. 1996, c. 238, s. 27(2).
  23. Strata Property Act, s. 196(2), (3).
  24. Strata Property Act, s. 195. Strata Property Regulation, s. 6.4(1).
  25. Strata Property Act, s. 197. See also Strata Property Regulation, ss. 11.2, 11.3 and 17.11(6).
  26. Strata Property Act, s. 194(1),(2).
  27. Strata Property Act, s. 197.
  28. Strata Property Act, s. 197(3).
  29. Strata Property Act, s. 197(3.1).
  30. Strata Property Act, s. 197(4).
  31. Strata Property Act, s. 197(5).
  32. Strata Property Act, s. 194(4).
  33. Strata Property Act, s. 198(1).
  34. Strata Property Act, s. 195. For information about an owner’s liability to contribute to the operating fund or the contingency reserve fund, see Chapter 26, Paying For Repairs.
  35. See, for example, The Owners, Strata Plan VIS 4534 v. Seedtree Water Utility Co. Ltd. et al., 2006 BCSC 73.
  36. Strata Property Act, ss. 166 and 198(1).
  37. Strata Property Act, ss. 99 (formula for a judgment against a strata corporation) and 195 (formula for a judgment against a section).