3 Responsibilities Of Strata Corporation

CASE LAW

Exercise of Strata Corporation’s Powers by Owner Developer

Section 3 of the Strata Property Act and s. 116(a) of the Condominium Act both provide that the strata corporation is responsible for managing the common property and common assets of the corporation for the benefit of the owners. In discussing the duties and obligations of owner developers, the following case, decided under the Condominium Act, affirms the strata corporation’s responsibility to act in the best interest of the owners.

Once a strata plan is registered, owner developers have made a commitment to the arrangements set out in the plan. Developers are under an obligation to individual buyers not to allow their self-interest to interfere with the interests of those present and future purchasers. Owner developers are prevented from benefiting from their control (or domination) of the strata corporation in its infancy to better their positions at the expense of future owners. Where a parking agreement gives the owner developer exclusive rights to all of the parking stalls in a condominium building and no benefit can be seen to the individual unit owners, the agreement is for the exclusive benefit of the owner developer and contrary to the provisions of s. 116(a) of the Condominium Act (Strata Plan 1261 v. 360204 B.C. Ltd., 1995 CanLII 659 (BC SC), supplementary reasons 1996 CanLII 3513 (BC SC); see also the annotation for this decision under s. 80 of the Act).

See also s. 6 of the Strata Property Act, which sets out the duties of the owner developer in carrying out the duties of the strata council.

Common Property Managed for Benefit of Owners

Under s. 116(a) of the Condominium Act and s. 3 of the Strata Property Act, a strata corporation must manage common property for the benefit of the owners. The following case, decided under s. 116(a) of the Condominium Act affirms this principle.

The petitioner was the first purchaser of a strata lot in a new condominium development. At the time of the purchase, the petitioner entered into a lease agreement with the owner developer for exclusive use of a roof top patio for a renewable term of 99 years. Maintenance costs were to be borne by the strata corporation. Subsequently, the strata corporation passed a bylaw that purported to make the petitioner responsible for a share of the common expenses in proportion to the area of the roof top patio. The court found that the lease was void and, therefore, that the bylaw was unnecessary and unenforceable. Under s. 116(a) of the Condominium Act, a strata corporation must control, manage and administer the common property “for the benefit of all owners”. The developer of a strata plan, once it is registered, is under an obligation to the individual purchasers not to allow its self-interest to interfere with the interests of present and future purchasers. That principle prevents an owner developer from using its control of the strata corporation in its infancy to ameliorate its position at the expense of future owners. It is prevented from entering into transactions with itself for its benefit as developer, but to its detriment as owner. In this case, the lease was not in the best interests of all owners. The agreement would only be of benefit to the owner developer who received a higher price and to the petitioner who received exclusive use and potential maintenance subsidization from the other owners (Matthias v. Strata Plan VR 2135, 2000 BCSC 519).