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Professional Standards Manual

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5. Strata Sales

(b) Obtaining Information - View Entire Section

(II) Strata Documents - View Subsection
(1) Form B Information Certificate

Under the Strata Property Act, a buyer is entitled to obtain an Information Certificate (known as a Form B). The Form B contains information about the strata lot including the monthly strata fees, whether the owner has entered into an agreement with the strata corporation regarding alterations, and what the owner owes to the strata corporation. The Form B also provides information about the strata corporation such as the amount in the contingency reserve fund, whether the strata corporation is involved in litigation or arbitration and information about the use of parking spaces and storage lockers.

Attached to the Form B must be the strata corporation’s rules, the current budget, the owner developer’s Rental Disclosure Statement, if any, and the most recent depreciation report, if obtained.

Where a strata lot is part of a section, as discussed above, if the section is in compliance with the Strata Property Act the section will have its own strata fees, its own operating and contingency reserve fund, and possibly, its own depreciation report. Thus, a Form B will be required for the section as well as for the strata corporation.

The Strata Property Act references a “current” Form B. Many licensees mistakenly believe that a Form B that is dated within the past 30 or 60 days is current. In fact, a Form B is a snapshot of the current state of affairs in respect of information relating to both the strata lot and the strata corporation. Information such as the amount that the strata lot must pay in strata fees can change if a new budget is approved at an annual general meeting. Thus, if an annual general meeting was held after the Form B was prepared, although the Form B may be less than 30 days old, it may nonetheless be out of date. Similarly, the answer to the question respecting whether the strata corporation has been sued or is subject to arbitration can change in a day.

Because the listing licensee may have obtained the Form B when the licensee listed the strata lot, when providing the Form B to the buyer’s agent, if the listing licensee provides the Form B obtained at the time the strata lot was listed, the listing licensee may be providing a Form B that is not current even though it is less than 30 days old. As there is no way to know whether any of the information on the Form B has changed, the listing licensee should provide a new Form B, or confirmation from the strata corporation that the Form B being provided is current.

Although the Form B is generally of interest to the buyer, the listing licensee should use the Form B as a guide in determining with the seller how parking stalls and storage lockers are to be recorded on the listing. Thus, to ensure they are providing accurate and complete information, it is advisable for the listing licensee to obtain the Form B before they begin marketing a strata lot.

Additionally, the listing licensee should review, with the seller, the portion of the Form B that indicates how much the seller owes the strata corporation to ensure that the seller agrees with the amount and that the seller understands that in most cases the amount will need to be paid to the strata corporation, or arrangements that are satisfactory to the strata corporation must be made, before the strata corporation will issue a Form F. The Form F must be provided to the Land Title Office in order for the sale to complete in most cases. If the seller disputes some of the charges, such as fines, chargebacks for damage, or insurance deductibles, the listing licensee should advise the seller to immediately seek legal advice in order that the matter can be resolved. Waiting until a few days before the completion date to dispute the amount owing is not generally an effective strategy.

**Alert**

In the case where the strata lot is within a section of the strata corporation, a licensee should ensure that a Form B is requested from the strata corporation and the section.

Licensees should note that in some cases, the section and the strata corporation may be managed by different strata management companies.

(i) Engineering Reports vs. Depreciation Reports

Licensees should be aware that the terms “engineering report” and “depreciation report” reference two entirely different documents.

Over the years, many strata corporations have obtained engineering reports to identify structural, envelope or other building components deficiencies requiring repair. The report was specific to the problem areas and usually provided options for repair. The means by which a licensee can access an engineering report is discussed below under “Additional Strata Corporation Documents.”

In 2011 the Strata Property Act was amended to require strata corporations to obtain a depreciation report no later than December 13, 2013 unless the strata corporation has fewer than 5 strata lots, or the owners by 3/4 vote, agreed to waive the report. The Strata Property Act requires that a depreciation report contain an inventory of the physical components of the development, a summary of the repairs and maintenance work that occurs less often than annually, and a financial forecast that sets out the anticipated maintenance, repair and replacement costs projected over 30 years. The report must include a description of how the contingency reserve fund is currently being funded and it must contain at least three cash flow funding models to pay for the repairs. The report must include the name of the person preparing the report, a description of the person’s qualifications, whether the person carries errors and omissions insurance and it must set out the relationship between the person and the strata corporation.

The Rules require licensees to advise their client to seek independent professional advice on matters that are outside the expertise of the licensee. Licensees should therefore refrain from expressing an opinion on either an engineer’s report or a deprecation report. Buyer’s agents should recommend that their buyer obtain professional advice if the buyer has questions or concerns relating to the report.  

(ii) Parking Stalls and Storage Lockers

It is important to remember that, the use of parking stalls or storage lockers by the seller does not necessarily mean that they will be available for the purchaser. Unless it is clear that the parking stall/storage locker will be available to be used by the purchaser, the parking stall /storage locker should not be included on the listing.

Effective January 1, 2014, the Form B is required to indicate the designation of parking stalls and storage lockers and must indicate whether they are part of a strata lot, a separate strata lot, limited common property or common property. If the designation is common property, the Form B must also identify how the use is administered. The Form B must indicate whether the Strata Council has given approval for the use, whether the parking stall or storage locker is rented on a monthly basis and if so, the amount of the rent or alternatively, whether the parking stall or storage locker has been allocated by an assignment from the owner developer.

Following is an explanation of the various designations that may be identified on a Form B, and the significance to the seller and buyer.

  • Strata Lot or Part of a Strata Lot

Some strata plans designate parking stalls/storage lockers as part of a strata lot or, in some very rare cases, as a separate strata lot. Although such designations are rare, the Form B will indicate the designation. If the parking stall/storage locker is part of a strata lot, the new purchaser will automatically own and therefore have the use of the area when the strata lot is purchased. The listing for the strata lot can identify the parking stall/storage locker by reference to its stall or locker number. It is not necessary to list the parking stall/storage locker separately. No further action is required by the buyer to ensure that the buyer will have the use of the parking stall/storage locker.

In some cases, parking spaces may be designated as a separate strata lot. If the seller is selling both the residential/commercial strata lot and the parking strata lot, both must be listed for sale and separately transferred to the buyer.

  • Limited Common Property (LCP)

If a parking stall/storage locker is designated as LCP, whether by the developer, or by the owners at a later time, the parking stall/storage locker is automatically available for use by the owner of the strata lot to which the parking stall/storage locker is designated.

When listing a strata lot to which the exclusive use of a LCP parking stall/storage locker is designated the listing should indicate that the parking stall/storage locker is LCP. The numbers of the parking stall(s)/storage locker(s) can be shown on the listing as being the parking space(s)/storage locker(s) number that the buyer will be entitled to use. No further action is required by the buyer to ensure that the buyer will have the use of the parking stall/storage locker.

  • Common Property

If the parking stall/storage locker is designated on the strata plan as common property, it is within the control of the Strata Council, except in cases where there is a developer’s lease, which is discussed below.

Common property is owned by all owners as tenants in common. The Strata Council has the authority under the Strata Property Act to permit an owner or a tenant to use common property. If the parking stalls/storage lockers are common property, owners or tenants are entitled to use a particular area as a result of the Strata Council’s grant of exclusive use to that owner or tenant. The Form B will indicate whether the parking stall/storage locker is available for use as a consequence of an allocation of use by the Strata Council. In some cases, the permission to use the parking stall/storage locker may have been given many years ago. Some owners may not even realize that they are using their parking stall/storage locker as a result of the permission granted by the Strata Council. It may even be that the permission to use the parking stall/storage locker was originally given by the developer during the time the developer was acting as the strata council.  

The provision of the Strata Property Act that authorizes the Strata Council to grant permission to an owner or tenant to use common property limits the period of time for which permission can be given to one year. The permission may be subject to conditions. The permission may be renewed and may be made subject to the same or different conditions. Additionally, the permission for the exclusive use of common property may be cancelled on reasonable notice.

Because the allocation of the use of common property is within the control of the Strata Council and can change, when listing a strata lot where the parking stall/storage locker is common property, the seller should not promise a buyer that the buyer will be entitled to use any of the common property. Rather, the seller should refer the buyer to the information on the Form B.

The buyer can rely on the Form B to indicate which parking stall/storage locker is allocated to the strata lot being purchased, however the buyer’s agent should clearly point out the statement on the Form B that indicates that where the designation of the parking stall/storage locker is common property, the allocation is subject to section 76 of the Strata Property Act and may be subject to change in the future. If the Form B is incomplete, or the information conflicts with the information provided by the vendor, the licensee should recommend that their client seek legal advice.

  • Developer’s Leases

In a number of developments the developer has entered into a lease of the common property parking stalls/storage lockers to itself or to a company related to the developer. After leasing the common property, the developer then enters into agreements with purchasers in which the developer subleases and assigns one or more parking stalls/storage lockers to a purchaser. The developer may charge for all subleases, or it may charge for only additional parking stalls/storage lockers.

Although the lease and sublease agreements vary, generally, the sublease provides that the owner must assign the sublease to a new purchaser at the time the strata lot is sold.

Leases of common property parking and storage areas are seldom registered on title, however, the Form B is required to indicate whether such a lease is likely in place.

Although the seller may not recall whether there was a sublease agreement, the information about the sublease may be contained on the contract of purchase and sale that was prepared when the seller bought the strata lot. If the information about the lease and sublease is not available, the seller should rely on the Form B as the indication that a lease/sublease arrangement is likely to exist. However, without specific information about the sublease, and particularly which parking stall/storage locker was leased, the seller is unable to provide the purchaser with any definitive information regarding the purchaser’s ability to use the parking stall/storage locker other than the information contained on the Form B. If the seller requires more information on the parking stall/storage locker that was assigned as part of the sublease, the seller may need to obtain legal advice. If the seller has a copy of the sublease of a parking stall/storage locker from the developer, the listing licensee can include reference to the parking stall/storage locker when listing the strata lot for sale. The listing should indicate that the area in question is common property and that the seller has a sublease to a specific parking stall/storage locker. The number of the parking stall/storage locker can be shown on the listing. Without a copy of the sublease, the listing should only indicate the information contained on the Form B. A reference to a specific parking stall/storage locker should not be included on the listing agreement.

If the seller has a copy of the sublease, the buyer’s agent should obtain a copy and advise the buyer to read the sublease, or obtain legal advice, to ensure that the sublease can be assigned to the buyer. If the seller does not have a copy of the sublease, the buyer’s agent should recommend that the buyer obtain legal advice to ensure that the buyer will be entitled to the use of the parking stall(s)/storage locker(s) that are used by the seller. In such cases, a buyer’s agent should insert the following clause

Nature of the Parking Stall(s)/Storage Locker needs to be Verified Clause

Subject to the Buyer verifying on or before (date) that the parking stall(s)/storage locker. associated with the strata lot, which are # ____ is (are) designated 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.).

This condition is for the sole benefit of the Buyer.

  • Claims the Parking Stall/Storage Locker was Purchased

In a number of cases, sellers of strata lots insist that the listing should include the parking stall/storage locker because the seller believes they bought the parking stall/storage locker from the developer. The payment may have occurred in conjunction with a sublease of the parking area, or it may have been required by the developer in order to permit the allocation of common property. Notwithstanding any claims by sellers that they paid for a parking stall/storage locker and thus own the parking stall/storage locker, the designations as set out on the Form B are the designations that must be considered when determining how to represent parking stalls/storage lockers on the listing and when considering what a purchaser will be entitled to use after the strata lot is purchased.