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5. Strata Sales

(c) Restrictions on Use – Bylaws and Rules

(i) General

In addition to the need to comply with the Strata Property Act, every owner must also comply with the strata corporation’s bylaws and rules.

(ii) Bylaws

Every strata corporation must have bylaws. The bylaws serve as the constitution of the strata corporation. The bylaws may provide for the control, management, maintenance, use and enjoyment of strata lots or common property and the administration of the strata corporation. The ability of a strata corporation to regulate the conduct of owners and their ability to use a strata lot is very broad.  

When a strata plan is deposited at the Land Title Office, the strata corporation acquires, by default, the Schedule of Standard Bylaws. All strata corporations that were created prior to the coming into force of the Strata Property Act that were relying on the Part 5 bylaws of the Condominium Act also acquired the Schedule of Standard Bylaws. Regulation 17.11 of the Strata Property Regulation provided that the Standard Bylaws are deemed to be the bylaws for all strata corporations created under the Condominium Act except to the extent that conflicting bylaws are filed in the land title office.

The developer, when depositing the strata plan, or later, the eligible voters of the strata corporation in a general meeting, may amend or repeal the Standard Bylaws and may create new bylaws. An amendment to the bylaws is not enforceable until it is filed at the Land Title Office. Bylaw amendments filed at the Land Title Office can subsequently be amended. This means that the bylaws of a strata corporation may consist of the Schedule of Standard Bylaws, or the Schedule of Standard bylaws plus any amendments filed in the Land Title Office, or only the amendments as filed in the Land Title Office, if the Standard Bylaws have been amended or disapplied.

Bylaw amendments must be approved by the owners at a general meeting by 3/4 vote.

It is useful to know that only bylaw amendments need be filed at the Land Title Office so in order to determine the current bylaws of the strata corporation it may be necessary to obtain all filed bylaw amendments, as well as the Schedule of Standard Bylaws. Also, sections may have their own bylaws that are separate from the strata corporation bylaws.

(iii) Rules

Rules are optional. The term rules replaces the phrase rules and regulations used under the former Condominium Act. A rule may only govern the use, safety and condition of common property and common assets. If a rule conflicts with a bylaw, the bylaw prevails.

When a strata council creates a rule, the rule is automatically subject to a sunset provision that may limit its life span. Although the rule comes into force immediately, the rule ceases to have effect at the first annual general meeting held after council made the rule unless the eligible voters at a general meeting ratify the rule by a majority vote. Once ratified, the rule remains in force until it is later repealed or altered.

(iv) Bylaws vs. Rules

Bylaws are different from rules in three important respects:

Source — Bylaws must be approved by a ¾ vote of the owners at a duly convened annual or special general meeting; rules are created by the strata council and take effect immediately upon being approved by the strata council. Rules must subsequently be ratified by the owners by means of a majority vote at the next general meeting after the rules were created.

Scope — A strata corporation at an annual or special general meeting is empowered to make bylaws covering not only the common property, but also the use and enjoyment of strata lots. By contrast, a strata council can only make rules affecting the use, safety and condition of common property and common assets.

Formality — Before it can be effective, a bylaw must be filed in the Land Title Office. Rules, however, do not need to be registered in the Land Title Office in order to be effective. Rules must, however, be in writing and must be capable of being photocopied.

(v) Enforceability

Bylaws and rules are not enforceable to the extent that they contravene the Strata Property Act, the Regulation, the Human Rights Code, or any other law. The Strata Property Act limits the enforceability of some bylaws and rules 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. Although this may appear confusing, it is important for licensees to understand that, notwithstanding an owner’s or licensee’s view, or legal opinion that a bylaw may be unenforceable for any of the reasons noted above, only a judge, an arbitrator or an adjudicator can determine that a bylaw is unenforceable. Licensees should therefore refrain from expressing any opinion on the enforceability of any bylaw or rule. Instead, licensees should explain to their clients that a question about the enforceability of a bylaw or rule is a legal matter about which the clients should seek advice from their lawyer.

A common misconception is that a developer or a strata council can waive the application of a bylaw or rule. 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 subject to any duty to accommodate an owner as required by the Human Rights Code. In certain circumstances it may be necessary for buyers or owners to seek the relaxation of a bylaw or rule if the bylaw or rule results in discrimination contrary to the Human Rights Code. Buyers seeking such an accommodation may wish to obtain legal advice.

(vi) Disclosure of Restrictions on Use

The Council has disciplined listing and selling licensees for failing to properly check the bylaws for restrictions. If a restriction exists in the bylaws, selling licensees must inform a buyer before he or she buys the strata lot. For example, typical restrictions include: a bylaw that prevents rentals; an age restriction; a prohibition against pets; a limitation on the size of vehicles; or on the number of occupants per strata lot.

Licensees should never assume anything about issues that could affect buyers. For instance, in many strata plans deposited before July 1, 2000, when the Strata Property Act came into force, licensees 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, 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. The following are common restrictions on an owner’s ability to use a strata lot.

(1) Age Restrictions

When considering age restrictions, licensees 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.

Licensees should always review the bylaws to determine whether the strata corporation has passed an age restriction bylaw. Licensees should 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 permits strata corporations to restrict the age of occupants of a strata lot notwithstanding the Human Rights Code. 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.

Discipline Record — Age Restriction Bylaw

The Council received a complaint that a buyer’s agent had failed to advise buyers of an age restriction bylaw in a strata development that prohibited children under the age of 19. The buyers had a young daughter and became aware of the bylaw after they purchased a strata lot. As a result of the bylaw, the buyers were forced to sell the strata lot and could no longer afford to purchase another home.

At the time the buyer’s agent showed the strata lot to the buyers, a sign at the entrance stated that the complex was adult oriented. When the buyer enquired, the buyer’s agent explained that “although the complex was geared toward adults, there were probably a few children.” The evidence established that, although the buyer’s agent provided the bylaws to the buyer, the buyer’s agent had overlooked the bylaw restricting the age of the residents. At the conclusion of the hearing, the Council found that the buyer’s agent was negligent in failing to ascertain and disclose that there was an age restriction bylaw prohibiting children.

The Council suspended the licence of the buyer’s agent for 14 days and ordered the buyer’s agent to successfully complete the portion of the licensing course regarding Condominiums and Agency.

(2) 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 limit the period of time for which they may be rented.

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. Rental restriction bylaws do not apply to family members, who are defined to include a spouse, a spouse arising from a marriage-like relationship that has lasted at least two years, a parent or child of the owner, or a parent or child of the spouse. Additionally, if the developer filed a Rental Disclosure Statement that applies to the residential strata lot under consideration, depending on the year that the Rental Disclosure Statement was filed, the rental restriction bylaw may not apply to that strata lot if the Rental Disclosure Statement continues to be valid. A Rental Disclosure Statement is filed by a developer before any strata lots are offered for sale and indicates which strata lots are designated as rental strata lots and the rental period. In most cases the developer will identify all strata lots in the development as rental strata lots on the Rental Disclosure Statement.

For all developments for which the Rental Disclosure Statement was filed on or after January 1, 2010, a rental bylaw passed by a strata corporation does not apply to a strata lot identified in the Rental Disclosure Statement until the expiry of the Rental Disclosure Statement.

The ability to rent a strata lot can be of great importance to a buyer so licensees need to understand the change and alert buyers to it.

Whether they act for a seller, a buyer, or both, licensees are accountable for any information they provide regarding the real estate or a trade in real estate. Therefore, if a licensee is uncertain about the answer to any question a seller or buyer may have regarding the rental of a strata lot they should advise that person to obtain independent legal advice.

(i) Rental Disclosure Statement Filed Before January 1, 2010

A Rental Disclosure Statement filed before January 1, 2010 will protect the Developer and first buyers from the application of any rental bylaw passed by the strata corporation until the Rental Disclosure Statement expires. A buyer who purchases from a first or subsequent buyer does not have the benefit of a Rental Disclosure Statement.

Therefore, although buyers who purchase from the Developer will be protected from a rental bylaw if the Rental Disclosure Statement has not expired, future buyers will be subject to any rental bylaw that a strata corporation passes. The future buyers are not protected even though the Rental Disclosure Statement has not expired.

Buyers from developers who wish to take advantage of their right to rent should confirm that the rental period in the Rental Disclosure Statement is far enough into the future so that the first buyer’s right to rent will not be terminated by the expiry of the Rental Disclosure Statement. In many cases, the rental period for Rental Disclosure Statements filed before January 1, 2010 is at least 99 years, or is for an indefinite or unlimited period.

(ii) Rental Disclosure Statement Filed After January 1, 2010

A Rental Disclosure Statement filed on or after January 1, 2010 will protect the Developer and all buyers from the application of a rental bylaw until the expiry of the Rental Disclosure Statement.

The amendment to the Strata Property Act has extended the benefit of the Rental Disclosure Statement from just the first buyer to all buyers until the expiry of the Rental Disclosure Statement. In other words, second, third, fourth, etc. buyers will be able to rent their strata lot as long as the Rental Disclosure Statement has not expired providing that the Rental Disclosure Statement was filed with the Superintendent of Real Estate on or after January 1, 2010.

Essentially, the strata corporation is not able to restrict rentals during the term of the Rental Disclosure Statement. If the buyer sells the strata lot while the Rental Disclosure Statement is in effect, the subsequent buyer would also be permitted to rent the strata lot. This effectively broadens the potential market for the strata lot and may be viewed by the buyer as an advantage. However, for a buyer hoping to see rental restrictions in place in order to create an owner occupied community, the fact that the strata corporation would be unable to restrict rentals may be viewed by a buyer in such a circumstance as a disadvantage.

All buyers, including buyers from developers should confirm the rental period on the Rental Disclosure Statement. Although, in the past, most Rental Disclosure Statements did not expire for significant periods of time, since January 1, 2010 some developers have filed Rental Disclosure Statements for a very short period such as five years. In such cases, the protection from a Rental Disclosure Statement ends for all owners, including the first buyer, when the Rental Disclosure Statement expires. Most first buyers believe that they will always be able to rent because they purchased from the developer. This is not the case. Developments with very short rental periods would therefore not be attractive to buyers who wish to rent the strata lot for an extended period.

(iii) Rental Disclosure Statement to be Attached to Form B

Because a Rental Disclosure Statement is generally filed in the pre-marketing period, any building that was built by January 1, 2010 would most likely have a Rental Disclosure Statement that was filed prior to January 1, 2010. For those buildings, only the first buyer would have the benefit of the Rental Disclosure Statement until the Rental Disclosure Statement expired.

If the building is clearly a building where the Rental Disclosure Statement was filed before January 1, 2010, (i.e. built in the 80s, 90s or early 2000s) the general rule will apply. Buyers of resale strata lots should be advised that they have no protection from a rental bylaw and that a rental bylaw (either existing or one passed in the future) will apply to them.

Because the Rental Disclosure Statement did not apply to anyone other than the Developer and first buyer, even though the Rental Disclosure Statement is required to be attached to the Form B very few strata corporations bothered to do so. However, the amendment to the Strata Property Act relating to the application of the Rental Disclosure Statement has now made it necessary for the Rental Disclosure Statement to be attached so that buyers and licensees acting on their behalf can determine whether the resale has a pre January 2010 Rental Disclosure Statement, in which case the new buyer would not benefit from the Rental Disclosure Statement or, whether the resale has a post January 2010 Rental Disclosure Statement, in which case the new buyer will have the benefit of the Rental Disclosure Statement until it expires.

It will therefore be necessary for buyers and licensees acting on their behalf to determine the expiry date of the Rental Disclosure Statement for the resale of strata lots in the future. As noted above, unless the building is clearly one for which the Rental Disclosure Statement was filed before January 1, 2010, licensees acting on behalf of buyers should insist that the Rental Disclosure Statement be attached to the Form B particularly where the licensee has any doubt or uncertainty about the date the Rental Disclosure Statement was filed.

In summary:

  1. If the Rental Disclosure Statement was filed before January 1, 2010, buyers of resale properties should be informed that a rental bylaw would apply to them.
  2. If the Rental Disclosure Statement was filed on or after January 1, 2010, the licensee should check the expiry date and if the date has not expired, advise resale buyers that they will be protected from a rental bylaw until the Rental Disclosure Statement expires.
(3) 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 amended by the owners to prohibit all or certain types of pets or to create further restrictions regarding the keeping of pets, or alternatively, to expand the numbers or types of pets that may be kept in a strata lot. 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.

(4) 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.

(5) Miscellaneous Restrictions

Many strata corporations restrict:

  • use of a strata lot, in regard to what cannot take place (such as running a business or an illegal activity);
  • colour of window coverings — to allow for uniformity of window covering colour;
  • waterbeds — often an outright prohibition, insistence on proof of insurance, or restriction on location within building;
  • hot tubs — often a prohibition especially on roof decks due to concerns with leaks or weight;
  • hardwood floors — may be prohibited or certain standards for underlay and noise abatement may be imposed especially in frame buildings
  • barbeques – may be prohibited on balconies, or the type of barbeque may be restricted; and
  • smoking – may be prohibited on common property, and possibly on balconies, decks and in some cases in strata lots.