BC government amendments to Strata Property Act impact strata corporation bylaws and developer disclosure statements to purchasers

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BC government amendments to Strata Property Act impact strata corporation bylaws and developer disclosure statements to purchasers

BC government amendments to Strata Property Act impact strata corporation bylaws and developer disclosure statements to purchasers

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December 21, 2022

After being sworn in as Premier of British Columbia on November 18, 2022, former Attorney General and Minister Responsible for Housing, David Eby, made swift work of introducing amendments to the Strata Property Act (the SPA)[1] which are purported to open up more rental and homeownership options for people in British Columbia. On November 24, 2022, the Building and Strata Statutes Amendment Act (the BSSAA)[2] received Royal Assent, just three days after it was first announced by the Office of the Premier. [3] Concurrently, the BC Financial Services Authority (the BCFSA) amended Policy Statement 1[4] and Policy Statement 2[5] under the Real Estate Development Marketing Act (REDMA)[6], which set out the required form and content for a developer’s disclosure statement to purchasers in relation to marketing strata lots in a development property, in order to align with the amendments to the SPA.[7]

Developers and strata corporations should familiarize themselves with these amendments and consider the impact on their disclosure statements and bylaws going forward, including the following key changes:

Strata corporations are no longer able to enforce bylaws that restrict the rental of strata lots;
Strata corporations are no longer able to enforce age restriction bylaws except those with respect to persons aged 55 and older;
Strata corporations will continue to have the option to hold annual and special general meetings electronically without a specific bylaw authorizing the same (a temporary exemption introduced during the Covid-19 pandemic which has now been made permanent); and
Developers marketing strata lots in development properties are no longer required to file a rental disclosure statement in Form J (the Rental Disclosure Statement) with the BCFSA and include information with respect thereto in their disclosure statements to purchasers.

This insight discusses the key changes in greater detail and will suggest next steps for developers and strata corporations.

An overview of the key amendments

	Immediately prior to November 24, 2022	Effective November 24, 2022
Rental Restriction Bylaws	Strata corporations could pass and enforce bylaws that: (a) prohibited the rental of residential strata lots; (b) limited the number or percentage of residential strata lots that may be rented (provided the bylaw set out the procedure to be followed by the strata corporation in administering the limit); and/or (c) limited the period of time for which residential strata lots could be rented.[8] Except as described above, strata corporations could not screen tenants, establish screening criteria, require the approval of tenants, require the insertion of terms in tenancy agreements or otherwise restrict the rental of strata lots.[9]	Strata corporations can no longer enforce bylaws that restrict the rental of strata lots, except as provided under s. 123.1(2) of the SPA with respect to persons aged 55 or older.[10] Strata corporations still cannot screen tenants, establish screening criteria, require the approval of tenants, require the insertion of terms in tenancy agreements or otherwise restrict the rental of strata lots. [11] Notwithstanding the foregoing, bylaws restricting short-term rentals, such as Airbnb, will continue to be allowed.[12]
Age Restriction Bylaws	Strata corporations could pass and enforce bylaws that restricted the age of persons who could reside in strata lots.[13] Such bylaws did not apply to persons who resided in the strata lot at the time the bylaw was passed, and who continued to reside there after the bylaw was passed.[14]	Strata corporations can still pass bylaws that restrict the age of persons who can reside in strata lots, but only if the specified age is not less than 55 years.[15] Such bylaws will still not apply to persons who reside in the strata lot immediately before the bylaw is passed (provided they are not contravening any age restriction bylaw), and who continue to reside there after the bylaw is passed.[16] Such bylaws will also not apply to: (a) caregivers who reside in the strata lot for the purpose of providing care to a resident who is dependent on them for continuing assistance or direction because of disability, illness, or frailty; and (b) prescribed classes of persons which may be specified by future regulation.[17]
Electronic Attendance and Notice Requirements for General Meetings	Strata corporations could pass bylaws to provide for attendance at an annual or special general meeting by telephone or any other method, provided it permitted all persons participating in the meeting to communicate with each other.[18] Effective April 15, 2020, as a temporary measure during the declaration of a state of emergency in British Columbia as a result of the Covid-19 pandemic, strata corporations could provide for attendance, or voting in person or by proxy, at a strata property meeting by telephone or any other electronic method, without having to pass any bylaw to that effect, provided the method permitted all persons participating in the meeting to communicate with each other during the meeting.[19] Notices of annual or special general meetings had to include a description of the matters that will be voted on at the meeting, including the proposed wording of any resolution requiring a 3/4 vote, 80% vote or unanimous vote.[20]	Strata corporations can continue, as a permanent option, to provide for attendance and voting by telephone and other electronic means at an annual or special general meeting, without having to pass any bylaw to that effect, provided that: (a) the notice of the meeting includes instructions for attending the meeting by electronic means; (b) all persons attending the meeting are able to communicate with each other; and (c) the chair of the meeting is able to identify whether the person attending by electronic means is an eligible voter.[21] Despite the bylaws of the strata corporation, a voting card is not required to be issued to an eligible voter attending an annual or special general meeting by electronic means, nor is such eligible voter entitled or required to vote by secret ballot.[22] In addition to a description of the matters that will be voted on at the meeting as previously required, notices of annual or special general meetings must now also include the date, time and place of the meeting (if applicable), and instructions for attending the meeting by telephone or other electronic means (if permitted).[23]
Rental Disclosure Statements	Developers who rented, or intended to rent, one or more residential strata lots were required to file with BCFSA, before the first residential strata lot was offered for sale or conveyed to a purchaser, a Rental Disclosure Statement, and provide a copy to each prospective purchaser before entering into an agreement to purchase.[24] If there were any bylaws of the strata corporation that restricted the rental of strata lots, their text was required to be attached to the Rental Disclosure Statement.[25] Developers in respect of a development property consisting of five or more strata lots or bare land strata lots were required, in their disclosure statement to purchasers, to state their intent with respect to rentals, and attach a copy of any Rental Disclosure Statement that had been of was going to be filed as an exhibit.	Developers are no longer required (or able) to file a Rental Disclosure Statement with BCFSA. Developers are no longer required to include information about Rental Disclosure Statements in their disclosure statement to purchasers.[26]

Impacts on strata corporation bylaws and disclosure statements to purchasers

Strata corporations will no longer be able to pass rental or age restriction bylaws, except as provided under s. 123.1(2) of the SPA with respect to persons aged 55 or older, and even then, such bylaws will not apply to any of the excluded classes of persons set out in s. 123.2 of the SPA (which, at this time, includes anyone residing in the strata lot, without being in contravention of a pre-existing age restriction bylaw, immediately prior to, and after, the new age restriction bylaw is passed, as well as live-in caregivers). Those strata corporations with pre-existing bylaws that restrict rentals (including, without limitation, outright prohibitions on rentals, restrictions on the number or percentage of strata lots that can be rented, or limitations on the time period for which strata lots can be rented) will no longer be able to enforce such bylaws. As a result, owners who may have previously been unable to rent their strata lots will be entitled to do so going forward, notwithstanding what the strata corporation’s bylaws may say.

With respect to age restriction bylaws specifically, although s. 123.1 of the SPA only expressly prohibits the passing of such bylaws where the specified age is less than 55 years, when read in conjunction with s. 141 (which prohibits rental restrictions generally) and s. 121 (which renders all bylaws that prohibit or restrict an owner’s right to freely lease a strata lot unenforceable, other than age restriction bylaws that specify a minimum age of 55 years), it is likely that pre-existing age restriction bylaws which preclude residents under the age of 55 are also rendered unenforceable by the recent amendments to the SPA. Nonetheless, it remains to be seen how a tribunal or court would interpret such provisions, if challenged.

Developers are no longer required (or able) to file a Rental Disclosure Statement with BCFSA, nor are they required to include information about Rental Disclosure Statements in their disclosure statement to purchasers. Developers remain responsible for: (a) disclosing the content of any filed or proposed amendments to the Schedule of Standard Bylaws from the SPA in their disclosure statements to purchasers, including a summary of any bylaw that imposes restrictions on the age of occupants, pets, rentals, or the use or resale of strata lots[27]; and (b) ensuring their disclosure statements plainly disclose all material facts without misrepresentation, and immediately filing an amendment to the disclosure statement if they become aware that it does not comply with REDMA, the regulations, or contains a misrepresentation.[28] In light of the recent SPA amendments, the BCFSA has expressly stated that a disclosure statement which includes restrictions that are now banned must immediately be amended to ensure continuous, accurate disclosure.[29] Failure to do so could prevent the developer from continuing to market the development property, render a purchase agreement unenforceable against a purchaser, and/or subject the developer to penalties under REDMA.[30]

Next steps

Strata corporations should review their bylaws, any resolutions proposing to amend the bylaws and any notices of upcoming annual or special general meetings for compliance with the SPA. Although there is no specific obligation imposed on the strata corporation to repeal unenforceable bylaws, we recommend that strata corporations seek legal advice and take action to clean up any bylaws which may no longer be enforceable due to the recent amendments to the SPA. Amendments to bylaws must be approved at an annual or special general meeting by a resolution passed by a 3/4 vote of the residential strata lots and a 3/4 vote (or as otherwise provided in the bylaws) of the non-residential strata lots (if any), and subsequently filed in the land title office.

Developers should similarly review their disclosure statements, including any bylaws which deviate from the Schedule of Standard Bylaws under the SPA, for compliance with REDMA and Policy Statements 1 and 2. If the bylaws include prohibited rental or age restrictions, or the disclosure statement contains any other misrepresentation of material facts, developers should take immediate action to file an amendment to the disclosure statement with the BCFSA. We further recommend that developers take this opportunity to remove any references in the disclosure statement to the Rental Disclosure Statement, by way of the same amendment.

Additional changes to the landscape of housing in British Columbia are looming on the horizon, as the government has simultaneously announced the Housing Supply Act,[31] which will allow the minister to establish housing targets for specified municipalities in relation to housing supply, including the availability and affordability of housing. Subject to consultation, this legislation is scheduled to be brought into force in mid 2023, if passed.[32]

Dentons will continue to monitor further developments with respect to the legislation affecting strata corporations and developers in British Columbia. We invite you to contact a member of our Real Estate Practice Group for assistance.

[1] Strata Property Act, SBC 1998, c 43 [SPA].

[2] Bill 44, Building and Strata Statutes Amendment Act, 3^rd Session, 42^nd Parl, British Columbia, 2022 (assented to 24 November, 2022), online: <https://www.bclaws.gov.bc.ca/civix/document/id/bills/billscurrent/3rd42nd:gov44-3>.

[3] Office of the Premier, News Release, “New premier delivers action to expand housing supply within first days” (21 November 2022), online: <https://news.gov.bc.ca/releases/2022PREM0065-001745> [Release].

[4] Policy Statement 1, Disclosure statement requirements for development property consisting of five or more strata lots, BCFSA (24 November 2022), online: <https://www.bcfsa.ca/media/2325/download> [Policy Statement 1].

[5] Policy Statement 2, Disclosure statement requirements for development property consisting of five or more bare land strata lots, BCFSA (24 November 2022), online: <https://www.bcfsa.ca/media/2327/download> [Policy Statement 2].

[6] Real Estate Development Marketing Act, SBC 2004, c 41 [REDMA].

[7] BCFSA, Advisory, 22-0465, “Amendments to Real Estate Development Marketing Act Policy Statements 1 and 2 to Align with Strata Property Act Amendments” (28 November 2022), online: <https://www.bcfsa.ca/media/3096/download> [BCFSA].

[8] SPA, supra note 1 at ss. 121(2)(a) & 141, now repealed.

[9] Ibid at s. 141(1), now repealed.

[10] Ibid at ss. 121(1)(c) & 141.

[11] Ibid at s. 141.

[12] Release, supra note 3.

[13] SPA, supra note 1 at ss. 121(2)(c) & 123(1.1), now repealed.

[14] Ibid at s. 123(2), now repealed.

[15] Ibid at s. 123.1(2).

[16] Ibid at s. 123.2(a).

[17] Ibid at s. 123.2(b)-(c).

[18] Ibid at s. 49(1), now repealed.

[19] Electronic Attendance at Strata Property Meetings (Covid-19) Order, Ministerial Order No. M1114 (15 April 2020) (Emergency Program Act), online: <https://www.bclaws.gov.bc.ca/civix/document/id/mo/hmo/m0114_2020>.

[20] SPA, supra note 1 at s. 45(3), now repealed.

[21] Ibid at s. 49.

[22] Ibid at s. 49(3).

[23] Ibid at s. 45(3).

[24] Ibid at s. 139(1), now repealed.

[25] Strata Property Regulation, BC Reg 43/2000, Form J.

[26] Policy Statement 1, supra note 4; Policy Statement 2, supra note 5.

[27] Ibid at para 3.5.

[28] REDMA, supra note 6 at ss. 14(2) & 16(1).

[29] BCFSA, supra note 7.

[30] REDMA, supra note 6 at ss. 16(4), 23 & 39-40.

[31] Bill 43, Housing Supply Act, 3^rd Session, 42^nd Parl, British Columbia, 2022, online: <https://www.bclaws.gov.bc.ca/civix/document/id/bills/billscurrent/3rd42nd:gov43-1>.

[32] Release, supra note 3.