Purchasing in a strata building means buying into its bylaws. Here are some potential deal-breakers
Buying a condo? The legal doctrine of caveat emptor (“let the buyer beware”) continues to apply to real estate transactions in BC today, and can have the effect of denying the buyer a remedy for defects and deficiencies discovered in the property after purchase. In general, the onus is on the buyer to determine the state and quality of the property being sold – rather than on the seller to point out any potential problems.
When purchasing into a strata building, an important part of the buyer’s due diligence process is reviewing and understanding the current bylaws of the strata corporation. A failure to review the bylaws can lead to nasty, unwanted surprises for new homeowners later down the road.
Schedule “A” of the Strata Property Act establishes a standard set of bylaws that apply to all strata corporations unless some or all of them have been replaced by custom bylaws. Any bylaw amendment must be passed by a three-quarter vote of owners at either an Annual General Meeting (AGM) or a Special General Meeting (SGM). Practically speaking, most large strata corporations will have adopted their own custom bylaws.
Bylaws are only enforceable if they are registered with the Land Title and Survey Authority (LTSA). However, there is no strict time limit within which a strata corporation must register the bylaws at the LTSA after their adoption by the owners. In a seller’s condo market, it is not unheard of for prospective purchasers to submit offers without any subjects. In such cases, time-permitting, prospective purchasers should consider ordering a copy of the strata corporation’s registered bylaws from the LTSA prior to submitting an offer.
In addition to reviewing the registered bylaws, it is important for prospective purchasers to request a “Form B” Information Certificate. The Form B discloses a variety of important information about the strata lot and the strata corporation including any copies of any bylaw amendments that have not yet been registered with the LTSA.
Here are five types of bylaws that you should pay particular attention to, as they could make a huge difference to many buyers.
Rental Restrictions or Rental Prohibition
Particularly if you’re purchasing the property as an investment, but also if you might simply want to rent out your place and go travelling, you will want to ensure that you are in fact allowed to rent out your strata lot. The strata corporation may have already enacted bylaws that could either prohibit the rental of residential strata lots entirely, or limit the number or the percentage of strata lots that may be rented out. Strata corporations may also restrict the length of time for which strata lots may be rented.
Short-Term Accommodation Prohibition
Offering up all or part of your strata lot for short-term accommodation can be a significant mortgage helper. However, the rise of AirBnB has led many strata corporations to pass use-of-property bylaws that prohibit short-term accommodations. So, even though the City of Vancouver will now permit primary residences to be let short-term by licensed hosts, that doesn’t mean the strata corporation permits this practice.
These bylaws should not be confused with rental restrictions or prohibitions, as BC courts have found that short-term accommodations are legally different in nature to rentals. Unlike with rental restrictions or prohibitions, there is no grandfathering of use-of-property bylaws. Rather, they take effect as soon as they are registered with the LTSA.
Pet Restriction or Pet Prohibition
When buying a home for yourself, make sure that your pet has a home as well. Pet bylaws vary greatly and can be as extreme as a complete pet prohibition. However, it is more common for strata corporations to restrict the number and types of pets.
The often-used Schedule “A” bylaws restrict pets in a strata lot to one or more of (1) a reasonable number of fish or other small aquarium animals, (2) a reasonable number of small caged mammals, (3) up to two caged birds and (4) one dog OR one cat. Strata corporations who have passed a custom pet bylaw may have modified these restrictions and may require pets to be pre-approved and registered with the strata council.
Approval for Hardwood Flooring
Want to replace carpeting with hardwood floors before moving in? It’s important to remember that when it comes to strata living, an owner is not the master of their own domain. In an attempt to reduce noise transmission between strata lots, many strata corporations have adopted bylaws that specifically regulate the installation of new flooring.
Even if your strata corporation’s bylaws do not contain specific provisions targeting the installation of flooring, the bylaws will always contains some general provisions requiring approval of the strata council for alterations or renovations to a strata lot. Proceed with caution before making such changes.
Unfortunately, many homeowners will check their strata corporation’s bylaws only after a problem arises. One very common issue faced by owners in a strata building concerns the obligation to repair water damage. Depending on the wording of insurance bylaws, you may be liable for damage caused by water escaping from your strata lot irrespective of whether you have been negligent or careless. The easiest way to protect yourself from such claims is by making sure that you purchase your own individual homeowner insurance to fill in any gaps left by the strata corporation’s insurance policy.