Strata Parking May Get Simpler
Legally Speaking Parking Strata Properties
Mike Mangan
BCREA
In its newest report (the “Report”), the British Columbia Law Institute’s formidable committee of strata experts (the “Committee”) recommends more changes to the Strata Property Act (the “Act”). If adopted, these changes will make it easier for a REALTOR® to confirm how strata parking is designated.
Background
Depending on the circumstances, a strata parking stall may be:
- a separate strata lot (except where intended to be used in conjunction with a residential strata lot);
- part of a strata lot; or
- common property.
The Committee focused on projects where parking is part of the common property. Where a parking stall is common property, it may also be:
- used under a developer’s long-term lease or license arrangement;
- designated as limited common property (“LCP”); or
- used under a short-term exclusive use agreement (effectively, mere permission).
Effective January 1, 2014, a strata corporation’s Information Certificate (Form B) must indicate the designation of any parking stall associated with a strata lot.
Leases and Licenses
When parking is common property, the developer may use a long-term lease or license to generate revenue from the sale of leasehold interests in parking stalls. In the Report, the Committee recommends eliminating a developer’s ability to lease or license a common property parking stall.
While leases vary, this is the general model. Early in the project, the developer incorporates an associated corporation (e.g.; Parking Inc.). Next, the developer gives a lease over the project’s intended parking areas to the associated corporation for a lengthy term (e.g., 99 years). Later, when the developer deposits the strata plan at the Land Title Office, the strata plan designates those parking areas as common property. But, those common-property parking stalls are subject to the prior long-term lease. If a first purchaser of a strata lot wants to use a parking stall, they pay extra. In exchange, the developer causes the associated corporation to partially assign the lease of the parking stall to the first purchaser. Later, when that purchaser sells their strata lot to a subsequent buyer, the first purchaser further assigns their leasehold interest in the parking stall.
Alternatively, developers sometimes use a license, instead of a lease, to create a similar parking scheme. Generally speaking, a license is a contract giving one party the right to use a particular area for a time; it does not create an interest in land. Here, the developer causes the associated corporation to assign the license to the first purchaser, instead of a lease.
The Committee discovered what many REALTORS® already know:
… leases and licences have created confusion in many strata properties and sown the seeds of conflict in others. Because leases and licences are private contracts, there is often less of a record of these transactions than is the case for the other options for allocating parking spaces and storage lockers. As the years go by and the strata lot associated with the space or stall is transferred, strata corporations can lose track of these arrangements.
To address these problems, the Committee recommends eliminating a developer’s ability to lease or license a common property parking stall. This proposal is future facing. If adopted, this change would not affect a lease or license previously made.
LCP
By designating a common property area as limited common property (LCP) that area is effectively set aside for one or more strata lots, whose owners may use the area exclusively. LCP is a form of common property, but some people miss this point. For clarity, the Committee recommends amending the Act to explicitly define LCP as a form of common property.
The Committee also recommends extending the time a developer may unilaterally amend a strata plan to designate a parking stall as LCP. Currently, a developer has two ways to do so any time before the first annual general meeting (“AGM”). The developer can amend the strata plan to designate a parking stall as LCP for the exclusive use of a strata lot. Plus, if certain criteria are met, the developer may amend the strata plan by designating up to two extra LCP parking stalls for the strata lot. The Committee recommends extending the time for a developer to exercise these rights to the fifth AGM. What if, by the fifth AGM some common-property parking stalls remain? The Committee recommends amending the Act to provide that, by default, any parking stall that the developer has not already designated as LCP by the fifth AGM will remain common property.
Summary
If the provincial government adopts these helpful reforms, it will simplify strata parking.
Meanwhile, the Real Estate Council of British Columbia (“Council”) expects a listing REALTOR® and any buyer agent to inquire about parking associated with a strata lot. While Council expects a REALTOR® to read the Form B’s parking information, experienced licensees know this is only part of the puzzle. Whether a REALTOR® acts for the seller or buyer, if the Form B is incomplete or the parking information conflicts with other information, the REALTOR® should investigate and warn their client to seek legal advice.
For more information about strata parking, see Council’s Professional Standards Manual or the Committee’s Report.
Mike Mangan B.A., LL.B.
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