Thursday, May 05, 2005
Strata Developments: the Use of Common Property
I have received an e-mail from a person who owns an apartment unit in the same building complex where I own one, in Vancouver B.C. . This particular person, who wishes to remain anonymous, is inquiring about the use of common property in strata developments. More specifically, she is asking whether common area designated as Limited Common Area (LCP) 'runs with the land' , i.e. whether subsequent owners will have the exclusive right of use as well. Since I am a four-year Council Member and this year's President of Strata Council, as well as a real estate Agent, this property owner has posed this question to me. I thought I'd write a post to investigate the use of common areas in general lines, which I am confident readers who are strata owners in British Columbia will find useful.
In a strata development the use of common property is often a cause of disputes among strata lot owners. Parking stalls, storage areas, rooftop decks and landscaped areas around individual strata lots have generated the most difficulty. Since the common property is available for use by all strata lot owners, an owner who wants exclusive use of a part of the common property must be able to point to some authority that gives the owner the right to use the area in question. Additionally, if an owner has a right to use some area of common property, it is important to know whether that right can pass to a subsequent purchaser, i.e. 'runs with the land' as stated by my fellow property owner above, or to a tenant if the owner leases the strata lot.
The first step in determining how common property can be used is to find out whether the particular common property has been designated as LCP. Common property that is designated as LCP for a particular strata lot assures the owner of that strata lot that he or she is entitled to use that common property on an exclusive basis. The LCP designation also assures subsequent owners or tenants that they too will have the right to use that particular piece of common property on an exclusive basis. The LCP designation can, however, be removed a 3/4 vote of the owners in a General Meeting.
If the particular property is not designated as LCP, it remains common property. While common property remains available for use by all owners, other arrangements may have been made which allow an owner to exclusively use the relevant portion of the common property. If the property is not LCP, the second step in determining how the property can be used is to find out whether the strata corporation has granted an owner permission to exclusively use the particular common property or whether the property was leased by the developer. A short-term, exclusive-use agreement between the strata corporation and an individual property owner is limited to a maximum period of one year. Although the Strata Council can renew the agreement, it can also choose not to renew or to renew at different terms and conditions. Naturally, if an owner is using a piece of common property under the terms of an exclusive-use agreement, the owner has a less certain arrangement than if the property was designated as LCP.
Since the short-term exclusive-use agreement is granted to an owner personally and is not attached to the strata lot, the right to use the piece of common property does not automatically transfer to a purchaser or tenant when the owner sells the strata lot or leases it. It is up to the purchaser or tenant to negotiate a new exclusive-use agreement with the Strata Council. When selling or leasing strata lots, owners who hold an agreement to exclusively use common property, and their agents, should be careful not to promise the purchaser or tenant the use of that property.
Even though particular common property is not designated as LCP or is not subject to an exclusive-use agreement, an owner may still be entitled to use that piece of common property as a result of the lease of the property by the developer. As a means of controlling the use of common property, the developer may have leased common property and then assigned or subleased a portion of it to a first purchaser. In this case it is necessary to look at the terms of the lease between the developer and the strata corporation and the terms of the assignment or sublease from the developer to the first purchaser, and any further transfer of rights from the first purchaser to a subsequent purchaser and so on, to discover if a current owner has the right to use that portion of common property or to transfer the right to a purchaser or tenant. Such was the arrangement made by the developer respecting exclusive use of parking areas in the building where the aforesaid property owner and myself own our respective strata units.
Whenever there are areas such as parking stalls involved in a strata sale, the safest thing to do is to check the registered strata plan and the resolutions dealing with common property at the Land Title Office to identify what kind of legal interest in the parking stall the seller can pass to the purchaser.
I would like to thank this person for taking the time to write to me. If any other reader wishes me to address a particular topic, just send me an e-mail and I will be glad to respond publicly on this blog.
Real Estate Chronicle