Amendments to the Strata Property Act allowing a strata corporation to be terminate by a vote of 80 percent of eligible voters came into effect on July 28, 2016. The threshold remains high, but easier to acheive than unanimity. The amendments are based on the recommendations of the British Columbia Law Institute Strata Property Law Project Committee in its Report on Terminating a Strata.
Why terminate a strata corporation? Older buildings may deteriorate to the point where it is uneconomical to retain them in a good state of repair, and it may make more sense to terminate the strata corporation and sell the land to a developer for redevelopment.
The amendments are summarized by the British Columbia Law Institute as follows:
The Strata Property Act amendments are found in sections 37 to 55 of the new act. These amendments achieve two important reforms to the law: (1) they lower the voting threshold required to terminate a strata from unanimity to 80 percent of the strata’s eligible voters and (2) they require a strata to apply to court for an order confirming a resolution to terminate—a requirement that is intended to afford some protection to dissenting owners and registered chargeholders.
The amendments begin by defining this new 80-percent voting threshold, making it clear that it requires 80 percent of all eligible voters, not simply 80 percent of the eligible voters who turn up at a meeting. This new voting threshold applies to a new category of resolution, which the amendments call a “winding-up resolution,” and define as a resolution to cancel a strata plan and become tenants in common (i.e,. to terminate the strata) or to appoint a liquidator for the strata.
A special notice period of at least four weeks’ written notice will apply when a strata wants to consider a winding-up resolution at an annual general meeting or a special general meeting.
If a winding-up resolution is passed by an 80-percent vote, then in most cases the strata will be required to apply to the Supreme Court of British Columbia for an order confirming the decision to terminate. An exception applies for very small stratas. If a strata has fewer than five strata lots, then it will have the option to proceed without the necessity of applying to court. Notice that, for stratas of this size, unanimity will effectively be required to terminate, because one eligible voter will have the power to prevent the strata from reaching the 80-percent voting threshold.
Strata-lot owners and registered chargeholders must receive notice of the application. If any of them opposes termination, they will have the opportunity to make their case to the court.
In considering whether to make the order, the court is directed to consider the following:
- the best interests of the owners; and
- the probability and extent, if the winding-up resolution is confirmed or not confirmed, of
- significant unfairness to one or more
- owners, or
- holders of registered charges against land shown on the strata plan or land held in the name of or on behalf of the strata corporation, but not shown on the strata plan, and
- significant confusion and uncertainty in the affairs of the strata corporation or of the owners.