Number 436, February 2010
Strata Property Act – Changes to Rental Restrictions Rules
Since its adoption, the Strata Property Act has permitted residential strata corporations to adopt rental restriction bylaws. With the adoption of the Strata Property Amendment Act (SPAA), important changes to rental restrictions for new strata developments came into force as of January 1, 2010.
Rental Disclosure Statements
Developers of residential strata lots have long been required by the Strata Property Act (SPA) to file a rental disclosure statement (RDS) with the Superintendent of Real Estate, in which they disclose if they intend to rent any of the residential strata lots they are developing.1 Typically when completing the RDS, developers would reserve the right to rent out any or all of the strata lots for an indefinite period or for a stated period of years. This was done for two reasons. One was to appeal to the concerns of investor buyers who wanted to rent out the strata lot and avoid rental restrictions subsequently adopted by the strata corporation. The second was to address the concerns of the developer’s lenders who wanted to ensure that if the project encountered problems, and the lender either took title to the strata lots or sold them through the foreclosure process, the strata lots could be rented out.
Under the SPA, if the owner purchased the strata lot directly from the developer and a valid RDS was filed with the Superintendent, that filing preserved the first buyers’ right to rent the unit until the expiry of the rental period specified in the RDS, notwithstanding the adoption of rental restrictions by the strata corporation following the initial purchase.
Strata Property Amendment Act
With the adoption to the SPAA, new rules apply to residential strata developments where the RDS is filed with the Superintendent on or after January 1, 2010. If a strata corporation adopts a rental restriction bylaw, the bylaw will not apply to any strata lot where the developer filed a RDS until the rental period specified in the RDS expires. The number of subsequent owners of the strata lot is irrelevant, with subsequent owners able to rent out their strata lots until the rental period expires.
In other words:
a. for residential strata lots where the RDS was filed before January 1, 2010, any rental restrictions adopted by the strata corporation will apply to a strata lot on the earlier of:
i. the date the strata lot is conveyed by the first buyer to a new owner; and
ii. the date the rental period set out in the RDS expires; and
b. for residential strata lots where the RDS was filed after December 31, 2009, the number of owners subsequent to the first buyer is irrelevant and the ability of all subsequent owners to rent continues until the date the rental period set out in the statement expires.
Buying from Developers
When buying from a developer, buyers and their REALTORS® should always review the disclosure statement filed under the Real Estate Development Marketing Act and review its provisions relating to rental restrictions, the proposed bylaws and the RDS. Now, they should also focus on the date the RDS was filed with the Superintendent of Real Estate. If the RDS was filed with the Superintendent before January 1, 2010, the old rules apply. If it was filed after January 1, 2010, the new rules apply.
Buying in Resale Markets
When purchasing in the resale market, buyers and their REALTORS® should always review any rental restriction contained in the bylaws, as well as the RDS. If not available from the seller, a copy of the RDS can be obtained from either the Superintendent of Real Estate, upon payment of a $38 fee, or the strata management company.
Edward L. Wilson
Lawson Lundell LLP
| ||1. ||Strata Property Act, S.B.C. 1998, c. 43, s. 139. |
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