To Rent or Not To Rent #484
Under the Strata Property Act1 (Act), a strata corporation may pass by-laws prohibiting or restricting the rental of strata units. A rental restriction by-law (RRB) must be filed at the Land Title Office and will take effect:
|I.||immediately upon filing, if filed by the developer prior to the sale of any units;|
|II.||alternatively, the later of:|
|i.||one year after the RRB was passed; or,|
|ii.||where a unit is rented, one year from the date the tenant vacates the unit.|
Despite a RRB prohibiting or restricting rentals, an owner may rent a strata lot under three scenarios:
- Rental Disclosure Statement
- Family Rental
- Hardship Exemption
A Rental Disclosure Statement (RDS) filed by the developer with the Superintendent of Real Estate will exempt certain units from an existing or future RRB. Whether an owner benefits from the exemption and for how long, will depend upon the rental period specified in the RDS, and the date the developer filed the RDS. A RDS filed before January 1, 2010, will benefit the first owner (i.e. the buyer from the developer) for the length of the rental period. A subsequent buyer will not benefit from the exemption. A RDS filed after January 1, 2010, will benefit the first and subsequent buyers, until the expiration of the rental period.
An owner may rent their strata unit to a family member. A "family member" means a spouse, child or parent, or a parent or child of a spouse. Spouse includes an individual with whom an owner has lived in a common law relationship for two years or more. If the RRB restricts the number or percentage of rentals, units rented to a family member will not be considered in determining whether the limit of rentals specified in the RRB has been reached.
An owner may rent their unit on the basis of hardship. The owner must follow the statutory procedure to apply for the exemption, and must prove hardship. While "hardship" is not defined under the Act, our courts have considered the definition set out in the Shorter Oxford English Dictionary: "hardness of fate or circumstances; severe toil or suffering; extreme privation". The strata must not unreasonably refuse to grant the exemption. A strata's failure to act reasonably or its failure to follow statutory procedure may result in the exemption being granted.
In Strata Corp. LMS3442 v. Storozuk2, the strata sought recovery of $16,450 in fines from the owner, Mr. Storozuk, who had rented his strata unit in breach of a RRB prohibiting rentals which had been passed years after he bought his unit. Mr. Storozuk had bought a lot to build a home and tried to sell his unit to finance the project. When the unit did not sell, he emailed the strata stating he intended to rent his unit.
The strata served Mr. Storozuk with a by-law infraction notice and he responded by asking the strata to consider his earlier email as an application for a hardship hearing, advising that he would attend an upcoming strata council meeting. At the meeting, the strata denied his application as he failed to provide sufficient evidence of financial hardship. The strata confirmed its decision in writing to Mr. Storozuk eight days later, contrary to the statutory requirement to render a written decision within seven days of the hearing. The strata's application for recovery of the fines was consequently dismissed.
This case is a reminder that licensees selling stratas should ascertain their client's position on rentals, provide a copy of any RDS and/or RRB to the client and consider advising the client to seek independent advice regarding the ability to rent.
|1.||Strata Property Act, SBC 1998, c. 43.|
|2.||Strata Corp. LMS3442 v. Storozuk,  BCJ No. 2075 (SC).|
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