Itís been more than three years since
Strata Property Act came
into force on July 1, 2000 and replaced the
Act. Property managers and developers
still often ask how this legislation affects them.
Quite a lot changed. Here are some
An "owner developer" (thereís a new
definition, for a start) now has a duty to act in the
best interests of the owners (including future owners),
and a duty to exercise the care and diligence of a
reasonably prudent person in the circumstances.
Penalties are payable by an owner developer if a strata
corporationís expenses are underestimated in the Interim
Budget. A strata corporation may lien one of the owner
developerís strata lots for non-payment of a penalty.
Any interim budget surplus is refunded to all the
An owner developer must establish a
contingency reserve fund that belongs to the strata
corporation and cannot be used by the owner developer to
pay strata corporation expenses.
An owner developer may pass
resolutions, including resolutions to amend bylaws, at
any time before the first conveyance to a purchaser.
Once the first conveyance has occurred and before the
first AGM is held, all resolutions requiring a 3/4 vote
must be passed by a unanimous resolution at a general
meeting. These provisions operate to prevent the strata
corporation from entering into any contract or
transaction with the owner developer (or with someone
not at armís length with the owner developer), once the
first sale has occurred, unless the contract or
transaction is first approved by a unanimous resolution
passed at a general meeting.
The first AGM must be held during the
six week period that begins on either: (i) the date that
50% plus one of the strata lots have been conveyed to
purchasers; or (ii) on the date that is nine months
after the date of the first conveyance of a strata lot;
whichever comes first. The notice for the first AGM must
include the first Annual Budget and the first Financial
Statement. Failure to hold the first AGM during this
time will result in severe penalties for the owner
developer. The owner developer will have to pay the
strata corporation $1,000 for the first 30 days of delay
and $1,000 for each additional delay of seven days.
The owner developer chairs the first
AGM either personally or through an agent. A majority
vote is required to approve the first Annual Budget. Any
amendment to the proposed Annual Budget must also be
passed by majority vote. The strata corporation begins
paying the expenses on the first day of the month
following the first conveyance to a purchaser.
At the first AGM, the owner developer
must provide the strata corporation with a host of
documents that were not previously required. For two
years following the transfer of control by the owner
developer, the owner developer must retain all financial
records that relate to the strata corporationís
finances. These records must be made available for
inspection by the strata corporation at no charge and
the strata corporation may, at its expense, copy or
Strata Property Act imposes
numerous duties and responsibilities on owner developers
that were not required under the Condominium
Penalties can be severe for non-performance. It is not
necessary for an owner to hold the title "owner
developer" in order for the responsibilities of owner
developers to apply.
For a detailed
review of the obligations of owner developers, please
download the following paper: