Latest Residential Rental Restrictions in Strata Corporations
The latest updates on rental restrictions in strata corporations, focusing on rental restriction bylaws, legislative limitations, and examples of rental bylaws wording. Understand the elements of well-written bylaws, recent caselaw affecting rental restrictions, and legislative limits on rentals in strata lots.
Download Presentation
Please find below an Image/Link to download the presentation.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author.If you encounter any issues during the download, it is possible that the publisher has removed the file from their server.
You are allowed to download the files provided on this website for personal or commercial use, subject to the condition that they are used lawfully. All files are the property of their respective owners.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author.
E N D
Presentation Transcript
Rental Restrictions in Strata Corporations What is the latest in residential rentals? March 11, 2015 Presented by: Veronica P. Franco PAMA Luncheon Presentation
Introduction Agenda for Today: 1. Rental Restriction Bylaws Elements of a well written bylaw Recent caselaw affecting language and content of rental restriction bylaws 2. Hardship and its definition Recent caselaw regarding timing to respond to hardship applications Renewal applications 2
RENTAL RESTRICTION BYLAWS Legislative Limitations on rental restriction bylaws Required elements on rental restriction bylaws 3
Rental Bylaws Legislative Limitations Section 121(c) A bylaw is not enforceable to the extent that it prohibits or restricts the right of an owner of a strata lot to freely sell, lease, mortgage or otherwise dispose of the strata lot or an interest in the strata lot. Section 141(1) The strata corporation must not screen tenants, establish screening criteria, require the approval of tenants, require the insertion of terms in tenancy agreements or otherwise restrict the rental of a strata lot except as provided in subsection (2) 4
Rental Bylaws Legislative Limits Section 141(2) The strata corporation may only restrict the rental of a strata lot by a bylaw that (a) prohibits the rental of residential strata lots, or (b) limits one or more of the following: These are the only restrictions that can be imposed on rentals (i) the number or percentage of residential strata lots that may be rented; (ii) the period of time for which residential strata lots may be rented. 5
Rental Bylaws Wording (Examples) Bylaw: Issue: Owner-occupied Enforceable? Subject to the provisions of this bylaw, strata lots shall be owner-occupied only, zero (0) rentals, with the following considerations and exceptions: Grandmothers? Spouse of owner? Children of owner? No other occupants? 6
Rental Bylaws Wording (Examples) Bylaw: Issues: Owner in good standing? An owner, in good standing, must make written application to the Strata Council for approval to lease. Permission to lease, pursuant to Section143 of the Act shall not be granted for a period longer than one year, except in the case of unusual hardship. Section 143 one year grace period and RDS? Unusual hardship? 7
Rental Bylaws Wording (Examples) Bylaw: Issues: Prohibition or not? 1. No strata lots may be rented. On what basis can rental be denied? 2. An owner wishing to rent a strata lot must apply in writing to the council for permission to rent. The council will review each application and may withhold permission if an exemption of bylaw 1 is not valid. Legislative limits? 8
Rental Bylaws Wording (Examples) Bylaw: Issues: 1. The number of strata lots that may be rented at any one time is 2. What is the Condominium Act? How is the limit administered? 2. An owner renting in breach of this bylaw must immediately end the tenancy and shall be fined the sum of $500.00 per month. 3. An owner who rents a strata lot shall provide to the council a completed Form K in accordance with Sections 46 and 47 of the Condominium Act. 9
Rental Bylaws Administering the limit Section 141(3) A bylaw under subsection (2) (b) (i) (limiting the number or percentage of strata lots that may be rented) must set out the procedure to be followed by the strata corporation in administering the limit. MUST SET OUT 10
Rental Bylaws Procedure to Administer Limit Carnahan v. The Owners, Strata Plan LMS 522, The bylaw in question: 9.1 The maximum number of strata units that may be rented at any one time is five (5). 9.2 An owner shall obtain the written permission of the strata council before renting or leasing the strata unit. 9.3 Where hardship results to the owner, he may appeal to the council for permission to lease his strata lot, and the council shall not unreasonably refuse the appeal, all pursuant to the Strata Property Act, section 144. 11
Rental Bylaws Procedure to Administer Limit Carnahan v. The Owners, Strata Plan LMS 522 (cont d), The bylaw in question: 9.4 Owners who have rental units must accompany or have an appointed agent accompany prospective renters when showing their unit. 9.5 Before an owner rents his strata lot, the owner must give the Strata Corporation the undertaking in Strata Property Act Form K, signed by the tenant, that the owner and the occupants of the strata lot will comply with the bylaws and rules of the Strata Corporation. 12
Rental Bylaws Procedure to Administer Limit Carnahan v. The Owners, Strata Plan LMS 522 (cont d) [32] Section 141(3) creates two obligations for a strata corporation purporting to restrict the number of strata lots that may be rented: (1) the strata corporation must have a procedure for administering the limit; and (2) that procedure must be set out in the strata corporation s bylaws. 13
Rental Bylaws Procedure to Administer Limit Carnahan v. The Owners, Strata Plan LMS 522 (cont d) [33] The Strata Corporation submits that a plain reading of s. 141(3) shows that strata corporations must have a procedure for administering the rental limit, not that the procedure must have a specific form. I agree. Unlike s. 144, which sets out the procedure a strata corporation must follow when it considers a hardship exemption, s. 141(3) gives a strata corporation considerable discretion in devising a procedure for administering a rental limit. 14
Rental Bylaws Procedure to Administer Limit Carnahan v. The Owners, Strata Plan LMS 522 (cont d) [34] However, merely because the legislature did not set a particular procedure to follow does not leave a strata corporation with unfettered discretion to decide the content and scope of that procedure. By obliging a strata corporation to set out the procedure, s. 141(3) requires it to establish a process for administering the rental limit that is clear and logical, not ambiguous or arbitrary. A strata corporation must do more than set out a single step in the process. 15
Rental Bylaws Procedure to Administer Limit Carnahan v. The Owners, Strata Plan LMS 522 (cont d) Rather, the procedure must be detailed enough that a strata owner, or a prospective strata owner, who reads the bylaws can clearly see how the strata corporation decides which strata owner is entitled to lease their strata lot when the rental restriction limit is not reached, and how a strata owner can attain that right. Such a requirement protects strata owners from the application of an informal and arbitrary procedure. Moreover, the bylaw s procedure must not itself allow the strata corporation to administer the rental limit arbitrarily. 16
Rental Bylaws Procedure to Administer Limit Carnahan v. The Owners, Strata Plan LMS 522 (cont d) Rental bylaw must set out procedure for setting limit If not, entire bylaw in unenforceable One single step (i.e. apply in writing) is not enough Having a policy is not enough Must show how the strata council decides which owner is entitled to rent and how a strata owner can attain that right 17
Rental Bylaws Procedure to Administer Limit Checklist: Which strata lots count towards the limit? Application in writing Waiting list basis first come first served? Council turnaround for response to application What happens if limit is reached? Or not reached? How long can unit sit empty? How long can an owner rent duration of tenancy, duration of ownership, or maximum period of time? 18
Rental Bylaws Procedure to Administer Limit Checklist (cont d): How long can an owner rent duration of tenancy, duration of ownership or unit moves back into unit, or a maximum period of time? Owner on waiting list doesn t want to rent, what are the options? 19
HARDSHIP The timelines and consequences. Hardship definition and obligations 20
Hardship Section 144 Application Basics (1) An owner may apply to the strata corporation for an exemption from a bylaw that prohibits or limits rentals on the grounds that the bylaw causes hardship to the owner. (5) An exemption granted by the strata corporation may be for a limited time. (6) The strata corporation must not unreasonably refuse to grant an exemption. 21
Hardship Section 144 The Application (2) The application must be in writing and must state (a) the reason the owner thinks an exemption should be made, and (b) whether the owner wishes a hearing. 22
Hardship Section 144 The time limits (4) An exemption is allowed if (a) the strata corporation does not give its decision in writing to the owner, (i) if a hearing is held, within one week after the hearing, or (ii) if no hearing is requested, within 2 weeks after the application is given to the strata corporation, or (b) the owner requests a hearing under subsection (2) (b) and the strata corporation does not hold a hearing within 4 weeks after the date the application is given to the strata corporation. 23
Hardship Missed deadline the Caselaw Strata Plan LMS 3442 v. Storozuk Timeline: March 7 strata sends s. 135 letter with 14 day limit to respond and advising owner can apply for hardship March 7 owner says consider February email his application and requests hearing at council meeting being held March 11 March 11 at the end of the hearing, council rejects application (orally) March 19 council denies application by email to owner 24
Hardship Missed Deadline the Caselaw Strata Plan LMS 3442 v. Storozuk One day late was enough to make this an automatic hardship! 25
Hardship Missed Deadline the Caselaw Strata Plan LMS 3442 v. Storozuk Lessons learned: Immediately forward application to owner; Diarize deadlines; Council must decide even if no meeting scheduled; Do not miss deadlines! 26
Hardship What is it? The Act does not tell us what constitutes hardship. When does hardship exist? Look at the caselaw for guidance 27
Hardship What is it? McEvill Holdings Inc. v. The Owners, Strata Plan VR 314. the question of hardship must be tested by the facts of each particular case. The insertion of the word undue before hardship requires the council to consider something more than hardship, but the Act, requires only hardship . The Court found the bylaw to be unenforceable because it established a stricter test than hardship. 28
Hardship What is it? The Owners, Strata Plan VR 333 v. Carl James Nunns (C.A.) Mr. Nunns bought two units as an investor with a rental restriction bylaw in place at the time of his purchase. The Court decided that since Mr. Nunns knew of the rental restriction bylaw at the time of the purchase, he could not claim that the bylaw does not apply to him. The Court also said that it is not hardship when an investor purchases a strata lot in the face of an existing rental restriction bylaw. 29
Hardship What is it? Von Schottenstein v. Owners, Strata Plan 730 The owner said that she had listed her strata lot for one year and had reduced the selling price considerably. She would lose money on the sale. The Court said that the owner s efforts to sell her strata lot at various prices is insufficient alone to ground a case of hardship. 30
Hardship What is it? Willson V. Highlands Strata Corp. the strata corporation was trying to enforce the rental restriction bylaw by fining the owner; The Court commented that economic hardship (i.e. decrease in market value) in conjunction with a leaky condo is probably the type of hardship contemplated by the legislation. 31
Hardship What is it? Als v. The Owners, Strata Corporation NW 1067. Mr. Als purchased a strata lot in 1993. In 1999, Mr. Als was told by his employer that he would be permanently transferred to San Francisco. Mr. Als made a hardship request on the basis that the appraised value of the property was considerably less than the value that he purchased for. The council rejected the application on the basis said that no figures were given to the council nor was anything provided that would suggest that Mr. Als is going to suffer hardship due to the move 32
Hardship What is it? Als v. The Owners, Strata Corporation NW 1067. Mr. Als then is sent to France temporarily. Mr. Als hires a lawyer who submits to the council that it was unreasonable for Mr. Als to sell the unit, he may be held in breach of his insurance by leaving the unit vacant (although it had already sat empty for 2 years by that time. The lawyer also requested details of all other hardship applications received by the council. 33
Hardship What is it? Als v. The Owners, Strata Corporation NW 1067. The court agreed that the council was correct in refusing to provide details of other hardship applications as such information was confidential. The Court also agreed that the council was entitled to ask for Mr. Als financial documents to support his claim. Mr. Als produced no financial information that showed that he could not afford the strata lot expenses. There was no evidence presented to council to prove that there was a breach of the policy and that no optional coverage was available for a vacant strata lot. 34
Hardship What is it? Als v. The Owners, Strata Corporation NW 1067 The Court listed the factors in determining hardship: (1) before it when making a decision to deny an application for hardship the council must consider the particular facts (2) factors to be considered and is not sufficient alone to ground a claim for hardship an inability to sell a strata lots is only one of the 35
Hardship What is it? Als v. The Owners, Strata Corporation NW 1067 (3) some other factors : the inability to obtain insurance because a unit is vacant; the potential prohibitive cost of property management; a substantial decrease in sale value where a new ban on rentals is put in place and the value of a strata lot being all or substantially all of the owner s assets. 36
Hardship What is it? Als v. The Owners, Strata Corporation NW 1067. (4) It is not enough to show a type of hardship which might necessarily apply to all non-resident owners. the rental bylaw must cause hardship to the owner . (5) hardship - hardness of fate of circumstances; severe toil or suffering, extreme privation . Finally the Court applied the dictionary definition of 37
Hardship What is it? Summary: The strata council: 1. should be fair and reasonable. 2. reviewing the application. must not prejudge the issue before the hearing or 3. should not lay down hard and fast rules. 4. must give reasons for its decision in writing. 5. determine, at a later date, whether or not hardship continues to exist. should consider limiting the term of the rental to 6. must not unreasonably refuse to grant exemption. 38
Hardship Renewal Applications Treat just like the original application; Does the hardship still exist? Set a new time limit When can you say no more renewals? Douglas v. Strata Plan LMS 1328 39
These materials are necessarily of a general nature and do not take into consideration any specific matter, client or fact pattern. Please direct inquiries or comments to: Veronica P. Franco 604.891.7714 THANK YOU
