The British Columbia Court of Appeal recently issued a decision regarding a petition for a declaration that a strata corporation must obtain supermajority approval of the owners before listing a strata complex for sale.
What Happened?
The strata complex was a three-story building located near Granville Street in Vancouver, British Columbia. It contained 41 strata units.
In early 2017, the strata council began to receive requests from realtors about the possibility of selling the building to developers. The council held a general meeting in May of that year, during which it informed the owners of these requests and gave a presentation on the strata winding-up process.
In July 2017, the strata council circulated an informal ballot to gauge the owners’ interest in listing the complex for sale. Twenty-four owners were in favour of listing, 14 were opposed and three did not respond. Soon afterward, the council informed the owners that it intended to proceed and engage the services of a realtor.
On April 20, 2018, one of the dissenting owners filed a petition under the Strata Property Act (“Act”) on behalf of himself and 12 other minority owners who were all opposed to the potential sale. Among other things, the petitioners sought a declaration that the decision to list the complex for sale must attract a supermajority voting threshold of either 75% or 80% of the owners.
Lower Court Decision
The chambers judge dismissed the petition as premature. In his view, although Division 2 of Part 16 of the Act, which concerns the voluntary winding up of a strata corporation with a liquidator, requires supermajority owner approval to finalize the sale of a strata complex, no supermajority requirement attaches to steps that are merely preliminary to a proposed sale.
Issues
The dissenting owner appealed on the basis that:
(a) the listing of a strata complex for sale would trigger an 80% voting threshold under Division 2 of Part 16 of the Act, although, at the hearing of the appeal, the dissenting owner’s position was that only 75% approval was required;
(b) the strata corporation and owners would lack the authority to list and market the complex without a liquidator in place to conduct the process; and
(c) the listing of a strata complex for sale would otherwise trigger a 3/4 voting threshold under the Act.
Court of Appeal Decision
After reviewing the applicable provision of the Act, the court found that the Act does not expressly impose any supermajority requirements upon a resolution to list a strata complex for sale, nor does the Act imply any such requirement.
It found that sections of the Act afford protections to the interests of dissenting owners in the event of a voluntary winding up with a liquidator. Given these protections, the court found that the mere listing of a strata complex for sale, in particular where the listing agreement remained conditional upon an approved winding-up resolution, did not materially infringe such interests.
It was only if the listing eventually led to an actual proposal for winding up that the resolution would need to receive 80% approval from the strata owners under s. 277.
Additionally, the court found that the Legislature could have expressly required a supermajority in relation to the listing of a strata complex for sale, but chose not to do so.
As a result, the court found that the dissenting owner had not established any error in the chambers judge’s interpretation of the Act, according to which only a simple majority of owners, as per s. 50(1), was required to approve the listing of a strata complex for sale.
Accordingly, the court dismissed the appeal.
Advice from Knowledgeable Real Estate Lawyers
There are significant legal and financial risks in entering into a residential real estate transaction. Such large purchases should not be made without proper guidance from an experienced lawyer. Without sound legal advice, you could end up paying more than you should for your home, or accept an offer that is too low, or worse yet, end up with a transaction that falls through due to missed paperwork, or details and technicalities that go unnoticed.
At DBH Law in Calgary, our real estate lawyers have more than 25 years of combined experience acting for purchasers, lenders, and developers through all stages of residential real estate transactions.
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