Often a termination process starts when a developer approaches a strata corporation wishing to buy all the strata lots for redevelopment. Or a strata corporation may be interested in winding up and selling for redevelopment because of excessive repair and maintenance costs.
Open and transparent communication with owners is essential. Information meetings should be held with owners from the very beginning to discuss options and collectively learn more about termination (winding up) including disbursement of funds to owners (if selling to a developer), costs and fees.
Owners will also want to understand how funds from selling would be disbursed. Disbursement to owners will be affected by when the strata plan was filed: before August 1974, unit entitlement; August 1974 to 2000, interest upon destruction; after 2000, relative assessed values.
If the majority of owners are interested in termination, usually a resolution is adopted to enable the strata council to move the process forward and hire legal counsel. Given the costs of the legal review and governance implications, the strata council should only proceed once the owners have formally given direction. The strata corporation is strongly advised to obtain independent legal and professional advice.
The strata council may also hire a real estate broker to market the property or negotiate an offer from a developer. When hiring a broker, the strata corporation's legal counsel should closely review: the terms and conditions of the agency agreement; the commission rates; and whether any type of limited dual agency (i.e. representing both buyer and seller) is permitted.
There is no set procedure but once an eligible offer has been received, a resolution to terminate can be drafted. The winding up resolution should be drafted by the strata's legal counsel and will usually be a detailed multi-paged document. The termination resolution will authorize termination of the strata plan, authorize the strata corporation to apply to the Supreme Court for termination orders and a vesting order authorizing the cancellations of the strata plan and winding up of the strata corporation; approve expenditures (funding for the lawyer, liquidator, liquidator's legal representation, fees and commissions); and may also address miscellaneous matters like move out timelines or rent-free periods.
A strata corporation is required to give at least two weeks' written notice of a general meeting. However if the agenda includes a resolution on termination, the strata must give at least four weeks’ written notice. Four weeks actually means at least 32 days when also considering the notice requirements under the Interpretation Act. If the general meeting is called by petition, then eight weeks‘ written notice (at least 60 days when also considering the notice requirements under the Interpretation Act ) is needed.
The notice of the general meeting to vote on termination must be given to all persons who are entitled to receive the meeting notice, regardless of whether a person previously waived the right to receive notification. Learn more about notice requirements and preparing for a general meeting.
Approving a strata termination resolution requires an 80% vote of approval from all the strata owners. It is not a quorum vote of those owners present or holding proxies at a meeting.
Given the importance of a termination resolution, all strata owners are eligible to vote on the resolution, regardless of any provisions in the bylaws making a strata owner ineligible to vote if the owner has unpaid special levies or unpaid strata fees.
In some situations a mortgagee (the person, organization or financial institution holding the mortgage) of a strata lot may vote at a general meeting on matters relating to insurance, maintenance, finance or other matters affecting the security for the mortgage. However, a mortgagee is not permitted to vote on a resolution to terminate a strata corporation.
After passing a resolution to terminate, a strata corporation with five or more strata lots must apply to the BC Supreme Court for an order confirming termination.
For small strata corporations with fewer than five lots, the requirement for an 80% vote to terminate is effectively unanimous. These stratas may choose whether to apply for a court order or not. On the one hand, obtaining a court order has a cost. On the other hand, having a court order means small strata corporations do not have to get unanimous written consent of the registered chargeholders.
The Strata Property Act provides guidance to the court in how to consider the best interests of the owners, including any significant unfairness to any dissenting minority owners or registered charge holders (e.g. mortgage provider) and ensures all parties have a standing in court.
When the strata corporation is ready to submit an application to the Land Title Office to cancel a strata plan, the strata corporation in addition to other documents, must include the following:
If the strata has obtained a court order:
a Certificate of Strata Corporation confirming:
- the winding up (termination) resolution has passed, and
- the strata corporation has no debts other than the debts held by holders of registered charges.
a copy of the court order
If the strata has fewer than 5 strata lots (and does not obtain a court order):
the written consent of all holders of registered charges
a Form E Certificate of Strata Corporation for Section 274 confirming:
- the winding up (termination) resolution has passed, and
- the strata corporation has no debts other than the debts held by persons who have consented in writing to the winding up of the strata corporation.
Notification of Intent to Cancel
In addition to the process outlined above, bare land strata corporations must also meet another requirement in order to terminate.
Bare land strata corporations ("strata subdivisions") wishing to terminate must notify the applicable local government 90 days in advance. A bare land strata corporation considering termination may wish to transfer responsibility for bare land strata services (e.g. sewer, roads, electricity) to local government.
However, the applicable local government does not have to accept responsibility for any bare land strata services and this may prevent the bare land strata from terminating.
Many bare land strata corporations have significant responsibilities for common property and limited common property such as roads, water, sewage, hydro and recreation facilities.
However, a bare land strata corporation's water and sewer services may or may not be provided by the local government and may or may not be constructed, installed and maintained to local government standards. Local government subdivison standards may also differ for things like building setbacks, road widths, road construction, road finishing, sidewalks, curbs and gutters. In Electoral Areas (parts of Regional Districts) roads are the responsibility of the Province and strata roads may or may not meet provincial standards.
It is strongly recommended that a bare land strata corporation wishing to cancel a strata plan (terminate the strata) consult with the appropriate local government officials (including those in development and planning) well in advance of submitting an application to cancel a bare land strata plan, e.g. six months.
It is very important that the bare land strata corporation and the appropriate local government have come to a shared agreement, with legal documentation, about who will be responsible for the bare land strata property’s common property and assets and the associated repair and maintenance costs if the bare land strata terminates. This shared agreement should be reached before owners vote on a termination resolution.
If a bare land strata corporation does not reach a shared agreement with the appropriate local government (or in some cases the Province) and terminates without having an approved subdivision plan, the owners could inadvertently become "tenants-in-common" on a single land parcel. Being "tenants-in-common" has significant legal implications including not being governed by strata legislation.
A bare land strata corporations cannot unilaterally transfer their responsibilities for strata services to local government.
Before submitting an application to the registrar in Land Titles to cancel a bare land strata plan, the bare land strata corporation must provide notice of the cancellation to the appropriate local government 90 days in advance using "Form BL-A Notice of Intent to Wind Up a Strata Corporation and Cancel a Bare Land Strata Plan".
The notification requirement is a step to help ensure that the bare land strata corporation and the applicable local government (e.g. municipality or regional district or, in some situations, the Province) are aware of their respective termination responsibilities and have come to a mutual agreement.
Like other strata corporations contemplating termination, bare land strata corporations are strongly advised to retain independent legal counsel familiar with strata law and bare land strata corporations.
References:
https://www2.gov.bc.ca/gov/content/housing-tenancy/strata-housing/termination
Strata Property Act: Sections 43, 45, 54, 273.1, 274, 278.1, 279, 284
Bare Land Strata Plan Cancellation Regulation: Section 2.1
The information on strata housing is provided for the user’s convenience as a basic starting point; it is not a substitute for getting legal advice.
