One of the most divisive issues a strata corporation can
face is that of rentals. It can range from whether or not to allow rentals at
all to topics such as exemptions to a no rental bylaw and how to deal with
problem tenants. For the average person the legal landscape can often be quite
confusing. With this article, I hope to make it a bit clearer.
The starting place for any
discussion of rentals is Part 8 of the Strata Property Act (the “SPA”)
entitled “Rentals”. Absent a bylaw prohibiting or restricting the number of
strata lots that can be rented, any owner may rent their strata lot.
Section 141(2) of the SPA
permits “the strata corporation to restrict the rental of strata lots by a
bylaw that:
(a) Prohibits the
rental of residential strata lots, or
(b) Limits one of
more of the following:
(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.
There are a few key things that
can be drawn from this section. First, the ability to restrict rentals applies
only to residential strata lots. There can be no restrictions on the rental of
commercial (or non-residential) strata lots. Second, there can now be an
outright prohibition on the rental of strata lots (under the Condominium Act
there had to be at least one strata lot that could be rented. A zero rental
bylaw was invalid – see 453881 B.C. Ltd. v. Strata Plan LMS508
(1994) 41 R.P.R. (2d) 318). Third, limits can be placed on the period of
time that a strata lot may be rented.
Section 141(1) of the SPA
prohibits the strata corporation from becoming involved in the selection of
tenants. The strata corporation may not:
(a)
Screen prospective tenants;
(b)
Establish criteria that tenants must meet;
(c)
Require that it approve tenants;
(d)
Require that certain terms appear in any tenancy
agreement; or
(e)
Place restrictions on the rental of strata lots other than
with regard to the number of strata lots rented or the length of a tenancy.
The one exception to s.141 (1)
is the enactment of an age restriction bylaw. Arguably tenants should have to
meet the age set out in such a bylaw. (No case law exists yet on this point).
It should be noted, however, that the Human Rights Code states that the
only age that is acceptable to be used in relation to rental property is 55
years. Any other age (i.e. 40) would arguably not apply to renters.
There are several instances in
which a rental restriction bylaw will not apply to an owner. Those are as follows:
(a) They are
exempted by way of a Rental Disclosure Statement (s 143(2) SPA);
(b) They are
renting to a family member (s.142 SPA);
(c) They
were renting to a tenant at the time the rental restriction bylaw was passed
(s.143 (1) SPA); or
(d) They
have been granted an exemption from the rental restriction bylaw on the basis
of hardship (s.144 SPA).
The Rental Disclosure Statement
exemption applies to first purchasers (i.e. those who bought directly from the
owner-developer). In a Rental Disclosure Statement the owner-developer usually
states an intention to rent the strata lots for a specified period of time. The
first purchaser is entitled to rent their strata lot for the period set out in
the Rental Disclosure Statement notwithstanding the passage of a rental restriction
bylaw. (Be careful of the wording in Rental Disclosure Statements filed under
the Condominium Act. In Abbas v. The Owners, Strata Plan
LMS1921 (2000)(BCSC unreported) the court held that where the
owner-developer “reserved” the right to rent, that invalidates the Rental
Disclosure Statement).
An owner may rent to a “family
member” notwithstanding the passage of a rental restriction bylaw. Regulation
8.1 of the SPA defines “family member” to include the spouse, parent or child
of an owner or the parent or child of the spouse of an owner. “Spouse” includes
married, common-law and same sex partners.
If an owner were renting their
strata lot at the time a rental restriction bylaw were passed, they can
continue to rent until the tenant who was renting when the bylaw was passed
leaves plus one year. After that the rental restriction bylaw applies unless
another exemption applies to that owner (i.e. Rental Disclosure Statement).
Owners who live in a no rental
building and who do not qualify for the Rental Disclosure Statement exemption
can request permission to rent despite the existence of a rental restriction
bylaw. However, the owner must meet certain criteria:
(a) The
owner seeking the exemption must apply for it in writing;
(b) They
must provide sufficient detail (i.e. detailed financial data) to permit the
council to properly consider their request;
(c) They
must prove the existence of a hardship (generally financial ruin if unable to
rent);
(d) They
must prove that the hardship results from the rental restriction bylaw; and
(e) They
must prove that the hardship cannot be afforded or avoided.
The case of Als v. Strata
Corp Nw1067 (2002) 97 B.C.L.R. (3d) 393 contains a good review of the case
law surrounding hardship applications.
A strata corporation can enforce
a valid rental restriction bylaw by fining the contravening owner (the fine can
be $500 per week if the bylaws are structured properly) and ultimately seek an
injunction from the court prohibiting the rental of the strata lot.
A landlord has a number of
things that he or she should be aware of or consider when renting a strata lot.
They are:
(a) Pursuant
to s.148 of the SPA if the lease is for 3 or more years the tenant is
automatically assigned the powers and duties of the landlord;
(b) s.146 of
the SPA requires that the landlord give the tenant a copy of the bylaws and
rules of the strata corporation and have the tenant sign a Form K acknowledging
receipt of the same. The Form K must then be submitted to the strata
corporation. Failure to do so can result in a fine to the owner.
(c) A
landlord who rents to a tenant in contravention of a rental restriction bylaw
can be liable to the tenant under s.145 of the SPA for an amount equal to one
month’s rent and the tenant can cancel the rental agreement without penalty if
the tenant was unaware of the rental restriction bylaw; and
(d) Under
s.131 of the SPA, the landlord is responsible for all fines incurred by the
tenant and the occupants of the strata lot.
Owners often oppose the rental
of strata lots because they are concerned about the behaviour of the tenants.
After all, they don’t have a vested interest in the strata corporation, as do
the owners (or so the argument goes). Often there is a belief that there is
less control over tenants than owners. This isn’t the case however. A tenant
who repeatedly and continually contravenes “a reasonable and significant bylaw
or rule…that seriously interferes with another person’s use and enjoyment of a
strata lot or the common property” can be evicted by the strata corporation
pursuant to the provisions of the Residential Tenancy Act (see s.138 (1)
of the SPA). An owner cannot be evicted, no matter how obnoxious they are. The
strata council should also remember that it could fine tenants for violations
of the bylaws and rules. If the tenants don’t pay the owner must. A landlord is
not going to suffer steadily mounting fines (which they may be responsible to
pay) for too long and will likely take steps to evict the tenant as they have
agreed under the tenancy agreement to abide by the bylaws and rules.
As a final note, landlords
should pay careful attention to whom they rent their strata lot. There has been
an increase in the number of marijuana grow operations in town homes and
metamphetamine and similar drug labs in apartment style strata corporations.
Council and other residents should keep an eye out for suspicious activities
and signs of the same.
Shawn M. Smith is an
associate lawyer with the law firm of Cleveland & Doan located in White
Rock and may be reached at 536-5002. This article is intended for information
purposes only and nothing contained in it should be viewed as the provision of
legal advice.