Strata Alert: Court of Appeal Clarifies Requirements for Rental Restriction Bylaws – Endorses a Wait List Model
Alex J. Chang, Associate Lawyer
Phone: 604-685-1255
Email: ajc@lmlaw.ca
In the recent decision of Mathews v. The Owners, Strata Plan VR 90, 2016 BCCA 345, the Court of Appeal has clarified the legal requirements for rental restriction bylaws and overturned a previous decision of the BC Supreme Court in Carnahan v. The Owners Strata Plan LMS522, 2014 BCSC 2375.
Under s. 141 of the Strata Property Act (SPA), a strata corporation may pass a bylaw restricting the total number or percentage of strata lots that may be rented. Under s. 141(3) of the SPA such a bylaw must set out a procedure for administering the limit. The Carnahan case looked at that requirement and held that the procedure must set out how a strata corporation decides who may rent when multiple owners vie for the limited number of rentals. According to Carnahan, failing to do so would render the rental restriction unenforceable.
The Court of Appeal ruled in Mathews that rental restriction bylaws only require a “basic procedure governing the administration of the rental limit.” The bylaw in Mathews required owners to ask for permission from the strata council to rent but did not set out how the council would decide who got to rent if there were multiple owners competing for the single option to rent. Overturning Carnahan, the Court held that the bylaws do not need to set out how the strata corporation decides who can rent.
The Court of Appeal held that while a “first come, first served” procedure with a waitlist is, “practically speaking, the only permissible way of administering the limit that is open to a strata corporation”, the requirement for a waitlist does not have to be set out in the bylaws. However, the Court of Appeal did say that the including of a wait list bylaw would provide owners with “helpful clarity.”
The Court of Appeal decision should serve as a warning to strata corporations that consider departing from a wait-list model for administering rental limits. The Court took a broad interpretation of what would constitute impermissible screening criteria under s. 141(1) of the SPA and even held that a needs-based system for selecting which owners could rent would violate that section of the SPA. The court also noted that decisions regarding who may rent that are arbitrary or grounded in oblique motives would be significantly unfair under s. 164 of the SPA.
WHAT WE DO: Lesperance Mendes has been advising and representing strata owners in strata property law matters since 1997. To find out more about her strata property law practice and how our team of lawyers can assist you to resolve your strata dispute, contact Paul G Mendes, partner, at 604-685-4894 or send him an email to pgm@lmlaw.ca
THIS ARTICLE IS NOT LEGAL ADVICE: This article provides general information and should not be relied on upon without independent legal advice.
Lesperance Mendes Lawyers
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(604) 685-3567