Strata Alert: Top 5 Issues For New Strata Corporations – #1 Take Control

Top 5 Issues For New Strata Corporations – #1 Take Control


Alex J. Chang, Associate
Phone:  604-685-1255


With everything seeming new and shiny, many buyers can enter a honeymoon period with their new strata corporations. Many may also be preoccupied with moving and settling in. However, there are many issues that a new strata corporation should deal with or they may run into trouble later.

This countdown series of Strata Alerts will review the 5 most urgent matters a new strata corporation should address so that the advice your strata lawyer gives does not include the words, “your strata would be in a better place if this had been dealt with sooner.”

This first article in our countdown deals with what should be the first item of business for all strata owners – taking control of their strata corporation.

Prior to the first annual general meeting (AGM) when a strata council is elected, the “owner-developer” acts as the strata council and controls the strata corporation. While developers have certain duties to a strata corporation under the Strata Property Act (SPA) to act in the best interest of the strata corporation many developers have inherent conflicts of interest that cannot be avoided.

The developer just built, marketed and sold the strata property and may not be quick to point out the flaws in their product. For example, a developer may not be quick to investigate, repair or report construction defects under warranty or consider if certain long-term contracts or cost-sharing arrangements are in the best interest of the owners. These issues will be the topic of future articles in this countdown series.

Thus, new owners should ensure that the first AGM is called and a new council is elected as soon as possible so that their interests are looked after in the strata’s governance.

Under s. 16 of the SPA, the developer must hold the first AGM during the 6 week period that begins on the earlier of:

  1.   the date on which 50% plus one of the strata lots have been conveyed, and
  2.   the date that is 9 months after the date of the first conveyance of a strata lot.
At this first AGM, a council of the owners is elected to replace the owner developer and take control of the strata corporation under s. 20(1) of the SPA.

Another point of business at this first AGM is for the owner developer must provide important documents concerning the strata corporation to the new council under s. 20(2) of the SPA. This will also be the topic of the next Strata Alert in this series.

If the developer fails to convene the first AGM within the required time, any strata lot owner may convene the meeting under s. 17 of the SPA by giving notice of the AGM under s. 45 of the SPA to all strata lot owners including the owner developer.

Under s. 17 of the SPA and s. 3.1(2) of the Strata Property Regulation (Regulation), the developer must pay the strata corporation a penalty of $1,000 for a delay of up to 30 days, and $1,000 more for every additional seven days if they do not call the first AGM on time. The Courts in Strata Plan KAS 3549 v. 0738039 B.C. Ltd., 2015 BCSC 2273, aff’d 2016 BCCA 370 held that the escalating risk of a penalty is meant to ensure that the developer calls the first AGM in the required timeframe. However, the Court has also held that this penalty may only be imposed if an owner actually calls the first AGM under s. 17. The Court held this requirement is meant to also incentivize owners to call the first AGM if the developer does not do so in time. Section 17 stresses the importance of promptly calling the first AGM and transferring control of the strata corporation to the owners.

Owners in a new phase of a strata corporation may also have an interest in taking some measure of control in the strata corporation’s governance, albeit for different reasons. The SPA provides that they are also entitled to a measure of representation and control when their phase becomes part of the strata corporation.

Under s. 230 of the SPA, the strata corporation (not the developer) must also hold another AGM during the six-week period that begins on the earlier of:

  1.   the date on which 50% plus one of the strata lots in the new phase have been conveyed; and
  2.   the date that is six months after the deposit of the new phase plan.

Under s. 13.5 of the Regulation, 2 additional members of the council must be elected at this AGM under s. 230 from the owners of strata lots in the new phase to hold office until the next AGM.

These two additional members are elected even if the council already has the normal maximum number of members under the bylaws and they serve until the next regularly scheduled AGM. This is meant to ensure that the owners in the new phase have some representation and can raise the immediate concerns of their phase on the council.

WHAT WE DO:  Lesperance Mendes has a dedicated team of strata lawyers.  To inquire, please contact Alex J. Chang.


THIS ARTICLE IS NOT LEGAL ADVICE:  This article provides general information and should not be relied upon without independent legal advice with respect to the specific facts of your case.