Strata Alert: BC Supreme Court Decision Sheds Doubt on the Practice of Developers Selling Parking Lease Assignments

Alex J. Chang, JD
P:  604-685-1255

In Abstract Projects Inc. v Strata Plan EPS6069, 2023 BCSC 42, Lesperance Mendes won another victory for our clients in the BC Supreme Court, preventing a developer from assigning parking spaces under a lease to themself over the objection of the residential strata lot owners.

The Strata Property Act (SPA) provides that areas of common property may be designated as limited common property (LCP) for the exclusive use of one or more strata lots. In this case, the parking area in dispute was designated as LCP for the exclusive use of the residential strata lots and had its own gate. The disclosure statement also included statements that indicated that parking was meant for the residential strata lot owners. As a result, the residential owners expected that the relevant part of the parkade was going to be exclusively for their use.

However, the developer, which still owned the commercial strata lots, had purportedly leased the entire parkade to a related company for 99 years. The lease said it could “partially assign or sublet this Lease and its rights under this Lease to an owner or purchaser of any strata lot within the development”.

The developer argued that the lease entitled them to assign LCP residential parking to themselves as the owner of commercial strata lots. When the strata corporation and its residential section refused to allow access to the residential part of the parkade, the developer sued the strata corporation to force access under the lease.

Parking facility leases are a relatively common method for a developer to sell parking separate from the strata lots because they grant developers greater flexibility in selling the parking spaces than the methods recognized under the SPA.

However, the court accepted the strata’s argument that the lease was void, and in doing so raised questions about the legality of these types of leases generally.

The lease was created before the creation of the strata corporation and was not registered on title. However, the developer argued that they caused the strata corporation to assume the lease later when it controlled the strata corporation as the owner-developer following the deposit of the strata plan.

The Court accepted the strata’s arguments that when a lease is made in contemplation of the stratification of land and not registered as a charge against title, that lease can only become effective after stratification and subject to the strata plan. As such, the adoption of the lease after the stratification of the property must be done in accordance with the SPA. The Court found that the lease did not comply with the SPA and was void because:

  1. Section 253 of the SPAprovides that dispositions of common property by way of leases exceeding three years become subdivisions of land and Part 7 of the Land Title Act Since a subdivision plan was never submitted to the registry per those sections, the lease was held to be invalid.
  1. The lease also conflicted with the LCP designation on the registered strata plan. The LCP designations granted exclusive use of the parking area to the residential strata lot owners. Those LCP rights could only be disposed of property by passing a unanimous resolution and amending the strata plan under s. 257 of the SPA .

The court also accepted the strata’s argument that the terms of the lease, even if valid, did not permit the developer to assign the parking to anyone other than residential strata lot owners. In doing so, the court took into account the surrounding evidence, including the LCP designations, the disclosure statement, and bylaws which all suggested that the developer had not originally intended to assign the residential parking to non-residents.

Given the widespread use of unregistered leases to sell parking assignments in BC, it is expected that developers will attempt to distinguish this case to preserve the practice. However, in this author’s view, this case sheds serious doubt on whether the use of such leases was ever a valid and appropriate measure by which developers may sell and allocate parking.

This would obviously have implications for strata corporations or owners with similar disputes with their developers over parking leases.

However, it may also have implications in the long run for strata corporations and owners that rely on such leases to allocate parking to owners. In those cases, the strata corporation may want to consider amending their bylaws or strata plan to provide certainty over the parking allocations.

Lesperance Mendes has been representing and advising British Columbia strata corporations, strata owners, and strata managers since 1997. To find out more about our strata property law practice, contact any member of our strata property law practice group: Paul Mendes, Sat Harwood, Alex Chang, or Amanda Magee.


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.