Winding Up Strata Corporations

The first reported strata corporation to force the winding up of the entire strata corporation with only 80% approval of the owners is The Owners, Strata Plan VR 2122 v Wake, 2017 BCSC 2386.

Earlier in 2017, another strata corporation attempted to force the wind up of itself, but was unsuccessful because the resolution was deficient. 

The wind-up provisions of the Strata Property Act are lengthy and require many components to be completed before the Court will approve the request. Further, as noted in the previous decision, if those requirements are not strictly followed, the Court will deny (a rather expensive) application to approve the winding-up of the strata corporation. 

However, in VR 2122, the strata corporation was successful and the Court ordered the wind up. Ultimately, the owners obtained a windfall, wherein they were able to sell their units for almost 3x the actual worth if the owners sold their units individually (due to Vancouver market conditions). 

6 of the 33 owners opposed the application stating that it was significantly unfair for them to have to move. The Court carefully considered their argument and found that it was actually significantly unfair to the 80% of the owners who wanted to sell if they were prevented from doing so. 

The Court noted:
The legislature in adopting the recommendations in the BCLI report 2015 recognized that increasing repair and maintenance costs or aging strata buildings, increasing land values, and municipal policies for increasing densification, encourages some owners to gain the financial benefit of redevelopment. The legislature recognized the difficulty in obtaining unanimous agreement, and amended the SPA to require 80% of the eligible voters to pass a resolution for the voluntary winding-up termination of the strata corporation. 
It was significant to the Court that the money each owner would realize from the winding-up would enable each owner to buy a similar (and even better) unit in the same area of the city.
While I understand the reasons why each of the opposing respondents do not want to move, I conclude that it would be significantly unfair to the majority of the owners if the orders sought by the petition were not granted; more than 80% of the owners would have their wishes thwarted by a small minority. Each owner of the supermajority would suffer a significant financial loss: the opportunity to receive roughly two and a half times what they would receive if they were to sell their unit individually, and the opportunity to remain in the community. 
 The orders sought were granted, the strata corporation would be wound up, and the strata corporation's costs of the application were ordered to be paid out of the sale of the strata corporation.

Comments

Popular Posts