This Is Not What We Assumed! Developers & Strata Corporation Dispute Cost-Sharing Provisions
Posted in Real Estate

In Interville Development Limited Partnership v The Owners, Strata Plan BCS2313, 2019 BCSC 112, the case involves a dispute between a strata corporation known as “Firenze” within the “International Village” development, and Interville, its owner developer and remainder owner.  Prior to depositing the strata plan which created Firenze, Interville had entered into easements amongst the various air-space parcels comprising International Village on behalf of each of these air-space parcels. These easements contained certain cost-sharing agreements regarding the pedestrian pathway known as the “Keefer Steps”. They were registered in the Land Title Office. However, following the deposit of its strata plan, Firenze did not execute an assumption agreement assuming the positive covenants contained therein.

For a number of years, Firenze continued to make contributions to the Keefer Steps in accordance with these cost-sharing provisions. This obligation was set out in the disclosure statement. Only upon turning their minds to the issue of whether a positive covenant was ever explicitly assumed did the strata corporation determine that it was not responsible for continuing to contribute to the cost of the Keefer Steps.

A number of arguments were advanced by Interville, despite positive covenants not being binding in British Columbia, as to why the obligation should be binding upon the strata corporation. The court did not consider all of them to be valid. For example, the court did not consider the actions of the first council members at the first AGM held by the strata corporation to establish the intention of the strata corporation.

The fact that the disclosure statement had indicated that the strata corporation would be required to make such contribution to these steps was considered a factor. It showed the objective intention of the developer when it was in control of the strata corporation to assume the obligation set out in the agreement. Furthermore, the court found that since this intention was expressed in the disclosure statement, it would have been taken into account in determining the purchase price. If the obligation was to reside with the developer, then it would have been reflected in a higher per-unit purchase price. The Court found that the strata corporation was required to pay its proportion of the total costs to maintain the Keefer Steps as set out in the disclosure statement and the easements, which was based on the buildable area of the strata corporation relative to the other air space parcels in the development. 

This decision provides some positive news for developers who may have omitted to sign such an assumption document, which in many ways is a mere formality (since it can be signed by the owner developer). While execution of such a written assumption agreement is a prudent step, its absence will not necessarily be determinative where there is sufficient evidence of the developer’s intention, as the controlling mind of the strata corporation, to make such an assumption. For developers, disclosure of information to prospective purchasers remains of great importance. 

  • Lisa  Frey

    Lisa is a partner in the Vancouver office of Lawson Lundell LLP. Her practice is focused on real estate and condominium law.

    Lisa assists clients with a wide variety of real property matters including acquisitions and dispositions of ...

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