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Strata Wind-Up Process May Commence with a Simple Majority Vote
Posted in Real Estate

In a recent decision (Dubas v. The Owners of Strata Plan VR. 92, 2019 BCCA 196), the BC Court of Appeal further clarified the strata wind-up process and intent of the strata wind-up provisions in Part 16 of the Strata Property Act.  In this important decision, the Court of Appeal confirmed that a strata corporation could list its property for sale by way of a simple majority decision (rather than a 75% or 80% vote).  With this clarification, strata corporations have been provided with greater flexibility to explore the profitability of moving forward with a sale.

The Dubas case involved a three-story, 41-unit building in Granville Street known as “Granville West”.  In 2017, Granville West’s strata council started to receive requests from realtors about the possible wind-up and sale of the property.  Following a town hall meeting with owners about the possibility of redevelopment, the strata council distributed an informal ballot asking owners to advise if they were interested in engaging a real estate agent for this purpose.  Of the owners who responded, more than 50%, but less than 75%, were in favour of listing. 

A number of owners applied by way of petition to the Supreme Court to require the strata corporation to obtain approval from a supermajority of owners prior to retaining a realtor to solicit offers on the building.  The group of opposing owners asserted a number of creative legal arguments regarding how the recently amended strata wind-up provision in the Strata Property Act should be interpreted, including that a supermajority vote and possibly the appointment of a liquidator were required prior to retaining the services of a real estate agent.

In May 2018, the BC Supreme Court decided that since the legislature had already included an adequate “procedural safeguard” (i.e. 80% supermajority of all owners, as well as the Court’s scrutiny of the terms of the sale having regard to the overall fairness to owners), it was not necessary to obtain such a vote early on the process.  To add an additional burden of a 75% or 80% vote would interfere in the unfolding of the process and limit a strata corporation’s ability to move forward with the early stages of exploring the wind-up process.  The Court also found that it was not yet necessary to appoint a liquidator at this stage of the process.

On appeal, the BC Court of Appeal confirmed the Supreme Court judge’s findings.  There was no evidence presented that listing the property would have an adverse effect on the owner’s strata lots in the meantime. Furthermore, in contrast to the argument advanced by the appealing owners, the process of soliciting offers would actually place the owners in a better position to judge the benefits of any winding up that might later be proposed. Another interpretation would be counterproductive and “overly interventionist”.

As the procedure associated with strata wind-ups is clarified, it becomes more and more important to obtain timely and appropriate legal advice to navigate the process as a strata corporation.  Previous Court decisions have shown that failing to follow the correct procedure could delay or threaten the wind-up process altogether.

Lawson Lundell’s Strata Wind-Up Group assists strata corporations, developers, strata management firms, appraisers and real estate agents in all aspects of strata corporation wind-ups. We have valuable experience dealing with strata wind-ups, including the first court-approved wind-up in British Columbia, and can assist strata corporations, developers and real estate agents in navigating this process.

For more information, please contact the co-authors: Lisa Frey and Edward L. Wilson

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