Part 6 published on 01/05/04
Sharing of repair costs only by specific type of strata lots not ordered in this case
In this case, the strata corporation contained two different types of strata lots: townhouse style strata lots and apartments style strata lots. The apartment building contained defects that resulted in water ingress. The remediation cost was estimated at 2.4 million dollars. The question was whether or not the owners of the townhouses style strata lots were obligated to contribute to this cost.
British Columbia’s Condominium Act was replaced by the Strata Property Act on July 1, 2000. The Condominium Act contained provision for common expenses relating to a particular type of strata lot to be shared exclusively by the owners of that type of strata lot. Therefore, under the Condominium Act the costs to repair the apartment building would be shared only by the owners of the apartment style strata lots.
However, the Court said that the Condominium Act did not apply. The Court said that the timing was such that the allocation of the particular expense was to be determined under the Strata Property Act.
The Strata Property Act contains provision for operating expenses relating to specific types of strata lots to be shared only by the owners of those lots. However, this provision does not apply to reserve fund expenses. Reserve fund expenses can only be allocated to a subset of strata lots if the strata lots have been divided into sections for purposes of cost-sharing. The Court said that if the strata owners wished to have all expenses (including reserve fund expenses) apportioned by type, the solution was to establish separate sections, each with its own operating and contingency reserve funds. This had not been done in this case.
The Court found that the cost to repair the apartment building could not be considered an operating expense, because it was not a repeating, annual expense. The Court found that the apartment repair is a reserve fund expense, which must be shared by all strata lots, since no sections of strata lots had been established in this corporation.