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SWEETHEART STRATA DEAL UNSWEETENED
(March 2001)
by Del Elgersma
A B.C. Supreme Court judge recently ruled
that the developer of a strata-titled development
had an obligation not to put its interests
ahead of the interests of future owners.
The developer had agreed to give the
first
purchaser in the development an exclusive
99-year lease of a rooftop patio owned
by
the strata corporation. Since the developer
owned all of the strata lots, it entered
into the lease on the strata corporation's
behalf. The lease provided that no
rent was
payable to the strata corporation,
and that
the strata corporation would pay for
all
maintenance and repair costs. The purchaser
would not have purchased the strata
lot if
the developer had not included the
lease
of the patio.
Subsequent purchasers were aware of
the lease
and there were no complaints about
it until
11 years later, when a new owner convinced
the strata corporation to pass a bylaw
making
the first purchaser responsible for
all of
the costs of the leased patio area.
The first purchaser brought an action
against
the strata corporation for a declaration
that the bylaw was unenforceable because
it violated the lease. However, the
judge
ruled that the lease was void because
it
was not in the best interest of all
of the
owners. Because strata corporations
have
a duty under the Strata Property Act
to manage
common property for the benefit of
all owners,
developers are not permitted to use
their
initial control of the strata corporation
to benefit themselves at the expense
of future
owners.
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