I’ve seen many fads come and go in the quarter century that I’ve called Vancouver home. Bell-bottoms, (very) low-rise jeans, oxygen bars, true love, Pokémon Go, and the list goes on.
What is unlikely to be a fad and almost certain to stay (along with avocado toast), is the number of people electing to adopt low or high-rise strata living. With the move toward higher-density in many areas of British Columbia, the demand for strata-titled properties has, unsurprisingly, been on a meteoric rise for quite some time.
Equally unsurprising is that people make claims against strata managers. Since 2014, about 15% of the claims against strata managers have resulted from alleged errors made on the Form B Information Certificate regarding parking stall or storage locker allocations.
Form B = increased liability risks
Since 2014, strata corporations have been required to disclose on the Strata Form B the designation of any parking stall(s) or storage locker(s) associated with a strata lot. While this welcome change arguably created more certainty for potential buyers, it has left strata corporations as well as strata managers, who are often tasked with collecting and providing information on behalf of the strata corporation, more vulnerable to legal liability. As my three-year-old daughter says, “Yuck!”
Don’t get stung!
Serious consequences can stem from an erroneous Form B. Pursuant to section 59(5) of the Strata Property Act[1] (the Act), the information disclosed in a Form B Information Certificate is binding on the strata corporation, and parties receiving the Form B are entitled to rely on it (provided the person acted reasonably in doing so). While filling out a Form B Information Certificate may seem like a mundane administrative task, care must be taken to ensure the information being provided is accurate to avoid potential liability. Errors made on the Form B can lead to heated disputes between owners (bad) and result in a strata manager being sued by buyers, sellers, and/or the strata corporation (really bad).
Tips on avoiding liability
To reduce your risk of being stung, follow these tips/guidelines when collecting and providing information about parking stall or storage locker allocations:
1. Understand how parking stall and storage lockers are allocated
Understanding how parking stalls and storage lockers are allocated is critical to completing an accurate Form B and your ability to detect possible errors in the records (for example, owner lists) that may have been relied upon as sources.
Generally speaking, a parking stall or storage locker will be designated in one of three ways:
- A separate strata lot (rare and no longer permitted[2] in residential strata corporations);
- Part of a strata lot (more common in older strata corporations); or
- Common property (most common).
If a parking stall or storage locker is common property (CP), it may be designated as (1) limited common property for the exclusive use of one or more specific strata lots (LCP), (2) under a developer’s long-term lease or license, or (3) under a short-term exclusive use agreement pursuant to section 76 of the Act.
Be sure to obtain and review any disclosure statement(s) from the developer, the registered strata plan, any sketch plans, resolutions affecting common property, and the strata corporation’s by-laws and rules. If a parking stall or storage locker is part of a strata lot, the strata plan should indicate that a parking stall/storage locker is part of the subject strata lot. Similarly, if a parking stall or storage locker is LCP, it should be designated on the strata plan or on a sketch plan attached to a resolution filed at the Land Title Office. Where a parking or storage area is CP on the strata plan, determine whether its use is governed by a lease or licence from the developer or if the strata corporation has allocated its use by way of a short-term exclusive use agreement (i.e. permission to use). You should also obtain and review documents pertaining to any lease or licence (head-lease, sub-lease, assignments, etc.) or documents pertaining to a short-term exclusive use agreement (resolution, council minutes, by-laws, etc.) as applicable.
2. Audit, audit, audit…
At the risk of sounding like an accountant (no offense to accountants), strata managers should conduct regular audits of parking stall and storage locker allocations. Once the necessary records (as discussed above) have been obtained and reviewed, conduct an audit to confirm that actual use of the parking stalls and storage lockers agree with your records. Features in data entry software, such as the ability to find duplicate values, can also help avoid a parking stall or storage locker being erroneously allocated more than once on a parking stall/storage locker list.
If an audit reveals any discrepancy, investigate further to determine whether an affected owner or the strata corporation has documents/information to support the current situation (for example, lease assignments, verbal agreements, etc.). Where the issues are complex, strata managers should advise the strata corporation to seek independent legal advice.
3. Qualify information if appropriate
If an audit discloses a discrepancy between the records and reality, the strata manager may consider noting the discrepancy in the Form B Information Certificate and attaching any applicable documentation (for example, a document purporting to grant an owner the right to use a different parking stall than one originally assigned).
4. Limit liability contractually
Finally, to the extent possible, strata managers should seek to limit their exposure to legal liability contractually. Review your strata management agreements with your brokerage’s lawyer and consider whether they provide for the following:
- The strata corporation will provide the strata manager with all documents and records that may be required by the strata manager to satisfy his or her duties;
- Exclusion of liability when the strata manager relies on inaccurate records (for example, parking stall/storage locker lists) provided by the strata corporation or a previous management company;
- Indemnification (for example, save harmless) provision for all judgments, liabilities, demands, etc. except in cases of a strata manager’s wilful misconduct or gross negligence; and
- The strata corporation will cause the strata manager to be included as an additional insured in its insurance policies.
Closing
Unlike the number of people sporting bell-bottoms, the pressure upon strata managers to take on increasingly complex operational duties will only continue to increase. With the imposition of more and greater responsibilities, strata managers face increased risk of legal liability to both third parties (buyers and sellers) and those whom they contract with (strata corporations). No doubt, the Form B Information Certificate is a hotspot for claims involving strata managers, and ensuring the accuracy of the information provided will help you avoid getting stung by the Form B.
Further information on Form Bs and parking stall and storage lockers can be found on the BCFSA website.
[1] [SBC 1998] c.43
[2] Section 244(2) of the Strata Property Act [SBC 1998] c.43
