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== A. When Strata Lot Owners are Indebted to the Strata Corporation == | |||
=== 1. How Strata Lot Owners Become Indebted to the Strata Corporation === | |||
A strata lot owner may become indebted to the strata corporation in several ways, including: | |||
* The owner may be in arrears of strata fees or special levies; | |||
* The owner could owe interest on outstanding strata fees; | |||
* The owner may owe money for fines or costs of remedying if they have contravened a bylaw. | |||
=== 2. Treatment of Debt Owed to a Strata Corporation === | |||
==== a) Methods of Debt Collection by a Strata Corporation ==== | |||
A strata corporation can collect a dent by a: | |||
# Forced sale proceeding; | |||
# Arbitration proceeding; or | |||
# Action in debt. | |||
Owners and strata corporations can also resolve disputes over debts at the Civil Resolution Tribunal. | |||
==== b) When the Strata Corporation is a Respondent ==== | |||
A strata corporation can also be named as a respondent in a foreclosure proceeding commenced by a mortgagee, during which the strata corporation can ensure the court makes an order to pay certain amounts that may be owing to the strata corporation. | |||
== B. Forced Sale Proceedings == | |||
Forced sale proceedings can only be used as an action taken to enforce a Certificate of Lien (Form G of the ''SPR''). A strata corporation can only register a Certificate of Lien against an owner’s strata lot if the owner fails to pay any of the following (''SPA'', s 116(1)): | |||
# Strata fees; | |||
# A special levy; | |||
# A reimbursement of the cost of work referred to in s 85 of the ''SPA''; | |||
# The strata lot’s share of a judgement against the strata corporation. | |||
== C. Court and Arbitration Proceedings == | |||
1. Amounts Owing Under the Certificate of Lien | |||
Instead of proceeding directly with forced sale proceedings, the strata corporation may | |||
commence an action in debt in the Provincial Court (if the amount claimed is less than | |||
$35,000), Supreme Court, or initiate arbitration proceedings. For any of these options, the | |||
commencement must be authorized by a ¾ vote resolution in accordance with s 171. The | |||
commencement of a lawsuit in Provincial Court does not need a ¾ vote if the corporation | |||
has a bylaw that dispenses of that requirement. The limitation period for an action in debt | |||
is two years. | |||
Alternatively, such actions can be claimed at the Civil Resolution Tribunal, which has no | |||
monetary limit. | |||
2. Collection of Non-Lienable Amounts | |||
An owner can be indebted to a strata corporation for several items that cannot be included | |||
in a Certificate of Lien, including: | |||
1. Fines; | |||
2. Costs of remedying bylaw contraventions; | |||
3. Insurance deductibles; | |||
4. Administrative fees; | |||
5. User fees; | |||
6. Move-in or move-out fees; | |||
7. Claims for damage to property caused by an owner or a person an owner is | |||
responsible for; | |||
8. Interest charged on debts other than outstanding strata fees and special levies; | |||
9. Legal fees; | |||
10. NSF charges; and | |||
11. Other chargebacks. | |||
A strata corporation can commence an action in court for the amounts in the same methods | |||
as a Certificate of Lien, in addition to the CRT. A ¾ vote resolution is not required to | |||
commence proceedings under the CRT. | |||
For each non-lienable amount, a strata corporation must have the authority under the | |||
bylaws or SPA to charge is to the account of the strata lot owner and the must endure they | |||
comply with notice provisions under s 135 of the SPA. The strata corporation must also | |||
have a valid and enforceable bylaw or rule to create the debt, such as a “user fee” for the | |||
use of common property and common assets that is objectively foreseeable, as was the case | |||
in Strata Plan LMS 3883 v De Vuyst, 2011 BCSC 1252. | |||
D. Certificate of Payment | |||
When a strata lot is being transferred, a Certificate of Payment must be filed at the Land Title Office | |||
(SPA, s 256) and must be provided by the strata corporation within one week of the request of the | |||
purchaser if not money is owing to the strata corporation or if money is owing but certain arrangements | |||
have been made to pay or to dispute the amount owing (s 115(1)). The strata corporation can charge a | |||
fee no greater than $15 for the Certificate of Payment (s 115(3)). | |||
A strata corporation can refuse to provide the Certificate of Payment until all of the outstanding arrears | |||
are paid or satisfactory arrangements for payments have been made. Often, the owner will pay to | |||
negotiate a settlement with the strata corporation. If court proceedings have commenced to resolve any | |||
disputed fines or costs, the owner can pay the strata corporation “in trust” until a dispute is resolved, | |||
requiring the strata corporation to then provide a Certificate of Payment (s 115(1)(b)(i)). If no legal | |||
proceedings have started, a strata lot owner disputing fines or costs of remedying a bylaw contravention | |||
has no option other than payment. | |||
E. Foreclosure Proceedings | |||
A mortgagee can commence foreclosure proceedings against a strata lot owner that owes money to the | |||
strata lot and to the mortgagee on title. If a Certificate of Lien is registered by the strata corporation to | |||
a strata lot, the strata corporation gets named as a respondent in the mortgagee’s foreclosure | |||
proceedings. The money owing under the Strata corporation’s Certificate of Lien has priority over the | |||
mortgage (SPA, s 116). | |||
It used to be the case that a strata corporation was required to give the mortgagee a Certificate of | |||
Payment when a foreclosed strata lot was sold. However, if there was money owed to the strata over | |||
and above the amount owed under a Certificate of Lien, strata corporations would refuse to provide a | |||
Certificate of Payment. As a result, the Land Title Office would refuse to register the transfer of the | |||
strata lot without a Certificate of Payment. Peoples Trust Co. v Meadowlark Estates Ltd., 2005 BCSC | |||
51 resolved this dilemma by deciding that a change of ownership arising from a foreclosure proceeding | |||
does not trigger the requirement under the PSA to file a Certificate of Payment. This means that if a | |||
Certificate of Lien is not filed by the strata corporation at the time of the sale, they lost their opportunity | |||
to claim for any money owed to it. | |||
F. Principles of Allocation of Payments | |||
If there is no bylaw dealing with allocation of payments from owners, the strata corporation will apply | |||
the payment as directed by the owner. | |||
Many strata corporations have adopted bylaws stating that payments will be allocated to fines first. This | |||
is allowed, per Chorney v Strata Plan VIS 770, 2011 BCSC 1811, as long as the bylaw does not prevent | |||
an owner from contesting or refusing to pay fines while continuing to pay strata fees. A bylaw that | |||
allocates payments cannot override an owner’s express of implied direction to apply payments to strata | |||
fees and special levies. | |||
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