Sanjin Cvetkovic : Blog posts labelled: parking

Parking leases in a nutshell

Posted on June 23, 2011 by Sanjin Cvetkovic

The manner in which the Developer designates the parking area on a strata plan depends on the structure of the development. The general rules of thumb are as follows:

STALLS AS LCP:

1) If the project is solely residential and the Developer intends to sell all of the units, it’s most common for the Developer to designate the parking garage as CP, but the individual stalls as LCP such that each strata lot has at least one parking stall designated for its exclusive use.

2) In this scenario, the Developer is required to provide the surveyor with a list of every parking stall that is to be designated to each particular strata lot, and those LCP numbers are included on the strata plan filed in the LTO to raise titles in advance of the first sale. To do this, the Developer must be able to determine in advance of sales, what it wants to do with all the stalls – ie. that it does not intend to retain a handful of stalls for its own use to designate them as a marketing tactic to bigger strata lots in the future, if the sales don’t go well or to sell them to potential buyers (perhaps owners of commercial strata lots close by in the complex etc.) down the road. Once the strata plan is filed and the first sale closes, the Developer has limited means to amend the strata plan without a ¾ vote of the strata corporation.

3) This method ties the Developer’s hands and is generally mostly seen in residential projects only. LCP stalls are designated permanently on the strata plan for the use of the strata lot specified and thus cannot be sold to other owners or outside parties – they run with the sale of the unit, unless a strata plan is permanently amended to change the LCP designation by approval of the strata corporation and an amended strata plan is filed in the LTO (which is rare).

STALLS AS CP:

1) In a project that’s mixed residential and commercial, it’s advantageous for the Developer to designate the parking garage and all stalls as CP. Prior to the first sale (as Developer controls strata corporation in the period between the Strata plan filing and the first sale) the Developer enter into a lease agreement with a company controlled by the Developer and named Random Parking Co. (the Tenant). The Developer leases all of the stalls to the Tenant and causes the Tenant to assign each particular stall to the first purchasers, who then assign the CP stall/storage locker to the new buyer of the strata lot upon sale. A term of the lease provides that once all the strata lots are sold the Developer causes the Strata Corporation to assume the rights and obligations of the Developer, and thus the Strata’s job is to maintain the Parking Assignments (and the register of which strata lots were initially leased which stalls – usually a binder with a list) when the units are sold over and over again, and to ensure the Assignments are kept in order etc.

2) The major advantage to this method is that the Developer doesn’t need to tie themselves to a list of which stalls are designated to which units until each strata lot is sold, which can be long after the strata plan is filed.

3) Thus the Common Property area of the parking garage and all of the stalls become SUBJECT TO the lease arrangement, meaning the owners do own the common property as tenants in common, but that ownership right is subject to any contract in place, and therefore subject to the lease agreement and terms of it.

4) The assignment of the lease from the Tenant to each owner grants the owners the exclusive contractual right to use and occupy that particular stall and storage locker. Because the contractual right to use the stall is granted to the owner of the strata lot – that owner could assign their right to use and occupy the stall and locker to another owner in the building by entering into an assignment (and taking payment for the sale of the leased stall/locker) – BUT this would mean that when the strata lot is sold, the owner must advise the new buyer that the unit does not come with a stall or locker - - the Strata Corporation should carefully maintain the Assignment Registry to verify if a stall and locker has not been previously assigned by the owner of a pending sale.

5) Usually there is a term in the lease that restricts transfer so that owners are only permitted to assign the stall/locker to another owner in the building – sometimes though the Lease expressly provides that assignments can be made to owners outside the development (ie. anyone who is willing to pay the developer $20,000 for a stall.. developers commonly reserve a handful of CP stalls for themselves - ie. remember they are the Tenant under the Lease (eg. Onni Parking Co.) so they use this method to be able to sell stalls to neighbouring retailers long after they’ve sold out the strata lots and lost control of the strata corporation.

6) In summary by incorporating a company before the strata plan is filed and entering into this lease arrangement which the Strata Corporation later assumes by stepping into position of “Developer/Landlord” once all units are sold.. the Developer gets out of being the Landlord and having to administer the lease in the future (first they assign all the stalls to the Tenant (themselves) and then causes Tenant to assign the ones it wants to provide to strata lots for new buyers - at least one per strata lot is mandatory by City bylaw) BUT Developer gets to remain as the parking Tenant which allows them to retain control over the stalls they want to keep to later profit from them.

7) Normally in mixed developments there’s a provision the developer has added to ensure that assignment of stalls/lockers can be made to outside parties who are not owners in the strata plan.

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Describing Parking Stalls and Storage Lockers on Listings

Posted on November 25, 2010 by Sanjin Cvetkovic

Posted in parking, property, vancouver

Determining how to describe parking stalls and storage lockers when listing a strata lot for sale can be difficult. Simply because the seller has the use of parking stalls or storage lockers does not necessarily mean that they are available for the purchaser. Unless it is confirmed that the stall or locker will be available for use, it should not be on a listing. Property on a strata plan is designated as either a strata lot or common property (CP), which can be further designated as limited common property (LCP). Both CP and LCP are owned by all owners within a strata corporation; individuals exclusively own their strata lots.

Strata Lot or Part of a Strata Lot

Strata plans can designate parking stalls/ storage lockers as part of a strata lot, in which case the new purchaser will automatically have the use of the area and the listing can identify the stall or locker number. Alternatively, the stalls or lockers would be part of separate strata lots. If the seller is selling both the lot and the parking strata lot, both must be listed for sale and separately transferred to the buyer.

Limited Common Property

LCP is common property that is designated for the exclusive use, not ownership, of a particular strata lot owner and is shown on the strata plan. Where a parking stall/ storage locker has been designated as LCP for the use of a strata lot, it should be indicated as LCP on a listing. The listing can include the specific stall or locker numbers.

Common Property

If a parking stall/storage locker is designated as CP, it is within the control of the Strata Council, unless there is a developer’s lease. The Strata Council has the authority to grant an owner or a tenant exclusive use under the Strata Property Act. When listing a strata lot where the parking stall/storage locker is CP, entitlement of use cannot be included, unless there is a developer’s lease or unless the Strata Council has confirmed the use of the stall/locker. When CP has no lease or sublease and the Strata Council confirms the parking stall/storage locker numbers that the buyer would use, they can be referenced on the listing with “subject to the provisions of the Strata Property Act.” If no stall or locker numbers are confirmed, they cannot be referenced in a listing.

Developer’s Leases

Developers can enter into leases of CP parking stalls/storage lockers to either themselves or to related companies. They then often enter into agreements with purchasers to sublease one or more parking stalls/storage lockers to each purchaser. One parking stall is often assigned to each purchaser who is either charged for only the additional stall or locker or for all subleases. Generally, the sub-lease provides that the owner must assign the sub-lease to a new purchaser at the time the strata lot is sold and the listing can reference the stall or locker numbers. If a seller sub-leased a parking stall/ storage locker from the developer, they can reference the stall or locker when listing the strata lot for sale, indicating that the area in question is CP but subject to a sub-lease. The stall or locker number can be shown on the listing.

Purchased Parking Stalls/Storage Lockers

In many cases, sellers of strata lots insist that the listing should include the parking stall/storage locker because the seller bought it from the developer. If the area in question is designated as CP, unless there is a lease/sublease arrangement or the Strata Council has confirmed what parking stall/storage locker the buyer will be entitled to use, the stall or locker should not be included on the listing even though it was paid for. Unfortunately, developers can charge purchasers for an additional parking stall or storage locker without designating the area as LCP or entering into a lease/sublease arrangement and the area remains CP which cannot be “bought.” If there was no lease and no designation of LCP, although the developer may have charged the buyer to allocate a parking stall/storage locker, the buyer may not have realized that the developer was acting as the Strata Council who can technically only grant the buyer the use of CP for a one year maximum. If that is the case, the seller could obtain written confirmation from the Strata Council that the same stall or locker would be allocated to the new purchaser. The listing could then reference the stall or locker number and include that it is “subject to the provisions of the Strata Property Act.” Without confirmation from the Strata Council, the listing should not reference the stall or locker number.

Recommendations to the Provincial Government

BCREA recently submitted recommendations to the provincial government regarding the Strata Property Act addressing, among other issues, the challenges around describing parking stalls and storage lockers when listing a strata lot for sale. To view the full BCREA Strata Property Act brief, visit www.bcrea.bc.ca/govt/2010- 09StrataPropertyAct.pdf. Prior to the conveyance of a strata lot, the strata council, strata corporation accountant or strata property management company fills out a Form B Information Certificate (usually ordered by the REALTOR® on behalf of the seller). Based on extensive consultation and feedback from member boards, BCREA noted that potential buyers of strata properties need more and better information as the Form B Information Certificate does not address critical information. In particular, BCREA recommended that the government add new provisions to section 59(3) of the Act to require strata corpora-tions to disclose information about the designation of parking as either CP, LCP, part of the strata lot or subject to a lease with the developer; if the parking and storage is designated as CP, the strata corporation should indicate how it will be allocated to a new buyer and what stall numbers and storage lockers will be assigned to the buyer.

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