Spotlight on phases: Should approval of a Phased Strata Plan Declaration expire after one year?
10 November 2016
By Kevin Zakreski
BCLI is running a public consultation on complex stratas. It is asking for public input into proposed changes to the law governing sections, types, and phases. For information on how to participate in the consultation please visit the Strata Property Law Project—Phase Two webpage.
This post is part of a series that spotlights issues on sections, types, and phases discussed in the Consultation Paper on Complex Stratas. To read other posts in the series please click here.
Brief description of the issue
An approving officer’s approval of a Phased Strata Plan Declaration is subject to a time limit. That approval “expires” after one year, “unless the first phase is deposited before that time.” In the view of one commentator, this expiry creates an “absolute” deadline. If the first phase isn’t deposited in the land title office before this deadline passes, then the approval effectively becomes a nullity. The act does not make any provision for the approving officer to extend this deadline. So an owner-developer who failed to deposit the first phase within this time and who still wanted to press on with the phased strata plan would, in all likelihood, have no option other than to start over at the beginning. The owner-developer would have to start a new application to an approving officer for approval of a Phased Strata Plan Declaration. Should an approving officer’s approval continue to expire after one year, or should it remain in force for a longer period or indefinitely?
Discussion of options for reform
The committee considered four options to address this issue. One option would be simply to retain the current provision. A second would be to retain the current approach, but with a longer period before expiry. The third option considered was to retain the current time limit, but to give an approving officer the discretion to extend it. Finally, the committee considered simply repealing this time limit altogether.
Starting with the current rule, the committee attempted to assess it by examining whether it is fulfilling its legislative purpose. The goals of the current rule are unclear. Unlike much of the act’s legal framework on phasing, which can be traced back, largely unchanged, to the first appearance of phasing provisions in the mid-1970s, this requirement only dates to the advent of the Strata Property Act. There is no public record of why this change appeared in the Strata Property Act. There is also no public commentary on the purposes of this provision.
It is possible to speculate on the goals of the provision. It may be intended to limit the possibility that changing facts and circumstances might cast a shadow over the approval of the Phased Strata Plan Declaration. The risks of this occurring increase as time passes from the date of approval. The one-year expiry date also provides a measure of closure and certainty to the process. In some cases, it may be clear that a project isn’t going to progress to deposit of the phased strata plan. This provision ensures that such projects don’t continue to carry the approving officer’s seal of approval.
It’s also possible to speculate on the drawbacks of this rule. Placing an expiry date on the approval of Phased Strata Plan Declaration does limit the flexibility afforded to owner-developers. The one-year limit might not be realistic in some cases. The choice of one year as the time limit could also be characterized as arbitrary. There is no obvious connection between this period and the time required to move from approval of a Phased Strata Plan Declaration and depositing the first phase of the strata plan.
There are a number of ways to approach reforming this rule. One way would be to change the time limit. Providing that the approval only expired, for example, after two or three years would address concerns about flexibility without any of the practical difficulties in moving from declaration to deposit of the phased strata plan. But it would retain the arbitrary nature of the rule.
One way to address concerns about arbitrariness would be to keep the current time limit and give the approving officer the discretion to grant extensions. This approach would effectively allow for appropriate time limits to be crafted on a case-by-case basis. If there were a good reason for an owner-developer being unable to deposit the phased strata plan within one year, then the approving officer would grant an extension. Inadvertent or sloppy developers would not be rewarded with additional time. The drawback to this approach is that it would inject further complexity into the system, and would require additional resources to administer (by the approving officer) and navigate (by many owner-developers).
The final option to consider is simply to do away with this concept of an expiring approval altogether. This approach would return the legislation to its position before the enactment of the Strata Property Act. It would take arbitrariness out of the rule. But it would also remove the elements of closure and certainty that an expiry date brings to the system.
The committee’s tentative recommendation for reform
The committee favoured the second option for reform. The committee understands that the current rule has caused problems for real-estate developers. Although there are methods to reduce these concerns, they amount to workarounds. It would be better to address the source of developers’ concerns in the legislation.
While there is always some arbitrariness to any time limit, in the committee’s view two years would be preferable to the current one. A two-year limit would give real-estate developers more time to deposit the first phase of a phased strata plan, allaying their concerns. The two-year period would be equivalent to the two-year basic limitation period. This approach would also retain the goals of certainty and finality, which are aspects of the current system, and would avoid the complexity inherent in building a discretionary element into the rules.
The committee tentatively recommends:
The Strata Property Act should provide that an approving officer’s approval of a Phased Strata Plan Declaration expires after two years unless the first phase is deposited before that time.