Condominium Home Owners’ Association of British Columbia Leadership, Education and Resources Website: www.choa.bc.ca / Toll-free: 1.877.353.2462 Bulletin: 600-005 (April 15, 2015)

What a Strata Corporation needs to know about:

AIR SPACE PARCEL AGREEMENTS

This bulletin has been produced in partnership with the Council of British Columbia. CHOA would like to extend a note of thanks to the Real Estate Council for sharing the funding costs and the Strata Management Advisory Group for research feedback.

With many thanks to the research contractor for the production of this bulletin: Allyson Baker, Partner, Clark Wilson LLP

This bulletin is intended for information and education purposes. Strata corporations located within Air Space Parcel boundaries and subject to Air Space Parcel agreements are recommended to obtain copies of all registered Land Title Documents and the registered Air Space Parcel Agreements and to seek legal advice on the understanding of the cost allocations, shared responsibilities and liabilities associated with the agreements. Page 2 of 16 Bulletin: 600-005

Understanding an Air Space Parcel Agreement

Introduction of the applicable documents (being the ASP agreement(s), any assumption and alteration When the concept of the “” was agreements (referred to in this publication as first introduced in British Columbia in the 1960s, “A&A agreements”), any related reference or the first strata corporations tended to be simple explanatory plans (which may be volumetric plans residential developments. Since that time, showing the applicable parcels in three- however, and driven by a number of factors dimensions, as well as the as-built plans for the (including the increasing value of land and urban strata plan and the planning principles adopted by various municipalities), mixed-use developments have other parcels that comprise the air space parcel become a more common model for real estate arrangement). In order to fully understand the development. Such mixed-use developments nature of the air space parcel arrangement, the typically consist of residential and commercial strata corporation may have to seek the advice of units or various types of commercial units and/or appropriately qualified experts, such as legal residential units, or may be separated by air counsel, engineers, surveyors and/or space boundaries into separate properties. The accountants. Ideally, this would be done in documents that determine how the intersected conjunction with the owners of the other parcels properties will function are typically entitled within the air space parcel arrangement; “Reciprocal ” but will be referred to in however, if the owners of the other parcels are this publication as “air space parcel agreements” not prepared to participate, the strata or “ASP agreements”. corporation should seek its own advice.

An ASP agreement is a lengthy, complex A. What is an air space parcel and how does document that sets out rights of access and use of it differ from types and sections? property, as well as obligations as to maintenance, repairs, inspections, and Where different property interests reside within servicing for shared property or assets. The ASP one development, three different mechanisms Agreement will typically contain formulas that are commonly employed to create varying define how the costs are shared between parties; measures of autonomy between the different however, these agreements are made all the types of property users: more confusing by references to various owners, the municipality, easements, reservations and 1. Creation of types – Under section 6.4(1) Section 219 Covenants. It is impossible to of the Strata Property Regulation, a strata address all of the possibilities that may arise in a corporation is permitted to adopt bylaws single publication because each ASP agreement to recognize a “type” of strata lot for the will be unique to each air space parcel purposes of allocating the operating arrangement and such agreements do not fall expenses incurred by the strata under the regulatory application of any specific corporation in respect of that type to the legislation, such as the Strata Property Act. A strata lots of that “type” only. However, strata corporation seeking to understand the air in the absence of a unanimous vote space parcel arrangement that it finds itself must resolution, contingency reserve fund and start with gathering and reviewing all Page 3 of 16 Bulletin: 600-005

special levy contributions must still be of the strata corporation and the will of contributed to by all strata lots, regardless the owners collectively.

of type, based on relative unit 3. Subdivision of land to create air space entitlement. It is important to note that parcels – In BC, the registered owner of a the creation of “types” pursuant to parcel of land owns not only the surface of Section 6.4(1) only relates to the the land but also what exists both above allocation of costs – unlike a section, a and below the surface of that land. As a “type” is not a separate entity from the result, the owner of land owns a three- strata corporation. dimensional space, the boundaries of which, while not identified on a plan of 2. Creation of sections – A section is a legal the parcel, are generally accepted to entity separate from the strata extend above and below the surface as corporation with its own powers and may be necessary for the ordinary use and duties as determined by Part 11 of the enjoyment of that parcel. Strata Property Act and the bylaws of the strata corporation. Under section 193 of The subdivision of a parcel of land by filing the Strata Property Act, a strata a strata plan to create strata lots is one corporation is permitted to have sections way to subdivide the three-dimensional only for the purpose of representing the space. The subdivision of land to create different interests of: one or more air space parcels, which is permitted by Part 9 of the BC Land Title (a) owners of residential strata lots and Act, is another way to divide the three owners of nonresidential strata lots, dimensional space. However, unlike the relationship between a strata corporation (b) owners of non-residential strata lots, if and sections within that strata they are use their strata lots for corporation, the relationship between the significantly different purposes, or separate parcels of land created by an air space subdivision (which are called the (c) to the extent permitted by the Strata “air space parcel(s)” and the “ Property Regulation, owners of parcel”, with the remainder parcel different types of residential strata generally being the ground level parcel in lots. the air space parcel arrangement) is The existence of one or more sections in a governed entirely by the ASP strata corporation must be reflected in the agreement(s) between the parcel owners. bylaws so it is necessary to review the Even if air space parcel arrangement bylaws of the strata corporation as filed in involves one or more strata corporations, the Land Title Office to determine the Strata Property Act has no application whether any sections exist within a strata to the relationship between or amongst corporation or not. While the creation of the air space parcel(s) and the remainder sections does give some measure of parcel. autonomy to the different categories of B. How do I know if my strata corporation is strata lots reflected by the sections, all a party to an air space parcel arrangement? strata lots are still subject to the authority Page 4 of 16 Bulletin: 600-005

If a strata plan is subject to an air space parcel form of agreement included in the disclosure arrangement, this will be identified on the first statement as it is possible that provisions of the page of the strata plan filed in the Land Title draft were amended before the ASP agreement Office. Attached as Schedule A [Sample Strata was executed and filed in the Land Title Office. Plan Excerpt] to this publication is the first page of a strata plan that is part of an air space parcel C. What is typically addressed in an air arrangement as confirmed by the notation on the space parcel agreement? upper left hand corner of the document. As an ASP agreement defines the relationship A search of the common property register (which amongst the air space parcel(s) and the is the register in the Land Title Office that lists all remainder parcel, it is important for a strata of the agreements that have been filed in respect corporation that exists within such an of the common property of a strata plan) will also arrangement to have an understanding of what is confirm the presence of an air space parcel typically addressed in these agreements. A arrangement and will identify the agreement or typical ASP agreement will do the following: agreements related to the arrangement. Attached as Schedule B [Sample Common - Identify the parties to the ASP agreement. Property Register] to this publication is the - Identify the areas of each of the air space common property register for a strata parcel(s) and the remainder parcel that corporation that is part of an air space parcel are subject to rights of support, access arrangement – the notations and charges related and/or use by the users of the another to this arrangement have been marked for parcel within the air space arrangement. identification. Depending on how the air space Areas that are subject to such rights of arrangement has been structured, there may be access or use could in theory form any more than one ASP agreement that sets out the part of the development but in practice relationship between the parcels of land and their tend to include the common areas of each respective owners. It is therefore important to parcel, such as the parking, mechanical review the strata corporation’s full common services, electrical services, fire safety property register to ensure that the strata services and walkways. corporation has copies of all applicable agreements related to the air space parcel - Identify the extent of the rights of access arrangement. or use.

The existence of an air space parcel arrangement - Identify whether there is any obligation on must be disclosed in the disclosure statement the parties to share costs, and if so, issued by a developer marketing the sale of identify how the costs will be shared. residential strata lots. In some cases, this may be done by including a draft of any proposed ASP - Identify any obligations to obtain agreement(s) in the disclosure statement. In insurance and to name the other parties other cases, the developer will provide a to the air space parcel arrangement on summary only of the proposed air space parcel any insurance policy. arrangement. As the version of any ASP agreement that is filed in the Land Title Office will - Identify any obligations to repair and govern the relationship between the parties, a maintain property. strata corporation should not rely on the draft Page 5 of 16 Bulletin: 600-005

This is not intended to be an exhaustive list of the become party to the ASP agreement, replacing types of matters that may be addressed in an ASP the owner developer as the remainder owner. agreement as each agreement will have been The strata corporation itself does not become a drafted to address the needs of the particular air party to the ASP agreement unless an A&A space parcel arrangement. agreement is executed between the owner developer and the strata corporation, pursuant to 1. Parties to an air space parcel agreement which the owner developer assigns benefits and the strata corporation assumes obligations under Ideally, the strata corporation would be named as the ASP agreement. As A&A agreements cannot a party to the ASP agreement. The reality currently be registered in the Land Title Office, a however is that the strata corporation will rarely strata corporation should obtain a copy of any be a named party to the ASP agreement because A&A agreement applicable to the ASP Agreement of the timing of filing of the various subdivision from the owner developer or one of the other plans. As noted above, when an air space parties to the ASP Agreement, such as the subdivision occurs, one or more air space parcels applicable municipality. and the remainder parcel will be created. As the filing of an ASP agreement will typically occur If there is an A&A agreement, the strata council immediately following the filing of the subdivision and the strata manager will need to be familiar plan and before any strata plan is filed, the owner with the terms of the A&A agreement to developer (or a related company) will typically understand the rights and obligations that the own all of the air space and remainder parcels strata corporation has directly assumed in respect created by the air space subdivision and will of the ASP agreement. therefore be named in the agreement in various capacities (i.e. as an owner of each air space Whether an A&A agreement has been executed parcel and the remainder parcel). or not, the strata corporation will nonetheless still have a significant role to fulfill in respect of the air The first step in identifying whether the right and space parcel arrangement. This role will be obligations of the strata corporation and/or the discussed further in this publication. strata lot owners under the ASP Agreement is to confirm whether the strata corporation was The strata corporation should also determine created out of an air space parcel (and if so, who the other parties to the ASP agreement are. which one) or the remainder parcel. Many ASP In some cases, the owner developer may retain agreements contain introductory clauses title to one or more of the parcels within the air identifying the use of each of the air space parcels space parcel arrangement – in other cases, title to and the remainder parcel that may assist. the other parcel(s) may have been transferred to Otherwise, it will be necessary to look at Land unrelated third parties. It is also possible that a Title Office filings to be able to make this strata plan may have been filed in respect of any determination. of the other parcels, in which case our strata corporation EPS 000 may have to work with Let’s assume for the purposes of this publication another strata corporation to implement the air that Strata Plan EPS 000 was created out of the space parcel arrangement. subdivision of the remainder parcel. When the owner developer transfers title to each of the In addition to the owners of the air space and strata lots in the strata corporation created out of remainder parcels, the municipality in which the the remainder parcel, all strata lot owners parcels are located will also be a party to the ASP Page 6 of 16 Bulletin: 600-005

agreement for the purpose of any Section 219 and will typically be tempered by reservations Covenants under the Land Title Act that were identified in the ASP agreement, including such granted by the owner developer in respect of the reservations as the ability of the granting parcel development (Section 219 Covenants are owner to temporarily interrupt the discussed further below under heading 5. What is rights that have been granted in order to facilitate a Section 219 ?). repair and maintenance and to adopt bylaws, rules and security arrangements as long as they apply equally to all parcel owners.

2. Rights of Access, Use and/or Support In order to understand what portion(s) of an air space or remainder parcel are subject to the As noted above, an ASP agreement is often rights of access, use and support, it may be referred to as a reciprocal easement agreement, necessary to refer not only to the ASP agreement under which rights of access, use and support are itself but also to the following: granted by one parcel owner to other parcel owners in the air space parcel arrangement. The - Any reference or explanatory plans that rights granted and obligations imposed are may have been filed in respect of the ASP described as “reciprocal” in that all parcel agreement as the boundaries of any owner(s) typically (but not necessarily) enjoy the easement areas may be limited by such same benefits with respect to the other parcel(s) plans as they have granted to the other parcel owner(s) and are subject to the same obligations as the - The as-built construction drawings for the other parcel owner(s). development to identify the location(s) of services Rights of access, use and support granted by the ASP agreement will vary by agreement, but may - An on-site inspection of the properties to include: confirm the physical location(s) of services

- Rights to travel over a parcel of land, 3. Cost Sharing Provisions and Other whether on foot or in vehicles Covenants in an ASP Agreement

- Rights to access, construct, repair and A common, but not mandatory, feature of an ASP maintain services, such as water, sewer, agreement is an agreement amongst the air space electricity, and fire safety systems and remainder parcel owners that they will share certain expenses as identified in the ASP - Rights to park vehicles agreement. These expenses typically relate to the repair, maintenance and insurance of - Rights to place or store construction property. In the absence of cost sharing materials or other objects provisions, there is no legal obligation on the part of a landowner who has the right to access and - Right of support, meaning the right to rely use another parcel of land (called the “dominant upon the structural support provided by tenement” in the of easements) to share the structural elements of the building costs being incurred by the landowner granting The rights of access, use and/or support granted the rights of access and use (called the “servient by an ASP agreement will rarely be unrestricted tenement”) with respect to the repair, Page 7 of 16 Bulletin: 600-005

maintenance and insurance of the property that insurance at its own cost, and then seek is subject to the easement. Furthermore, even if reimbursement of the amounts expended from there are cost sharing provisions in the ASP the owner(s) of the other parcel(s). agreement, there is nothing in law that requires that the cost sharing provisions reflect the actual Many ASP agreements will contain provisions usage of or benefit received by the dominant that: landowner in respect of the easement areas. As a result, a servient landowner may find itself paying - identify how claims for reimbursement are all or significantly all of the costs associated with to be made, including the format of any repairing, maintaining and insuring the easement statement and provision of any invoices, areas even though the dominant landowner may the timing and frequency of statements, be the primary user of the easement area without the timing and frequency of payments and any entitlement to reimbursement from the interest on overdue amounts. dominant landowner. - limit the party incurring the expense to In addition to provisions dealing with cost seeking contributions for only those sharing, an ASP agreement will often include expenses that are reasonably necessary. other obligations (typically referred to as - require the party incurring the expense to “covenants” in the agreement), such as: give notice to other parcel owners in - A duty on a party to obtain and maintain advance of incurring the expense. specified insurance coverage. The cost reimbursement provisions of the ASP - A duty on the servient landowner to repair agreement should be carefully reviewed to and maintain the servient parcel generally ensure that the strata council and its strata or to a specific standard. manager understand the invoicing and payment process contemplated by the ASP agreement. A - A duty on the dominant landowner to failure to comply with the provisions of the indemnify the servient landowner for any process, such as failing to deliver the statement damage caused by the dominant within the required period of time or in the landowner. required format, may provide a defence to the other parcel owner with respect to the claim. A 4. How does a party to an ASP parcel sample summary schedule of allocated costs and agreement collect amounts owing by obligations from an ASP agreement is attached as another party to the same agreement? Schedule C [Sample Cost Sharing Summary Schedule] to this publication. While this schedule As noted above, an air space parcel agreement sets out the obligations and cost sharing formulas may include provisions that identify certain costs for the relationships between the air space that are to be shared by the air parcel parties and parcels and remainder, such schedules are the formulas to be used to determine each parcel frequently vague about the particulars of the owner’s share of those costs. Under a typical ASP allocation of responsibilities for maintenance, agreement, the owner of the property for which service, inspection, repair, renewal and insurance the repair, maintenance or insurance is required liabilities. As a result, in order to be able to (in our example, the EPS 000 strata corporation) effectively maintain the relationships and must initially undertake the work and obtain the understand the responsibilities and liabilities of Page 8 of 16 Bulletin: 600-005

each of the parties, a legal opinion that interprets an injunction application by the other parcel and analyzes the ASP agreement, with input from owner. technical consultants, may be necessary before the air space parcel arrangement is clearly 5. What is a Section 219 Covenant? understood and the parties are able to implement the cost sharing arrangements. A Section 219 Covenant is an agreement between a landowner and a municipality related to the Strata corporations should also be aware that property that is the subject matter of the claims for reimbursement under the cost sharing agreement and is adopted pursuant to section provisions of the ASP agreement are subject to a 219 of the Land Title Act (formerly section 215 of 2-year limitation period under the BC Limitation the Land Title Act). A municipality will typically Act. This means that, if the owner of any of the require a Section 219 Covenant as a condition of other parcels fails to pay its cost sharing allowing the owner developer to develop what contributions, the strata corporation must will ultimately be separate parcels of land within commence a lawsuit in BC Small Claims Court or a single development. Section 219 Covenants BC Supreme Court against that parcel owner may address such issues as: within 2 years of the date on which the unpaid amount became due and payable under the ASP - The provision of access and use of the agreement. If the strata corporation fails to start property of one parcel by the owners of the lawsuit within the 2-year limitation period, other parcel(s) in the air space parcel the claim will become statute-barred and is no arrangement longer legally enforceable. As a result, if one - Responsibility for the repair and parcel owner is refusing to make their cost maintenance of shared utility systems, sharing contributions, a strata corporation should including fire and life safety systems seek legal advice in a timely manner and well within the limitation period about any available - A duty to indemnify the municipality in options to collect unpaid cost sharing respect of claims arising from the air space contributions. parcel arrangement

Given the cost of resolving legal disputes, a strata Section 219 Covenants are tailored to address the corporation may wish to deny the other parcel unique features of each development and must owner(s)’s the access, use and support rights therefore be reviewed carefully to assess the granted by the ASP agreement as a means to try obligations of the strata corporation and the to force payment of the unpaid amounts. Any owners. A Section 219 Covenant can only be decision to deny another parcel owner the enforced by the municipality and does not create benefit of the rights of access, use and support any rights or obligations as between the owners should be carefully considered with the benefit of of the various parcels in the air space parcel legal advice. The provisions of the ASP arrangement. agreement (including the Section 219 Covenant) may prohibit a “self-help” remedy of this nature 6. Can an ASP agreement be cancelled or to collect unpaid contributions (or, indeed, as a terminated? means of resolving any dispute) and a strata corporation that attempts to deny access, use As the existence of an air space arrangement and support rights may find itself the subject of involving one or more air space parcels and the remainder parcel will have been material to the Page 9 of 16 Bulletin: 600-005

applicable municipality’s approval of the use provisions are subject to a Section 219 development, it is unlikely that air space parcel Covenant, municipal approval will also parties will be permitted to agree to cancel or likely be required for any amendment. terminate the ASP agreement without the agreement of the municipality. The provisions of (c) Provisions of the ASP agreement creating the ASP agreement should be reviewed carefully obligations to contribute to expenses, to to determine under what circumstances an ASP obtain insurance or to carry out some agreement may be cancelled or terminated. It other act can generally be amended by should also be noted that, pursuant to the approval of the strata council. However, if requirements of the Land Title Office, a strata the amendment results in an increase in corporation does not have the authority to give the strata corporation’s share of expenses, up the benefit of an easement in favour of the the council may wish to seek the approval strata lot owners – the owners themselves must of the owners before agreeing to such an individually agree to the cancellation or increase. All of this is subject to the termination. As a result of these various proviso that, if the ASP agreement is restrictions, the end of an ASP arrangement will subject to a Section 219 Covenant, the only typically occur when the original municipality may also be required to development is redeveloped for a new project. approve the amendment.

7. Can an ASP agreement be amended? Any amendment of any grants of access, use and/or support must be filed in the Land Title In theory, any agreement can be amended, Office to be enforceable. By contrast, an including an ASP agreement. However, in reality, amendment of any obligations to contribute to the ability to amend a provision of the ASP costs or to obtain insurance may not have to be agreement will depend on the nature of the filed the Land Title Office to be enforceable. A provision itself: strata corporation negotiating amendments to an ASP agreement should seek legal advice on the (a) Provisions of the ASP agreement granting requirements for such amendments, including the other parcel users the ability to access any Land Title Office filings that may be and use portions of the common property necessary. of the strata plan can be amended by way of a ¾ vote resolution of the owners of 8. Other issues that may arise in connection strata corporation. However, if these with an air space parcel arrangement access and use provisions are subject to a Section 219 Covenant, municipal approval (a) Annual Budgets and Contingency Reserve will also likely be required for any Funds amendment. The annual budget of a strata corporation that (b) Provisions of the ASP agreement granting exists within an air space parcel arrangement the strata corporation and its residents should include line items that reflect any cost the ability to access and use portions of sharing arrangements within the ASP agreement, another parcel cannot be amended including: without the unanimous approval of the owners and financial chargeholders of the strata lots. In addition, if these access and Page 10 of 16 Bulletin: 600-005

- those expenses incurred by the strata long term financial obligations, a strata corporation that are shared with the other corporation within an air space parcel parcel owner(s) arrangement should consider the inclusion of such obligations within its depreciation report. - the cost sharing contributions anticipated to be received by the strata corporation (c) Dispute Resolution from the other parcel owner(s) An ASP agreement may include a dispute - the cost sharing contributions expected to resolution clause that identifies how disputes be made by the strata corporation to the between two or parties to the air space other parcel owner(s) agreement are to be resolved. Arbitration is often identified as the intended forum for dispute In addition, a strata corporation that is required resolution. Alternatively, a claim may be initiated to make cost sharing contributions to other parcel in BC Small Claims Court or BC Supreme Court. A owner(s) regarding the repair and maintenance of strata corporation that is involved in a dispute the other parcel owner(s)’s lands will need to take with another parcel owner should seek legal this into account as part of its long term financial advice in a timely manner to ensure that its planning, including in respect of contributions to interests are protected. If a claim is not brought the strata corporation’s own contingency reserve in the correct venue or is not commenced within fund. the time limits set by the ASP agreement or the BC Limitation Act, a strata corporation’s claim (b) Depreciation Reports against other parcel owner(s) may be compromised. Similarly, if a strata corporation Section 94 of the Strata Property Act and Section finds itself the subject of a claim by other parcel 6.2 of the Strata Property Regulation set out the owner (whether by arbitration, in court or a requirements for a strata corporation’s tribunal, such as the BC Human Rights Tribunal), depreciation report, including a requirement that the strata corporation should report the claim to a depreciation report “include a description and its insurer (as there may be coverage for the claim estimated service life over 30 years of those items under the strata corporation’s insurance that comprise the common property, the common coverage) and its legal counsel in a timely manner assets and those parts of a strata lot or limited to ensure that the legal interests of the strata common property, or both, that the strata corporation and its owners are properly corporation is responsible to repair and maintain protected. under the Act, the strata corporation’s bylaw or an agreement with an owner.” The Strata (d) Strata managers of a new strata Property Act and the Strata Property Regulation corporation subject to an ASP agreement do not expressly state that the depreciation report must address any property owned by The initial strata manager of any new strata persons outside of the strata plan that the strata corporation plays a key role in assisting the strata corporation is required to repair and maintain, or corporation to “get up and running” in to which the strata corporation must make accordance with the requirements of the Strata contributions to the cost of repair and Property Act and other applicable legislation, as maintenance, under an ASP agreement. well as any agreements to which the strata Nonetheless, in order to obtain an informed corporation is a party. Subject to the terms of the understanding of a strata corporation’s overall strata management agency agreement, if the new Page 11 of 16 Bulletin: 600-005

strata corporation is subject to an air space parcel Covenant, whether within the strata plan arrangement, the strata manager may be or on one of the other parcels within the required to assist or advise the strata corporation arrangement. in implementing the ASP agreement, including the following: - Identifying warranty documents, warranty coverage and reporting periods for - Assembling all documents related to the residential and mixed use strata ASP arrangement, including all corporations where the owner developer agreements filed in the Land Title Office, is required under the BC Homeowner all and assumption Protection Act to provide third party agreements, any explanatory or reference warranty coverage for 2 years of the plans and any as-built construction overall property, 5 years for the building drawings – these documents should be envelope and 10 years for the structure of retained as part of the strata corporation’s the building. records. Where the air space parcel arrangement falls - Identifying operating costs incurred by the outside the strata manager’s expertise or retainer strata corporation that may be subject to scope, the agent should be advising the strata cost sharing provisions in the ASP council to obtain advice from appropriate agreement, as well as those costs to which consultants (such as engineers, surveyors, a strata corporation may have to lawyers, accountants and others) to ensure that contribute to that are incurred by other the strata corporation obtains appropriate advice parcel owners. regarding the air space parcel arrangement and the strata corporation’s rights and obligations - Understanding how claims for under the applicable ASP agreement. Given the reimbursement are to be made under the complex nature of ASP agreements, air space ASP agreement and, where it forms part parcel arrangements are often ignored by strata of the management retainer, issuing councils and strata managers. As a result, a strata invoices on behalf of the strata corporation may be losing out on cost sharing corporation in accordance with the contributions that it would otherwise be entitled provisions of the ASP agreement. Budgets to receive. If the strata manager is directed not being issued as part of a disclosure to take any steps by the strata corporations in statement for a new development should respect of an ASP agreement, or the air space reflect the cost sharing arrangements in parcel arrangement falls outside of the strata the ASP agreement contemplated by the manager’s retainer, the strata manager should disclosure statement. confirm these instructions to the strata corporation in writing. - Considering whether the strata corporation may be obligated to comply (e) Strata managers of an existing strata with any insurance coverage requirements corporation subject to an ASP agreement in the ASP agreement. All strata managers should have an understanding - Identifying any repair and maintenance of the strata corporation that they are managing obligations regarding property under the – that understanding includes identifying whether ASP agreement, including the Section 219 the strata corporation is part of an air space Page 12 of 16 Bulletin: 600-005

parcel arrangement. Simply because a strata conditions of the agreement that may be unclear manager assuming management functions from or confusing. It is recommended that the strata another agent sees no reference to the air space corporation seek legal advice, with the assistance parcel arrangement in the documents received of technical advice, on the interpretation, from the previous agent, that new agent should application and implementation of the ASP not assume that no air space parcel arrangement agreement. exists. As part of the due diligence involved in assuming the management of a new strata client, A failure to fully understand the ASP agreement a strata manager should obtain copies of the may have a number of consequences for a strata relevant land title documents, including the corporation and its owners, including: common property register of the strata plan. As noted above, a review of the common property - Failure to properly account for shared register will identify whether or not the strata costs and informing the other ASP corporation exists within an air space parcel partners of their obligation to pay the arrangement. formulated shared costs if they exist

(f) Shared managing agents/strata managers - Failing to receive or make contributions to shared cost items Where a strata manager acts for both the owner developer and the strata corporation, or for more - Failing to repair and maintain property as than one parcel owner, the possibility of conflicts required by the ASP agreement of interest arises. Managing agents/strata - Undertaking repair and maintenance that managers should carefully consider the duties the strata corporation is not required to that they owe to each of its clients, disclosure of undertake under the ASP agreement any conflicts and whether or not they can continue to act where a conflict exists. - Failing to obtain appropriate insurance or ensuring that another party to the 9. Conclusion arrangement has obtained appropriate An ASP agreement is often a lengthy, complex insurance document, made all the more confusing by references to various owners, the municipality, easements, reservations and Section 219 Covenants. The best place for the strata corporation to start is by collecting all of the filed Land Title documents that relate to the air space parcel arrangement. Once the documents have been obtained and reviewed, a cost sharing summary index of the shared costs should be created if one does not already exist, and the terms and conditions of the ASP agreement should be reviewed to confirm that the cost sharing summary index properly reflects those terms and conditions. It is likely that the strata corporation will still have questions regarding Page 13 of 16 Bulletin: 600-005 ______SCHEDULE A – SAMPLE STRATA PLAN EXCERPT _

SCHEDULE A – SAMPLE STRATA PLAN EXCERPT

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SCHEDULE C – SAMPLE COST SHARING SUMMARY SCHEDULE

Owner Primarily Remainder Air Space Parcel Shared Service Systems and Responsible for Owner's Share of Owner's Share of Common Facilities Maintenance Costs Costs

Commercial Pedestrian Access Routes and related areas, facilities, systems, and equipment Remainder 100% 0% Residential Pedestrian Access Routes and related area, facilities, systems, and equipment Air Space Parcel 0% 100%

Loading Areas Remainder 100% 0%

Vehicular Access Routes and related areas, facilities, systems, and equipment Remainder 30% 70%

Parking Facilities and Areas Air Space Parcel 33% 67%

Fire protection systems and all pumps within fire protection system, including jockey pump and main fire pump Air Space Parcel 20% 80%

Sanitary sewage system Air Space Parcel 10% 90%

Storm drainage system Air Space Parcel 20% 80% Life Safety and Emergency Systems Air Space Parcel 20% 80%

Service Room Areas Air Space Parcel 20% 80%

Electrical cables and devices supplying, and electrical usage to the Common Areas and Facilities Air Space Parcel 0% 100% Potable water lines and devices supplying, and potable water usage (as metered) by, the Common Areas and Facilities Air Space Parcel 0% 100% Service Connections Air Space Parcel 20% 80%