Balancing commercial and residential interests within a strata corporation can be an overwhelming, anxiety-driven exercise. Generally, commercial lots and residential lots prefer NOT to deal with each other unless financial interests demand some collaboration. As with all strata issues, nothing is given without a disadvantage of sorts so taking is a far more prevalent activity.
Sometimes residential strata lots are owned by non-resident owners who enlist property management companies to rent and manage their individual units. Often that is the end of it but occasionally,property managers can be in league with commercial strata lot owners and that mix can create quite a toxic punch when it comes time to vote on a contentious subject like common property alterations.
It is interesting how many owners will willingly, blindly provide their unit management with a proxy for an AGM. Actually, interesting is really not an appropriate word to describe this action- amazing is a better choice. Amazing because if any common property alterations are under consideration and a property manager is carrying a non-specific proxy, then most likely,the property management will vote alongside commercial interests.
Think about it for a moment.
Now, add to the commercial strata/ residential property management mix one more ingredient:Profit!
Yes, profit is a requirement to operate any successful business. Commercial strata lot owners of course are operating a business. Residential property managers make money off of non-resident owners so anything that could create a value would encourage managers to vote for a resolution that may be heavily weighted in favour of a commercial strata lot owner.
Finally, the garnish for this toxic punch has to be a strata council made up of more commercial strata lots than residential lots. For example, if a strata council is made up of 7 owners and 4 of them are commercial strata lot owners, residential owners apathetic to the management of their asset will, more than likely, pay a price for ignorance-especially when their own unit managers voted against their benign interests( I use benign here because most strata interests are not interesting until they are a fait accompli).
A strata corporation with any respect for a majority of residential owners over a minority of commercial owners, would not willingly “lend” its common property to a specific commercial unit. A strata corporation would ensure commercial interests and residential interests would be strictly managed and controlled for the benefit of all owners.
In the situation I’ve been advised about, a small cafe seeking profit, is looking to change the services it provides. This in itself is really not an issue however, residential owners understand the cafe to operate a specific type of service within specific hours of operation. The problem begins when the commercial strata lot effectively wishes to increase serviceable space and the services provided in such a way that “Use of Property” becomes contentious for residential owners both directly and negatively affected by the change.
There’s the contention part: The commercial strata lot owner asked for and received by three quarter vote authorization at an AGM, permission to change the “appearance” of Common Property directly adjacent to the public walkway in front of the strata lot. The corporation also acknowledged the owner’s full responsibility to bear the costs of altering the “appearance” of the Common Property.
The appearance change consisted of altering a raised planter box and making it a patio, ostensibly to encourage foot traffic to the “hotel”. Once completed, owners became aware the cafe was seeking a liquor license, extending its hours of operation and serving its food and beverage items on the patio.
Naturally, owners in units above and around the commercial strata lot realized they would be affected by noise and cigarette smoke up to and including 11pm nightly outside where noise travels and cigarette smoke rises. They also began to worry about liability as this was, still, Common Property. An outside space serving food and alcoholic beverages encourages a different kind of traffic to a building primarily hosting families. Loitering in interior Common Property areas would also create noise issues and increase maintenance costs for ALL owners. This change in “use” is a far cry from the request to change “appearance”.
There are so many little exploitive strategies that went on in this strata over this particular little gem of a situation.
1)a heavily weighted strata council run amok;
2)commercial strata lot owners resorting to bully tactics to intimidate the few owners who bothered to show up to the AGM;
3)the co-opting of individual residential strata lot management firms to vote in favour of the alteration to Common Property;
4)the attempt to transition a commercial business without residential owner input and perhaps more importantly,without legal advice, regarding the Common Property alteration and how it would effect all owners;
5)the fact the building is primarily residential and not actually a “hotel” and owners purchased understanding the commercial strata lot in question was not open beyond 8pm and did not serve alcohol;
6)the obvious fact the owner of the cafe did not want to ask for “Exclusive Use” of the specific Common Property area likely because of the legal requirements and the cost;finally and most importantly,
7)owners would most likely not have agreed to the change in appearance as they would have been better informed and the process would have taken much longer through due diligence.
So, I hope the residential strata owners pull on some serious work clothes and demand a Special General Meeting to kibosh this little enterprise. But I will give the commercial strata owner kudos for his degree of slick…..but slick is always toxic in the end.