Renovation/Alteration Fees – Recent CRT Decision
The practice of charging renovation fees is becoming more prevalent within Strata Corporations, at least according to our observations within our own portfolio and our discussions with other brokerages. We do not take a position on whether or not these charges are appropriate, each community is different and there are usually many variables at play when a Strata Council decides it is time to consider implementing fees. These circumstances usually include a noticeable uptick in the number of renovations being performed (i.e. an aging property) along with longer renovations (causing more disruption) becoming more common. Increases in both the number and duration of renovations inevitably result in more complaints being received by Councils, not to mention the additional wear and tear that they sometimes cause on common property (even with imperfect measures such as damage deposits being collected).
With these fees becoming more widespread, it was only a matter of time before the Civil Resolution Tribunal (CRT) heard a challenge of such fees. They did so and made a recent relevant ruling in Korecki vs. The Owners, Strata Plan LMS 4255 in which they rejected an Owner’s challenge that their Strata Corporation’s renovation fee of $1,000 is “unreasonable”.
Essentially, what the CRT considered were two questions- the first, whether or not the Strata has the authority to implement renovation fees at all (yes is their answer, the bylaw in question requiring user fees for the use of common property to support renovations to a strata lot is perfectly valid) and the second, whether the fees applied against Mr. Korecki were reasonable (also yes, but based on the particulars of this case).
The CRT did reiterate the importance of ensuring user fees are “reasonable”, as they have done in the past when it comes to move fees and other charges levied by Strata Corporations. They made the rather nuanced point that “reasonable” doesn’t always have to mean perfectly accurate. Their judgement included the following statement:
With that, I find that the strata has not proven that Mr. Korecki’s renovations cost $1,000 or more. However, I find that it is not necessary for the strata to prove that its costs were $1,000 or more to establish that the renovation fee is reasonable. The purpose of the renovation fee is not to recover the exact actual cost of each renovation. It is a fixed user fee to provide reasonable compensation to the strata for the use of common property. A fixed user fee, which again the SPR specifically permits, necessarily involves some rough justice. Some owners may pay too much while others may pay too little.
If your Strata Corporation is considering implementing renovation fees, we encourage you to consider the reasonableness of such fees and to seek legal advice in drafting of appropriate bylaws for your Strata Corporation to ensure that they are capable of withstanding a legal challenge.