Risk & Business Magazine CMW Spring 2016 | Page 26

Developments with Sections
An Insurance Overview

BY: GORDON LI, CLIENT EXECUTIVE, VICE-PRESIDENT, CMW

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ixed use developments are becoming
more and more common. In these,
residential and commercial space are
combined in the same building, often
with the bottom floors being composed
of offices, restaurants, and grocery stores
while the upper floors house apartments,
condos, and townhouses. The concern, in
most cases, is how to maintain autonomy
between the residential & commercial
areas inside the same strata corporation.
There are two primary means by which
this is done: through air space parcels, or
through the creation of individual sections
within the strata corporation.
In the former, air space parcels, air space
would be used to create separate entities for
residential and commercial use. Typically,

26 SPRING 2016

the strata corporation would then be solely
responsible for the residential portion
of the building. The alternative to that
is to create separate sections inside the
strata corporation for residential and
commercial strata lots, respectively. This
is done through the Strata Property Act
(specifically, Part 2) and is done to ensure
autonomous control over matters that are
solely related to each individual section.
The strata corporation will, ultimately,
be the one who remains in authority over
issues of common interest.

purposes, these sections are limited in what
they can do by the same act that allowed
their creation (the Strata Property Act).
The strata corporation itself, in addition
to individual sections, should have one
general liability policy, which should have
the sections added as Named Insureds.

In short, every section is going to be
treated as a unique legal entity and will
have their own independence when it
comes to finances and government (for the
most part). When it comes to insurance

• Crime/Fidelity – Sections within the
strata corporation are responsible
for maintaining individual trust
accounts and managing the funds
that they have separately from

In addition to what the strata corporation
has in place, individual sections should
strongly consider going a few steps farther
with what they are insured against. Here
are a few things to consider: