Strata council members have an obligation to put the corporation?s best interests first

Tony Gioventu
Times Colonist

Dear Tony:

We have an awkward situation in our strata corporation and need your assistance.

The vice-president of our strata council has been co-ordinating contractors and suppliers on a three-year construction project to replace our balconies that is costing about $1.7 million.

Our contractor accidentally copied all our council on an email to confirm progress payments that included an invoice from our vice-president, who has been acting as a sub-consultant of the contractor for the project and has been paid $75,000 in fees to date, acting as the certified consultant on the project. We budgeted for engineering fees up to $100,000, through a defined company, but the council and owners are very hostile that he did not disclose he worked for the company or potential conflict.

We are concerned about the integrity of the project and who he is representing, the contractor or the strata corporation. How do we resolve this issue? We do not want to get trapped in an endless costly legal dispute. We have had some questionable business decisions by this person over the years, so would also like to place other strata councils on alert.

M.H. Strata Council

Dear council members:

Unfortunately, there are many strata corporations that have discovered unethical or fraudulent business transactions involving strata councils and strata management companies. Non-disclosure of remuneration, business relationships and financial transactions is a typical complaint. Whether it is major construction, insurance claims, wind up of strata corporations, costly service agreements or investment planning, the common denominator is money, which is the source of most strata disputes.

The Strata Property Act defines the standard of care of a council member, the conditions for disclosure of interest and their accountability to the strata corporation. Council members must act honestly and in good faith with the best interests of the strata corporation as their obligation.

With that, they are bound to exercise care, diligence and the skill of a reasonably prudent person in comparable conditions. Any council member who has a direct or indirect interest in a contract or transaction with the strata corporation, must disclose fully and promptly to the council the nature and extent of the interest, abstain from voting on the contract or transaction unless requested by council to provide information, and must leave the council meeting while the contract is discussed and voted on.

The relationship in this situation is between the consulting company and the contractor; however, the consultant was providing services to and on behalf of the contractor and the strata corporation, so there is a duty of care owed to the strata corporation and a duty to disclose the full nature of the interest and the remuneration. As both the council member, the consulting company and the contractor were aware of the relationship and no one disclosed this information to the strata corporation, there is a reasonable argument to cancel the contract and retain independent services to complete the project while the matter is being resolved.

The council member who has received the compensation has a serious issue. If challenged through the courts or the Civil Resolution Tribunal he may find that if the contract was unreasonable or unfair to the strata corporation they may set aside the contract, or if the council member has not acted honestly or in good faith, require the council member to compensate the strata corporation for a loss arising from the contract and require the strata council member to pay to the strata any profit the council member makes as a consequence of the contract.

There may also be representation concerns regarding permits and certification of the project. In addition to receiving a financial benefit, who was the council member acting for? We can’t service two masters. It rarely works, especially when significant amounts of money or liability are involved. It would be prudent to have your lawyer speak to both the contractor and the consulting company. If any harm has been done in the process, a complaint may be filed with the Association of Professional Engineers regarding the conduct of the consultant and failure to disclose the relationship.

It is also prudent to inform the owners of what has taken place, advise them of steps council is taking. A simple solution for strata corporations in any significant business transaction is before you approve a contract, ask council and the strata manager to declare if they are aware of any interests direct or indirect where either the council member or strata management agent or agency would receive a financial benefit or has a business interest and record this action and results in the minutes.

The issue is not whether the services were competent or of value to the strata corporation, there was no valid reason to withhold this relationship. Clearly the council member was profiting from the contract and did not want their strata corporation to know.

Glacier Community Media © Copyright 2013-2018

Only in select circumstances can managers withhold information

Tony Gioventu
The Province

Dear Tony:

I recently put in a request for some routine documents owners are permitted to have copies of.  Two of those documents included a copy of the air space parcel agreement and the strata management service agreement. 

We understood we could be charged 25 cents per copy and included a cheque for the total amount of the copies. Before the strata manager released the documents, they insisted we had to sign a confidentiality agreement. We were appalled by the agreement as it prevented us from talking to anyone about the content of the documents and that we could not disclose these documents to any other strata owner in our building.

The manager told us this was a normal practice and if we wanted the documents, we would have to sign. Something seems very fishy? Is this normal?

Geraldine J. Vancouver

Dear Geraldine:

You are correct. Something is fishy. While there may be some provisions in the legislation to manage some documents differently, there is no provision allowed in the Strata Property Act or Regulations that permits a strata corporation to withhold documents.

Under section 35 of the act, other than the payment of the documents, the strata management company cannot add any such conditions. The air space parcel agreement is a public document filed in the Land Title Registry and the strata management contract is a service contract under section 35 of the act. 

The strata corporation must provide copies of the documents within 14 days of receipt of the request and you may consent to either receiving them in a print or digital form for convenience. The demand for a confidentiality agreement is not a normal practice and you should notify your strata council and advise it immediately.

Only the strata council has the authority to determine if there are documents that contain personal or privileged information and whether the information needs to be managed or protected for the best interest of the strata corporation.

There are circumstances where a confidentiality or non-disclosure document may be required. In several recent strata corporation windup proceedings where a strata corporation is negotiating with a buyer to confirm the details of an offer to deliver to the owners to be considered, or where there is a legal proceeding underway that requires confidentiality, there is a reasonable argument that the strata council has to act in the best interest of the strata corporation and that means all owners and interest holders at time. 

This does not imply the strata corporation has the right to withhold information, but it may require the strata corporation to release and manage the information in a different manner. If this is the case, the strata corporation normally directs its legal representative to speak directly to the owner requesting the information to determine the best method to resolve the issue.

In those circumstances, non-disclosure or confidentiality agreements may be necessary to protect privileged or proprietary information. 

We know there are already some reasonable restrictions within the legislation to protect everyone’s interests. For example, if a strata corporation is suing an owner, that owner is not an eligible voter and is not entitled to be present at the portion of a general meeting where the vote to commence the lawsuit is being debated or voted on and no, they are not entitled to be aware of the discussions or documents generated from that vote.

If your strata corporation and strata manager are not cooperating, you may obtain on order for the documents by filing a claim through the Civil Resolution Tribunal of B.C. Go to http://www.civilresolutionbc.ca to start your claim. 

© 2018 Postmedia Network Inc.

Make sure you understand what can and cannot be enforced

Tony Gioventu
The Province

Dear Tony:

Our strata council is getting a lot of pressure from our owners to adopt a bylaw that prohibits the use of marijuana and growing of plants. Owners are concerned this is just going to make our property the local grower and the value of our properties is going to fall.

Several owners have already complained about the smell of marijuana in the building from several smokers. We had to eradicate a grow op back in 2004, costing our strata over $75,000 in damages that we never recovered. 

What our council is struggling with is how far can we go with our bylaws? Do the federal and provincial laws override our ability to control what happens in our building?

Denise M., Parksville

Dear Denise: 

Federal legislation determines what substance may be possessed and consumed, the quantity of what may be possessed by individuals and if permitted, how it is grown, managed, regulated and taxed.

Each province then has the jurisdiction to determine how the distribution will be managed, who will manage the distribution and the controls placed on distribution. We may also find there are local government bylaws that will set apart specific zoning or regulations for the facilities that will grow marijuana and how local businesses market and distribute the products. 

Strata corporations are essentially private property. You cannot prohibit anyone from consuming marijuana as it comes in many forms that pose no nuisance to the community; however, in most strata corporations, the main issue is smoking. 

Smoke is a serious nuisance in many multi-family buildings as the smoke often migrates to other strata lots or common property and may contaminate those areas. While each strata lot is within its own climate or space, multi-family buildings such as apartment, connected townhouse or highrise-style buildings are rarely airtight.

Any neighbouring smoking or consumption that requires some sort of combustion will migrate to other strata lots. Your strata corporation is permitted to adopt a bylaw that regulates nuisance, such as smoking or noise.

The Schedule of Standard Bylaws already has a nuisance bylaw that can be enforced and your strata may adopt a bylaw that simply prohibits smoking of any substance within strata lots and on any common property. Those bylaws will continue to be enforceable. 

Your strata corporation is not permitted to prohibit or restrict the use of substances or plants that fall under the classification of medical purposes. If an owner or occupant requires the medical use of marijuana, the strata corporation is permitted to request valid documentation to grant the exemption. This is both for the protection of the strata corporation and the related strata lot.

The nature of bylaws for strata corporations raises an ongoing question for strata councils to consider. Is your smoking or nuisance bylaw enforceable? Strata corporations and managers are constantly borrowing bylaws from each other and tweaking them to apply to their own needs, but the limitations or changes they are adding to make them acceptable to their owners often render them unenforceable.

Even with enforceable bylaws, strata councils are still failing to follow the basic steps of bylaw enforcement, resulting in long costly battles between owners and their neighbours.  Spring seminars and workshops are an excellent opportunity for your strata council to refresh its knowledge of bylaw enforcement and application. Go to www.choa.bc.ca for a scheduled session in your area of B.C.           

© 2018 Postmedia Network Inc.

Purchaser shouldn?t have to pay retroactive fees

Tony Gioventu
The Province

Dear Tony;

We just purchased a condo in Langley and within a week of becoming owners, we were sent an invoice from our property manager that we owed back strata fees for November and December.

These are the increases to the strata fees that were not approved until the AGM at the end of December 2017, and we only became the owners as of Jan. 5.

Our strata fiscal year runs from Nov. 1 to Oct. 31. While the amount is not significant, it is the principle of the claim and the penalties being imposed by the strata manager that has us irate. Is a strata allowed to back-charge retroactive fees from previous owners to new owners?

Carol and Dave J.

Dear Carol and Dave;

The simple answer to your question is no, there are no provisions for retroactive fees; however, this is a more complicated problem that requires understanding how the Strata Property Act, regulations and the bylaws of each strata corporation function.

Here are the basic accounting principles for a strata corporation.

Every strata must approve an annual budget for a fiscal year. They can approve this before the year end for the next year, or no later than two months after the fiscal year end.

To ensure a strata corporation does not run out of operating funds, owners continue to pay the previously approved strata fee until the next budget is approved.

When the budget is proposed in the notice package, the notice must also include the schedule of proposed strata fees for the fiscal year.

This is where the owners would be notified of how increases will be covered in the next fiscal year.

By approving either the budget or amended budget, the owners are consenting to the fee schedule.

If the budget is approved before the new fiscal year begins, the solution is simple: the new fees come into effect.

If it is approved after the fiscal-year end, then the balance of the fee increases has to be paid for the remainder of the year.

The strata must collect the amount approved in the budget for the fiscal year, as that is the legal requirement under the act — the total amount of the budget divided by the unit entitlement/total unit entitlement of each strata lot for the fiscal-year period.

If the strata approves $100,000 in operating funds and a $25,000 contingency for the 2018 fiscal year, they must collect it. If they do not and it results in a deficit, the strata must pay that deficit back to the budget in the next fiscal year.

Many strata corporations that approve their budgets after the fiscal-year end choose to calculate the balance of the increases over the next 10- or 11-month period so it has the least impact on the owners and sets a comparable fee for the next year’s period with the least increase.

But some also introduce an adjustment for the next payment and call it a retroactive fee, which is incorrect, as the fee was not approved for that period; it encompasses the full fiscal year.

This is where your bylaws come into effect.

Strata corporations have modified their bylaws on payment schedules and methods, and this affects the ability of the strata corporation to manage and collect fees.

This is especially vulnerable when a sale occurs during the budget-approval process.

In your strata, the bylaws require the provision of 12 post-dated cheques for the next fiscal year, but that would be impossible, as your strata does not approve its budget until the end of the two-month period after your fiscal-year end.

A close look at the notice package for the AGM should indicate what the strata had intended and approved for the payment schedule.

A recent Civil Resolution Tribunal decision involving strata plan NW2729 will hopefully open the dialogue on this issue and help strata corporations plan their budget approvals and bylaws and manage their increases in strata fees correctly.

Glacier Community Media © Copyright 2013-2018

Easement deals require shrewd negotiating

Tony Gioventu
The Province

Dear Tony:

Our strata council presented a series of agreements to our owners at recent annual general meeting that raised a number of serious questions. Our manager had brought a number of requested easements from a developer who is building on the property next door and the resolutions we discovered were written by either a council member or our property manager. 

The problem with the resolutions and proposed easements is the language of what we were being asked to vote on and the outcome did not match.

In several resolutions, we were simply asked to approve the easement without the details of the agreement and without the benefit of the strata lawyer present to explain to the owners the implication of each of these agreements. I was unpopular with the council and the manager at the meeting, but successfully motioned to have all the easements deferred to a future meeting until all the information was detailed and published for our owners to review and seek legal opinions before we next vote.

Is this a normal practice? We were advised by our manager that council had reviewed and negotiated everything and it was routine, but none of our council are lawyers and no one considered the future implications. More troubling was the lack of disclosure from the manager and the council president, who declined to answer whether the strata or anyone was being paid.  

Brenda C., Burnaby

Dear Brenda: 

Development of neighbouring property is a condition that potentially affects every property owner in B.C. and strata corporations need to remember that in addition to their  strata lot, they are also the shared owner of a larger piece of property. 

An easement is an interest in land owned by another person, consisting in the right to use or control the land, or an area above or below it, for a specific limited purpose of time and conditions. 

Your property is a perfect example. The developer is proposing a highrise next to your mid-rise garden community. The adjacent parking garages will result in possibly property movement with a possible damaging effect if certain steps are not managed.

The developer has approached your strata requesting permission for an underpinning and anchor agreement to secure both sites. This is necessary during excavation and construction and future maintenance and access requirements and in most situations, the most economical method for the developer. 

Seems like a simple request and negotiation, right? Not at all. The simplest easement could impose conditions that reach far into the future of your property ownership and may even affect property values and your ability to wind up your strata corporation or future development of your site.

Your strata corporation does not have to agree. Every property has unique conditions and the implications of any easement for access, construction, future maintenance, terms and conditions of the easement and the related costs require close scrutiny by the lawyer representing only your strata corporation.

If someone approaches your strata requesting an agreement, it obviously has value for them. The expectation is your strata council should be able to confirm all the legal and engineering and related construction costs will be reimbursed by the developer to the strata corporation and the proposed easements will be closely reviewed to analyze what the current impact would be on your property and how these easements may affect the future use of your property and possible property value.

Your strata council should also be investigating the current value of the easement. It is possible there are access or property-use requirements that have significant value. You are essentially giving away some of your property rights, so why not be paid for them?

This is the time for a shrewd business negotiation. Remember, the easement is rarely for your benefit, the neighbouring property holder needs some concessions from you to develop and sell.

I would not vote in favour of any proposed easement without the benefit of legal advice and the complete disclosure of the exact wording of the easement. 

Your strata manager should be recommending independent legal advice on the easements and the resolutions. Strata managers may be in violation of the Legal Professions Act in B.C. if they are writing resolutions, constitutions or bylaws and being paid a fee, and management companies are charging through the service agreement. 

If the strata manager has received any fees from the developer or a third party not fully disclosed to the strata corporation, they are also in potentially in violation of the Real Estate Services Act.  Complaints may be filed on line through the Law Society of B.C. http://www.lawsociety.bc.ca, or the Real Estate Council of BC http://www.recbc.ca.   

© 2018 Postmedia Network Inc.

Different funds must be accounted for separately

Tony Gioventu
The Province

Our strata council is doing some weird and creative accounting and the owners are concerned we are not getting the real picture.

Over the years, we have approved a number of expenses from our contingency fund for routine upgrades and repairs. When we approve an amount — the last was for $25,000 of fencing — the strata moved the $25,000 from the contingency fund to the operating fund. The final amount of the project was $19,000. But at year end, our budget was overspent in a number of areas, and our year-end balance had a small surplus of $200.  Our council used up the $6,000 difference as a fund for a number of questionable expenses. If we total the past five years this has happened, we have spent over $50,000 of our contingency on fund expenses never properly accounted to the owners. Is this a normal practice?

Colleen M., Abbotsford

Dear Colleen:

There is a basic rule of finances in the Strata Property Act and Regulations that many strata corporations seem to selectively ignore: “The operating fund, special levy funds and contingency reserve funds must be accounted for separately.”

Each of the funds has separate approval procedures, accounting requirements and end-of-project conditions.  The only way to meet those conditions is to report annually to the owners the activity of each account. At the end of each fiscal year, every account requires a separate financial report showing the opening balance, any contributions to that fund, the details of any expenses to that fund, and the closing balance.

The operating fund is approved at an annual general meeting and may be amended by majority vote at the time the budget is considered. The account includes all of the operating expenses for the next fiscal year, and includes the amount approved to be contributed to the contingency fund. These two amounts are shown and calculated separately so each month, based on unit entitlement, every owner knows how much of their strata fee goes to the operating budget and the contingency.

The contingency fund is the reserve of the strata used to approve expenses that occur less than once a year. These are for emergencies or insurance deductibles, or resolutions approved either by a three-quarter vote or majority vote of the owners at a general meeting for specific projects. When a contingency fund expense is approved, either by council for emergencies or an insurance deductible or by a resolution of the owners, the amount is not transferred to the operating fund as a revenue/expense item. The amount approved is for the purpose intended only from the contingency fund and the details of the expense are reported as part of that fund.

This prevents strata corporations from abusing and manipulating contingency expenses such as your situation. If the strata had spent only $19,000 on the fence, the remaining $6,000 remains in the fund and council does not have discretion to spend the remaining funds on other expenses without the approval of the owners. 

Special levy funds must also be accounted for separately. There are still many strata corporations that still require special levies because their contingency balances are not sufficient to meet major repairs. Each special levy must be accounted for separately and is not part of either the operating or contingency fund. At the end of a special levy, if any owner is entitled to receive $100 or more in a refund, the remaining balance must be refunded to all owners, and all active special levy accounts in a fiscal year must be reported separately as part of the financial reports of the annual general meeting.  

© 2018 Postmedia Network Inc

For enforcement, it?s all about details

Tony Gioventu
The Province

Dear Tony:

After reading your column last week about collections, our council requested a copy of our current receivables from our property manager. We were horrified when we went through the list to discover we have no backup decisions, minutes, support or knowledge of a number of debts outstanding that date back to early 2015. 

We have shown a number of annual budget surpluses for 2015 and 2016, but if we can’t recover these debts, we will have to write these debts off and our owners will be left with a deficit that we have to pay back. Not good at a time when our fees are rising faster than the rate of inflation. 

Our question: Can we still collect an insurance deductible from 2015 for $10,000 if the strata has done nothing about it? We scoured our minutes for 2015 and there was no indication the council took any action and this owner has now their unit listed for sale. So how do we collect this? 

Conrad B., Burnaby

Dear Conrad:

Wow! Last week’s column opened the flood gates with over 500 emails from council members in a similar situation. The general response is that councils are not getting monthly reports showing detailed receivables and as a result, have no way of enforcing bylaws and making collections’ decisions. 

A late payment of a strata fee, for example, is a bylaw-enforcement matter and a penalty cannot be automatically added to the account unless the strata council has followed proper bylaw-enforcement procedures. A collection of an insurance deductible cannot be imposed on the issuing of a Form F Payment Certificate required when someone sells their strata lot, unless the strata corporation has a decision from the courts, the Civil Resolution Tribunal or an arbitration, or has an accepted action in those jurisdictions. 

This would either require the seller to pay the debt, a written undertaking from their lawyer agreeing to pay the debt on conveyance, or that they pay the amount into trust to the strata corporation to dispute the amount. 

If your strata has done nothing to collect the $10,000, the two-year limitation period on collections and actions may have expired at this time and it may now sadly be unrecoverable. Before you make that decision, place a call to your lawyer to determine if you have any options. If the owner has acknowledged the debt, that may continue the two-year limitation period.

The best solution for strata councils is record all bylaw-enforcement decisions in your minutes. If any fines or penalties or enforcement actions are authorized, record the details as well. Without this information, future strata councils have little information to rely upon as strata councils and managers change frequently.

If the strata council voted on bylaw enforcement and collections decisions, why is that information not in the minutes? Bylaw enforcement and collections are not private or confidential information. Do not include any personal information of owners, tenants or occupants, but the decisions are critical. It is the only method to track and follow up on decision-making. 

Here is a simple, yet effective, example for minutes that identifies the decision, what strata lot it affected, the action of council, and any ongoing instructions for the strata manager.

October 2017 minutes sample: “It was carried by majority vote of council to issue a demand notice to strata lot #27 for the amount of $5,000 for the insurance deductible relating to the water escape claim of July 1, 2017 advising if the amount is not paid within 30 days the strata corporation will commence a CRT action to obtain an order for the amount owing. The council reviewed the cause of the claim and identified the owner was responsible for failing to replace the leaking door seal on their dishwasher and left the unit while it was running.”    

If your strata council and manager manage action-type minutes that carry over until a matter is resolved, your monthly business will be much easier to handle and you will avoid needless losses and disasters.

© 2018 Postmedia Network Inc.

Tony Gioventu
The Province

Dear Tony:

Our strata has never provided any information regarding the enforcement of bylaws to our owners. This recently became an issue over two owners, one, a council member who had not paid their special levies or strata fees for over six months.

At our annual meeting, someone started questioning why we had over $40,000 in receivables and we were told that was confidential information. As a result, we lost confidence in our council and elected five new council members who have discovered that council has been cutting special deals with owners on payment schedules and totally ignoring bylaw enforcement. 

We have also lost the ability to collect an insurance deductible from an owner who did their own plumbing, causing a flood. The owner recently sold, so the rest of us were stuck with the $10,000 deductible. 

Judith W., Penticton

Dear Judith:

As a basic requirement of governance in the Strata Property Act, “the council must exercise the powers and perform the duties of the strata corporation, including the enforcement of bylaws and rules”.

The enforcement is determined through the act and the bylaws of each strata corporation. The act then says the strata corporation “may” do one or more of the following to enforce bylaws by imposing a fine, remedying a contravention by physical actions permitted in the act, or denying access to a recreational facility permitted by the act.

It is common for strata corporations to go for years without ever having to impose bylaw enforcement penalties. Provided the council can manage compliance with the bylaws, further enforcement may not be necessary. 

In your situation, your strata council is not only ignoring its bylaw enforcement against owners, but also council members. Your bylaws stipulate that owners must pay their strata fees on the first of each month. If they do not, then a bylaw violation has occurred, which triggers two separate types of penalties in many strata bylaws.

The first is the financial penalty. In your strata, interest is automatically calculated at a rate of 10 per cent annually and imposed monthly. Interest in bylaws is not a bylaw infraction and may be automatically calculated and included in an amount to be liened against a strata lot.

The second enforcement issue is a bylaw that impacts the eligibility of council members to be either elected to council or continue to sit on council if the strata corporation is entitled to file in lien against a strata lot. Your strata has even gone as far as adding a third bylaw requiring council to issue a demand notice for payment for strata fees and special levies and notice of being entitled to file a lien if the owner does not pay within 14 days. 

Your bylaws indicate “the strata council must issue the notice within five days of anyone being late on their payments”. As a result of not enforcing the bylaws, your strata council permitted a fellow council member to continue to act contrary to the bylaws and interest has not been imposed or collected and the debts are still outstanding with no collections started.

There is no harm in sending out demand notices to enable the strata corporation to file a lien and take further action if the owners cannot pay their fees. Nothing requires the strata to file a lien after the demand has been sent; however, a strata corporation cannot take the next step on collections to secure debts without issuing the notice. 

A decision to enforce a bylaw is a decision of council at a council meeting as council is not permitted to delegate bylaw enforcement to the property manager or a single council member. A general list of bylaw enforcement and collection decisions that are included in the council minutes, but exclude personal information, is a valuable record for both council and owners. It provides council with a record of its decision-making and the ability to track monthly progress and indicates to the owners that bylaws are being enforced and collections are being applied equally and fairly against everyone. 

If the council is not willing to enforce bylaws, elect a new council that will. The Civil Resolution Tribunal is always another option to order your strata to enforce its bylaws.

© 2018 Postmedia Network Inc.

Tony Gioventu
The Province

Dear Tony:

We have been following a number of your columns this fall on easements and discovered our strata has an easement with a neighbouring property that requires us to maintain and repair the fence dividing our two properties on our upper elevation and maintain surface drainage to avoid property damages.

We have always managed to do this, but are hoping you would write a column about how important it is for property owners, which includes strata corporations, to have complete records of all their documents filed in the Land Title Registry.

We were preparing for a battle with the neighbour over the fence costs and had spent almost $5,000 in consulting until an owner gave us your column and suggested we search for any easements. It has been a great help and, as recommended, we are having our lawyer look at the terms and validity of the easement before we proceed.

Thank you.

Katie Matthews

Dear Katie:

Your letter is a perfect example of why every strata corporation needs to identify and print every registered document for their strata plan in the Land Title Registry. In some cases, such as a bareland stratas, this could also include searches on individual titles for items such as building schemes.

If you are on a strata council, the most important thing you have to ask yourself is how do we make decisions on budgets, bylaws, property issues and operational issues if we don’t have all the documents that relate to our strata?

Step 1: Order all your land title documents filed on your common index and general property index. Print each document and save a digital file that can be shared with council, the property manager and posted to your strata website. A copy of your registered strata plan, schedule of unit entitlement and schedule of voting rights or interest on destruction, if they apply to your strata corporation, are essential.

Print all other property instruments such as easements, covenants, right of ways and airspace parcel agreements. There is a one-time cost to access the registered documents; however, think of the consequences: Decision-making without reliable information! Accuracy is critical. The number of misinterpretations, misquotes or selective conversions of technical information to benefit individuals is appalling.

Every week our offices assist strata corporations that are using modified or draft schedules of unit entitlement originally provided by the owner-developer or because a treasurer or council president discovered they could pay lower fees if a modified or rounded-up schedule was created.

Step 2: Create an operations binder/website indexing documents. The binder/site includes all registered land title documents, including the strata bylaws, the ratified rules of the strata, insurance policies, minutes of meetings, contracts of all service agreements, the strata management agreement, financial statements and annual budgets. Also included are all resolutions and accounting that apply to current special levies, copies of any court, arbitration or civil resolution/human rights tribunal orders involving the strata corporation, any orders issued by an authority in B.C. and a copy of your depreciation report and your annual maintenance and service plan.

If you don’t have a website, the retiring council members pass the binder on to the new members. Strata councils will find their jobs much easier if they are each provided with accurate and complete information resulting in better decisions, reduced conflicts and a proactive ability to make decisions at council meetings.

For council use only, you may also include a monthly financial report and receivables report, which are directly linked to bylaw enforcement, and other items that may require management under the Personal Information Protection Act. This is a great job for the strata secretary and fresh way to start off each year.

© 2018 Postmedia Network Inc.

Broker should work in the best interest of the strata corporation, not individual owners

Tony Gioventu
The Province

Dear Tony:
In October, our owners instructed our strata council to hire a commercial broker to market our strata corporation with the interest of selling the property to a developer if it’s a good price. 

We retained a lawyer to review the contracts for the agent and to review any offers from potential buyers. We had our first meeting in December and while we did not have an official 80-per-cent vote, we were close, with several opposed owners expressing an opinion they would be willing to reconsider for the right price. 

This is what has caused a problem. Two owners have now admitted to working privately with the buyer and the broker we hired to negotiate a higher price to secure their yes votes. At least half the owners are now furious and the objective of a collective sale is chaos.

How can a broker represent one legal entity, and at the same time, act for other parties on the same deal?  We thought the changes in real estate regulations would have changed this. It seems an awful lot like double ending on sales.

Robert K.

Dear Robert:

The term you are describing in relationship to real estate transactions in British Columbia is agency. This includes trading services, brokerage and licensee representation, rental management and strata property management. 

In broad terms, the law of agency is an area of commercial law dealing with a set of contractual, quasi-contractual and non-contractual fiduciary relationships that involve a person, called the agent, who is authorized to act on behalf of the principal (the party who hires them) to create legal relations or negotiations with a third party. 

In simple terms, your strata corporation hired the agent. Under the terms of the contract you signed, they agreed to act as your sole and exclusive representative when working with a buyer or third party, and to act in your best/fiduciary interest, which is the strata corporation. 

Whether an agent or brokerage has the ability to represent more than one party is determined by the consent of the parties through the representation or service agreement. This is one of the essential reasons CHOA recommends strata councils always have all agency or brokerage agreements reviewed before they sign them to ensure your council understands the impact of the agreement and the consequences of multiple-agency representation, the scope of authority being authorized, liability for services, the implications of fees, penalties that relate to termination clauses, and the requirement for consent and disclosure for all fees charged or earned directly from you the client or received from third parties that relate to your agency agreement. 

Your agency or brokerage representation agreement did not permit the broker to act on behalf of individual owners, the developer or any other party. You did not agree to a dual or multiple-agency agreement. Yes, it is possible that an agent or broker may act for several parties or in conjunction with several parties in an agency agreement, but they may only do so in B.C. with the consent of the principal, which is your strata corporation, and the remaining parties. 

The infraction is a potential breach of your contract and a possible violation of the Real Estate Services Act, Regulations and Rules of the Real Estate Council in B.C.  I encourage your strata council to contact the Real Estate Council of B.C. and file a complaint.

The changes in the legislation now permit higher fines, forfeiture of commissions and licence sanctions or loss. Even if you discover after the transaction is complete that an agent has breached their obligations and some owners have received undisclosed compensations or benefits that were in breach of the agency or brokerage agreement, you can still file a complaint.

Your complaint about irregularities is fairly common since the vote to wind up a strata corporation changed to 80 per cent. The problem is not the legislation, the real challenge we are discovering is the unwillingness for anyone to come forward to file a complaint. The reason is simple: profit. With a vibrant property market, everyone is making so much money, they are just happy to walk away with their doubled or tripled values and ignore the violations. 

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