Tony Gioventu
The Province

Dear Tony: 

Our strata consists of four different strata corporations in Richmond that share a clubhouse, recreational facilities, parking and landscaping areas. Since our community was constructed, all four strata corporations have equally shared the costs; however, we require some major upgrades to retaining walls, landscaping, the pool and parking lot. The total is going to cost almost $5 million.

Our community association has been managing the joint facilities and has given each strata 90 days to pass a special levy of $1.25 million due in March, but some of our strata corporations are half the size of the others and owners are questioning how we came to this number.

What happens if one of our strata corporations does not pass the special levy or we cannot agree on the formula that is used for the shared costs?  Everyone wants what is fair, but we cannot agree on how to fairly divide cost.

MJR

Dear MJR:

There are many strata corporations and property owners across B.C. who have shared use of facilities, either jointly owned or where some interest has been created through an easement, covenant or by contractual agreement.  

The Strata Property Act permits a strata corporation to either enter into an easement or covenant or the creation of easements at the time the corporation is created. These easements, which may also be referred to as covenants, air-space parcel agreements, land-use agreements or community agreements, are registered as easements on each of the strata corporations and property owners who share use of property, access rights or obligations to each other. The easements are filed in the Land Title Registry and each strata corporation will have the easements registered on their common property index or occasionally shown on the general index. 

Since writing about easements a few weeks ago, I received over 250 emails for all types and variations of strata corporations and adjoining property owners where no single answer is possible without first producing and reviewing the agreements.

I was also surprised to find out how many strata corporations are relying on “hand-me-down” documents and not registered agreements. 

In MJR’s strata corporation, there is a land-use agreement registered as an easement. It defines the shared properties, the obligations of each strata corporation, how funds are paid and managed and how much each share is paid by the four strata corporations. 

They are not four equal payments. The allocation of all cost is shared by the four strata corporations based on the number of units in each strata corporation, so two strata corporations each pay 15 per cent of the cost and the balance is split 40 per cent for the third strata and 30 per cent for the fourth. A significant difference from what has been applied to the annual operations costs. 

Because the community has operated with a different formula from the easement for over 15 years, I would recommend each strata corporation retain an independent lawyer to review the easements, the history of payment allocations, and how the facilities are being managed. 

The most common excuses I have heard for mismanagement are: “We’ve always done it this way,” or “ We were told as a community we could set up a different formula,” or “We can’t change after all these years.” While you may be sharing facilities or services, remember you are still independent property owners and entitled to your own rights of representation and negotiation. Always rely upon the registered agreements to determine your liabilities and rights.  

© 2017 Postmedia Network Inc

No way of determining what’s the norm where strata fees are concerned

Tony Gioventu
The Province

Dear Tony: 

Our building is only seven years old. With the addition of a resident caretaker and concierge to manage our property, our strata is facing a massive increase in our condo fees this year.

My monthly fees for a one-bedroom have gone from $419 a month in 2015 to $829 for 2018 — almost a 100-per-cent increase.

If we continue to increase our fees at this rate, our units will no longer be affordable as several owners in the building are now facing a serious financial cash problem. With increasing interest rates, operating costs and building costs, many owners are concerned our units will no longer be affordable.

We have also been informed the strata is planning on recommending full funding for our depreciation plan, which is going to be adding another $150 a month to my strata fees.

Is there a limit to the amount the annual condo fees can be raised each year? I know we need to protect our property and maintain our assets, but at what point do we face a crisis when the owners no longer approve sufficient funding? 

Carla D.

Dear Carla:

The annual budget contains those expenses for your strata corporation that occur once a year or more frequently.

The proposed annual budget is first developed and approved by the strata council before it gives notice of the annual general meeting. At the meeting, the eligible voters approve the budget by majority vote; however, as part of the discussion and debate, the eligible voters are permitted, by majority vote, to make amendments to either increase or decrease the portions of the budget before approving the final amount.  There is no limit to the value or types of changes the owners are permitted to make at the meeting and there is no limit on the proposed increases, provided the owners approve the budget by majority vote.

The total amount of the approved operating budget and the contribution to the contingency fund determines the portion each strata lot pays for monthly strata fees based on the schedule of unit entitlement filed in the Land Title Registry. When your strata corporation sends out the notice of the meeting, it must include a schedule of proposed strata fees showing the projected contributions if the proposed budget is approved.

Within two weeks of the budget being approved, the strata must send a notice to all owners advising if their strata fees have changed.

Unfortunately, many strata corporations just get into the routine of approving the same budget year after year without reviewing the impact of aging and changing buildings systems, long-term planning for renewals and an appropriate assessment of the services they need to maintain the standards of maintenance and repair. 

Budget planning is an ongoing annual process. When your strata council reviews monthly or quarterly financial reports, the information forms the framework for future projections. This provides the council with the opportunity to review existing and future service and maintenance agreements, staff requirements and long-term planning costs. 

I am constantly asked what the “average rate of strata fees” should be for a highrise, townhouses or low-rise apartments. There is no such standard as every building and community is constructed separately, with different geographic locations, services, finishing standards, service demands and community history. Rather than looking at how to keep strata fees down, owners need to focus on the appropriate strata fees to protect their investments.

In new buildings, it may take a few years before the building is fully occupied when you can anticipate strata fees to increase significantly as developers tend to project low fees for affordability and more services and operating costs are added. A well-planned and funded budget will ensure your property is well maintained, major repairs are funded, special levies are avoided and your financial asset is protected.    

© 2017 Postmedia Network Inc.

Consider easements? implications

Tony Gioventu
The Province

Dear Tony:

The property next to our strata corporation has been sold and a new development is about to start construction. Our building is a relatively new highrise with 10 townhouses with a large underground parking garage.

Our strata council has been approached by both the city and the developer and has received a number of requests for access to our property through the lane area, and standard types of development agreements that would permit them rights-of-way for construction and services.

In a recent column, you were talking about the subdivision of property and the need for every owner to agree to the changes. Is our strata required to obtain the approval of all of the owners before we can proceed or is council permitted to approve these agreements? 

Mike Foster, Vancouver

Dear Mike:

A subdivision of property occurs when a section of the common property of the strata corporation is defined and surveyed and divided off from the strata corporation and sold to another party. That requires the consent of all owners and registered charge. 

The types of agreements your strata corporation is likely being requested to consider are easements and rights-of-way. These are common on all properties and likely several are registered in the Land Title Registry and shown on your existing strata common property. 

An easement or right-of-way creates an interest on behalf of one or more parties with respects to another property owner or user. Easements, rights-of-way and leases all affect the common property in a variety of manners to generally provide access for services and utilities that cross over another property, the right to use property such as a shared driveway or courtyard, or impose more complicated obligations that relate to use, access, cost sharing and future liability of the easement.  A few tips though to protect your strata corporation.  There is no such thing as a “standard easement or development agreement” with neighbouring properties. What may seem like a simple agreement at the time may have far-reaching costly implications for your strata owners.

Current and future implications have to be considered. 

If a developer wants access to your property or concessions for use, remember it is your property and you have a duty to protect the interest of your owners. The proposed easement may also have significant value for the strata corporation that should be negotiated in each separate case.

If your strata corporation is willing to consider the proposals, one condition of the agreement is the developer will be required to pay for all of your legal and related expenses to review, negotiate and ratify the agreement at an annual or special general meeting of the strata corporation. 

Start by retaining a lawyer who has expertise in this area of construction and development and engage them to work for your strata corporation. Determine if there is any value to the requested easement. 

Elaine McCormack, with Wilson McCormack Law Group, cautions all councils to be closely engaged with the process so they understand what the easement means regarding the use and condition of the strata complex. “A strata corporation is not required to give a neighbour access to its land, including the courtyard or driveway, but if  you do, you may be able to negotiate compensation.

“If the easement is important to a new development, granting the easement could result in significant revenue for the strata corporation. There are also a number of construction issues requiring easement agreements, including underpinning of building structures, soil support, overhead crane swings, modifications to utilities, and other impact to your building to consider.”   Finally, before you can agree to any easements, your strata corporation will be required to pass a three-quarters vote at a general meeting and give the council the authority negotiate and authorize the terms and conditions of the agreements. 

© 2017 Postmedia Network Inc

Tony Gioventu
The Province

Dear Tony:

Our strata corporation negotiated a section of our common property with the Ministry of Highways for a highway-improvement project. They approached us with an offer for the unused common land that was reasonable.

The owners voted by three-quarters vote to accept the offer, but we are having complications with the Land Title Registry. There appears to be confusion over whether this is a liquidation of the strata or a simple subdivision of common property.

While not all owners agree, 88 per cent did note in favour of the proposal. Can you help clarify this and possibly provide some direction? 

SDL

Dear SDL:

I doubt I have ever come across a “simple” subdivision of common property. The strata corporation is certainly permitted to do this, but the requirements are very high because the subdivision may have an impact on the value of each strata lot, affecting each homeowner and each interest holder, specifically, the banks and lenders who hold mortgages. 

The resolution is actually irrelevant in this case as the form for the subdivision must be filed by the strata corporation and must be signed by every owner registered on title and any interest/charge holder, the mortgage provider.

The other part of your scenario is determining what is a reasonable value. Depending on the commercial use, future intended use of the property and the affect on other properties, the proposed subdivided property may have a much higher value.

Unlike the sale of a strata corporation, where there is an 80-per-cent vote to wind up the strata corporation, you are negotiating with only one potential buyer, the province of B.C.

In this circumstance, there are two conditions the strata may impose as part of the contract: that the strata retain an independent commercial property appraiser and legal representation to assist the strata. The strata agrees only on the condition that the ministry will pay for these costs and any costs relating to the subdivision and the filing of the required documents in the Land Title Registry.

If a strata corporation is considering winding up, you want to ensure your property is marketed showing its greatest potential and bring the best price to your owners for consideration. The strata corporation, under the instruction of independent of legal advice, engages an independent commercial broker to act as its exclusive agent and to market the property as widely as possible.

Once the offers come in, the lawyer and council review the proposals, terms and conditions and consider when it is time for an info meeting so the owners can ask questions and determine if this is a direction they are interested in. There may still be room to negotiate and counter offer if the notice for wind up has been set up properly. 

This is a good way to manage legal costs and services and does not require any commitment by the strata owners up to this point.    

© 2017 Postmedia Network Inc.

Check depreciation reports every year

Tony Gioventu
The Province

Dear Tony:

Our council recently put two items on our agenda at our annual general meeting to approve contingency funds for repairs and upgrades. One was the roofing on our eight townhouses and the other was a scheduled upgrade to our fire safety systems in our highrise.

The roofing was for $135,000 and the fire safety upgrade was for $22,000. Both these items were in our depreciation report and recommended for 2018, so were passed by majority vote. However, an owner raised a very good question at the meeting: The report was last updated in 2015, so how do we know these amounts are accurate?

This raised a number of other questions and proposed amendments at the meeting that related to the process for purchasing these products and services and, of course, what happens if there isn’t enough money approved? 

Our council wants to proceed with these projects, but the owners have raised some valid questions and amendments. Our property manager told us we could only approve the amount in the depreciation report. How do we proceed? 

Karen Featherstone

Dear Karen:

One of the significant benefits of depreciation reports and funding the contingency reserve fund is the strata corporation will only require a majority vote to approve the funds when the renewal or maintenance is recommended.

With the changes in the Strata Property Act, the intention was to provide strata corporations with the ability to plan funding, spend funds and authorize major projects, all by a majority vote. The majority vote also means the owners have the authority to make amendments to the majority vote resolutions at a general meeting. The result is the eligible voters have more authority on process, procedures and the expenses.

Major projects, regardless of the type of vote that is required, should all be treated with a high level of fiduciary responsibility. The depreciation report is an excellent planning tool for scheduling and financial planning, but time periods affect the projections due to product and material changes and availability, building code changes, contractor availability, inaccurate calculations of project and cost implications, and the delays in implementing the reports.

Review the depreciation report annually and identify those projects scheduled within the next five years. Your roof identified for renewal in 2018 is a project that should have been started in early 2017. The first funding approval, which could have been approved under consulting services in the annual budget, is for a roofing consultant/inspector to inspect the roofing condition and provide recommendations on maintenance or deficiencies and set the specifications for the planned renewal.

The consultant will provide you with current market costs and an overview of the complete scope of the project. One other aspect of the consultant’s work will be to advise you on the complete scope of work to avoid any duplication of future cost and work. This will form the framework on the amount you will proposed to the owners for the project.

The best example of this is your eight townhouse roofs, which have 16 skylights. At 21 years old, replacing skylights with the roofing will be the most economical choice for your strata and ensure the removal and installation will not affect your future maintenance and warranties. Also a good opportunity to consider an energy upgrade to the types of windows and ventilation. 

The only condition that is imposed by the act is that the report recommends the repair, renewal or maintenance. There is no such limitation in the act that limits your strata to the cost estimates established in the depreciation report. Other than estimates of when projects are due and possible costs, the depreciation report has no regulating authority over the business of the strata corporation.    

© 2017 Postmedia Network Inc.

Rules and bylaws require different approaches

Tony Gioventu
The Province

Dear Tony:

Last September was my strata corporation’s AGM. At the AGM, the strata corporation adopted a pet rule that prohibits more than one dog per strata lot.

My mother recently passed away, and in addition to dealing with the stress and sadness of that situation, I have inherited her two small dogs. My strata council has advised me that I must get rid of one of the dogs. Surely the strata council has the ability to exempt me from the rule due to these  extenuating circumstances?  

Wendy G., Qualicum Beach

Dear Wendy:

A good place to start is with understanding the difference between a rule and a bylaw. As per the Strata Property Act: “The strata corporation may make rules governing the use, safety and condition of the common property and common assets.” 

To adopt a rule is a two-step process that starts with strata council. First, the rule is proposed and passed by a majority vote of strata council. Once passed, the strata council must inform owners of the new rule and the rule takes effect once owners are notified.

Second, the rule must then be ratified by a majority vote of the owners at the next general meeting, either the AGM or a special general meeting, whichever meeting comes first. Once ratified, it is in effect until repealed, replaced or altered. If the rule is not ratified at the general meeting, it becomes null and void.

The SPA indicates a bylaw “may provide for the control, management, maintenance, use and enjoyment of the strata lots, common property and common assets of the strata corporation and for the administration of the strata corporation.”

To amend or propose a new bylaw, a three-quarters vote resolution of the owners must be passed at a duly convened general meeting (either the AGM or an SGM). It is important that the exact wording of the proposed bylaw amendment be included in the general meeting notice package that is distributed to owners in accordance with the SPA prior to the meeting.

 As you can see, there is a difference between a rule and a bylaw. Specifically, if a strata corporation wishes to prohibit or limit the number of pets living in a strata lot, a bylaw is required; a rule would not suffice.

Take a look at the minutes from your AGM. Did the strata ratify a new rule or adopt a bylaw to restricts the number of dogs per strata lot? If the strata did indeed pass a rule, request a hearing with your strata council. A hearing is the opportunity to be heard in person at a strata council meeting.

Once you request a hearing, the council must convene the hearing within four weeks and if the purpose of the hearing is to seek a decision of the council, the council must give the applicant a written decision within one week after the hearing. If, after the hearing, the strata council proceeds with enforcing the rule, and is demanding you get rid of one of the dogs, you may have to make a Civil Resolution Tribunal application. For more information go to: https://civilresolutionbc.ca

© 2017 Postmedia Network Inc.

When it comes to decorations, make sure to include everyone

Tony Gioventu
The Province

Dear Tony:

What types of decorations are a strata allowed to put up during the holiday seasons? Our condo has traditionally decorated our lobby and club rooms for Halloween, Christmas and Easter, but this year our strata council has told us that due to too many conflicts with the owners, we will not be able to host any events and put up decorations.

Our bylaws clearly permit the hanging of decorations for festival periods and they must be removed within seven days of the festival. Is council entitled to override the private bylaws of the strata corporation? Our owners are expecting a Christmas dinner along with the usual decorations and festivities, so do we just cancel the plans?

Margo W.  

Dear Margo:

The strata council must comply with the bylaws of the Strata Property Act in the same manner as every other owner, while at the same time it is responsible for the use and enjoyment, and maintenance and repair of common property.

The challenge it is facing is the awkward situation around holidays that recognize some religious traditions while excluding other religious traditions. This is where there is potential conflict for your strata corporation.

Whether it is events, decorations or other observances that recognize a religious or cultural tradition while excluding or discriminating against others, strata corporations are still subject to complaints under the B.C. Human Rights Tribunal. As a result, strata corporations and their members are not private to the exemption of other legislation. They are essentially their own public. As we are in the midst of year end approaching for many strata corporations, it is the ideal time to have a look at your bylaws and consider amendments that may still permit celebrations for all owners and all faiths and traditions; however, when your strata starts balancing celebrations of a variety of traditions in your common/public areas, the easiest solution may indeed be no celebration of traditions either by culture or faith, anywhere other than individual strata lots to avoid conflict. 

Bylaws must comply with the Strata Property Act, the B.C. Human Rights Code and all other enactments of law. These are not bylaws for the armchair strata council member to write.

At the very least, allocate some legal funds in your annual budgets and direct your strata council to review the bylaws under the supervision of an experienced lawyer. If you are going to permit festival decorations, at the very least, be inclusive of all requests.

© 2017 Postmedia Network Inc.

Manager, council at odds over contracts

Tony Gioventu
The Province

Dear Tony: 

 Our strata council is having a power struggle with our strata manager.  We have had the same manager for six years and have been pleased with her service, but we have discovered a number of contracts that the manager has signed where the terms and conditions of the contracts were different than what we approved. The council approved elevator service contracts and waste removal contracts at fixed prices for no longer than three years. Our strata decided to change waste removal contractors and find we are locked into a seven-year contract and we are spending money on legal advice to terminate the agreement. The manager told us it is normal for them to sign contracts on behalf of their clients, but if we don’t sign and approve our own contracts, how can we guarantee we are getting what we approve? 

Ryan A. Surrey

Dear Ryan: 

The strata manager/management company are the agents of the strata corporation. In an agency agreement, the manager/management company has the authority to act on behalf of the strata corporation under the terms of the agency agreement which is your written contract, and the instructions that are given to the strata manager by the strata council. 

There is no such condition as  “normal” in relationship to the strata manager signing contracts. That varies in every strata agreement. The instructions that your council give should constitute decisions that are recorded in your minutes in the same manner as any other decision of council. While a single council member, such as the president, may give directions to the manager, even those decisions are often not what the strata council had agreed to. The best solution is for your strata council to review all decisions, ratify them by majority vote at a council meeting, and record the decisions and the instructions in the minutes. 

Your strata council may also instruct your manager that all agreements and contracts must be reviewed and signed by the strata council.  It is very easy to overlook a change in a contract, and depending on the nature of the contract, a small amount of funds spent on legal advice before the contract is signed is in your strata corporation’s best interest. 

If your strata corporation has given an instruction to the strata manager, and they have acted contrary to that instruction that is a possible breach of their agency agreement and of the Real Estate Services Act, the Regulations and Rules of the Real Estate council.  Your strata council should start with a discussion with the strata manager and the broker of the company and if you have not reached a satisfactory solution contact the real estate council to file a complaint. For more information go to www.recbc.ca.    

© 2017 Postmedia Network Inc.

Make sure to take steps to prevent abuse

Tony Gioventu
The Province

Dear Tony: Thank you for your column about fraudulent proxies and voting results. Unfortunately, the column did not get to the point of what we do with proxies that don’t meet the requirements of the act.

Our strata had similar problems in the past and our solution was to make a copy of each of the proxies as they were registered and retain them as part of our records in the event there was a dispute. This resulted in several owners coming forward and requesting to see copies of the proxies and their claims they never issued a proxy for their meetings.

If that occurs, what happens to the vote that was taken? Is it void or do we have to call another meeting?

Jas S.

Dear Jas: A proxy is a written document signed by an owner appointing an eligible person to act in their place at the meeting. Proxies are not absentee ballots and the proxy is the person who has registered in the proper form.

There are pros and cons to proxies and how they are managed or permitted, but the alternative would only mean far fewer owners would have a voice in their strata business. For the vast number of strata corporations, proxies are well managed and honestly represented.

A simple solution to identifying who represents proxies is to include the registration roster in the annual minutes. The names of the persons who registered in person or by proxy and who represented the proxies may be included in the minutes of the meeting. In this method, you avoid including any personal information that may disclose directions for a secret ballot or other instructions.

By attending the meeting, owners and proxy holders consent to their names being included in the minutes. This provides disclosure to owners who have issued proxies and allows them to challenge the proceedings, the voting results and the individuals who have fraudulently represented their lots.

An error in registration does not automatically result in the reversal of the decisions at the meeting; however, if there are reasons to believe the meeting did result in a number of voting irregularities, the best solution may be another meeting called to ratify the resolutions and take steps to prevent future abuses.

If there are voting irregularities at meetings, any owner may make an application to the Civil Resolution Tribunal or court to challenge the results and seek an order to reconvene the meeting or nullify the resolutions.

One of the common misunderstandings about the registration process is how votes are issued and who certifies proxies. Any person may act as a clerk at the registration desk. They may register owners and proxy holders and issue voting cards; however, there is no provision within the Strata Property Act or the standard bylaws that delegates authority for the clerk to certify the proxies as valid.

© 2017 Postmedia Network Inc.

Plumber may prevent leaks

Tony Gioventu
The Province

Dear Tony:

Our highrise has had a number of waters leaks over the past year relating to toilets, showers, shower enclosures and fridge water lines. 

Our strata council has issued notice to owners that a plumber will be on site in two weeks to inspect our strata lots and will be making recommendations for maintenance to strata lots to ensure we don’t have any future problems. 

As a result of the leaks, our insurance deductible has increased to $50,000 and several owners are disputing the strata claims to pay the insurance deductible. We have a bylaw that requires an owner to pay for the deductible if they have been negligent or contributed in any way to the claim. 

I am concerned about our bylaw after the plumbing inspections. Will the strata be able to hold us to a higher level of liability because of the report? 

Kyle D., Burnaby

Dear Kyle:

The Strata Property Act sets a reasonable condition of liability as responsibility. If the owner is responsible for the claim, the strata corporation may commence a claim in the courts, arbitration or through the Civil Resolution Tribunal to obtain a decision for the amount of the claim. 

The term “responsibility” has been interpreted by the courts as a basic test of those conditions within the strata lot that are the obligation of the strata lot owner to maintain, repair or within their direct control.

If my dishwasher fails and the pump causes a flood, or my shower enclosure is not maintained, causing a leak into other units, or I plug my toilet and neglected to respond and left the unit while it was running, or my newly installed fridge with water lines and an ice maker fails and floods, you can rely on the general rule of thumb that I am responsible and the strata has a reasonable likelihood of recovering deductible cost. 

The real complication arises when a strata corporation adopts a standard of negligence. If your strata has adopted this bylaw, it will require the strata corporation prove the owner was negligent, not simply responsible.

While the inspections may identify risks or deficiencies, what happens to those risks that are not identified? Negligence is a much higher test that imposes a much higher standard of failure or action by the owner. 

Your email is perfect timing as a decision from the Civil Resolution Tribunal posted last week goes directly to the issue of negligence. In the decision the Owners, Strata Plan BCS 1589 v. Nacht et al, 2017 BCCRT 88, the adjudicator found as a result of the strata bylaws, that “proof of negligence on the part of the owners is required for the strata to recover its insurance deductible from the owners.”

 If an owner does not act with a reasonable standard of care for the maintenance and repair of their strata lot and the components within their strata lot, the standard set by the act is more than sufficient for the strata corporation to recover a deductible. A bylaw that imposes a higher standard will only result in all of the owners incurring the cost of the deductible amount for claims. 

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