Tony Gioventu
The Province

Dear Tony: We came home from a weekend trip to discover an awful mess in our condo. Somewhere in the strata drainage system, there was a blockage and our sink backed up, damaging our new kitchen renovation and hardwood floors.

The strata insurance provider was quick to respond and restoration was on the scene immediately, but we have just been informed by our homeowner insurance provider that our policy did not include sewer backup for betterments.

We have become so accustomed to banking, communication and purchasing online, we never gave it a second thought when we renewed our policy for this year. We reviewed the policy approval and never declined any such coverage, we just assumed this was part of every policy. As it turns out, not. Our cost for the kitchen and hardwood floors is likely around $20,000. Do we have any way of recovering this amount?

John Wilson

Dear John: It is unlikely that you are left with many options to claim these costs against anyone. When we purchase insurance online and click the acceptance box, we are not only accepting the terms and conditions of the contract, but within the online approval sequence, there will be some sort of declaration that you are aware and agree to the terms and conditions of the contract and any exemptions. 

Corporations prefer online services because it reduces overhead costs, but brokers play an important role in interpreting your policy and ensuring you have the best coverage possible.  

There is a remote possibility you could seek a claim against your strata corporation for the cost, but you would be required to prove some sort of negligence and show a history of plumbing failures that have not been attended. That doesn’t necessarily make the strata responsible for your loss because your insurance did not cover the damages. 

In any case, investigate all options closely and consult with your lawyer.

Marjorie Andersen at Hub International advises condo owners to speak directly with a broker and find out what may be exempt from your policy. According to Marjorie: “Renewing a policy online can be a risk because you are not speaking with a broker who may be asking you questions about your homeowner policy that could significantly impact your insurance. You could find that you are simply checking boxes to accept or decline coverage for certain perils without knowing the details or the implications.

“There are many nuances in strata and unit owner policies alike and every policy is different. Sewer backup coverage is not standard on all homeowner/landlord condo policies and as a result, you may not be covered unless you have specifically requested the additional coverage. And if sewer backup is included on your policy, the coverage may be limited and subject to a high deductible.

“Insurance buyers have the right to ask the following questions and get a reliable answer: Are there any exemptions/exclusions on this policy? Can I purchase insurance to cover those exemptions? What is the additional cost?”  

In the insurance industry, as consumers we don’t know what we don’t know. That is why we use reliable and informed brokers.

© 2017 Postmedia Network Inc

Health club access in dispute

Tony Gioventu
The Province

Dear Tony: Our property is made up of a strata corporation with a highrise, townhouses and commercial property. We have a health club operated by the strata corporation, but only the residential owners have access to the club.

As a commercial strata lot owner, we feel the clubhouse expenses are unfair because the operation is paid as a common expense from our operating budget, but we don’t have access.  We either want to be exempt from the cost or share access to the facility.

The residential owners argue it’s the way the plan was set up by the developer and we don’t have access because the facilities are limited common property allocated only to the residential units.  How do we force this issue into a fair solution? 

Douglas M.

Dear Douglas: There is a regulation of the Strata Property Act that requires a strata corporation to allocate operating expenses that benefit only limited common property just to those strata lots that are identified.

In the absence of either a bylaw that allocates operating expenses by type or the creation of sections for exclusive operating expenses, the regulation sets the condition.

This is not a discretionary option. If the area is designated as limited common property — or LCP — and there is an operating expense that benefits only that limited common property, then a strata lot or multiple strata lots designated to that area would pay for those expenses. A good example of this is swimming pools that are limited common property designated for the use of only a specific group of strata lots. The annual operating expenses for the pool, such as maintenance, heating, licensing and service costs, will be paid for by that specific group of strata lots. 

In your situation, the residential strata lots have been designated as the LCP owners for the health club. While you do not have any bylaws that relate to type or sections, the regulation requires the operating expenses of the pool to be allocated to the identified strata lots, which are the residential units. This would be a separate column or line item on your annual budget, and only the identified residential units will pay the annual cost for the pool. 

A note of caution here: this only applies to annual operating costs, it does apply to contingency expense allocations or major repairs such as the replacement of boilers, the structure of the building, roofing, or other repairs that occur less than once a year. Everyone still pays for those costs. 

Don’t try to download operating costs or general maintenance costs on to the LCP-designated strata lots unless it is an expense that only benefits the LCP for those units. If your strata corporation is not prepared to comply with the act, this is a type of dispute that may be adjudicated under the Civil Resolution Tribunal.  Go to civilresolutionbc.ca to start your claim.      

© 2017 Postmedia Network Inc.

Council president can?t make a deal on pets which contravenes bylaws

Tony Gioventu
The Province

Dear Tony: We noticed in the financial report at our AGM last month that our strata is owed almost $13,000 in unpaid strata fines.

Our strata does not permit dogs unless they are required for special circumstances. A new owner moved in July 2016 and brought two dogs. Her comment was no worries, she’d pay the fines to keep the dogs. The president of the council agreed as the amount would offset the increase in strata fees each year. 

The strata has been imposing $200 a week for each dog, so $1,600 a month. The owner has not paid, as she was quoted in an email a flat rate of $200 per month by the council president. 

It’s pretty clear the bylaw is not being enforced and unlikely the strata is not going to collect the claimed amount of money. How do we stop this crazy cycle? Our owners are very unhappy about the “deal”; we want to remove the dogs, which are constantly barking, and deal with our president, who is acting like a cowboy.

How do we fix this?

RJ and the council members

Dear RJ: It is not only a bad idea for a council to make a deal on bylaws, owners cannot buy their way out of complying with bylaws.

Bylaws must be enforced against all owners and tenants fairly. Under 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.”

If your strata corporation permits an owner, for a fee, to violate the bylaws, the owner is still in violation of the bylaws, and the strata still has a duty to take reasonable steps to enforce the bylaws.  Court decisions have provided some valuable insight into the obligations of a strata corporation, and with the introduction of the Civil Resolution Tribunal, strata corporations no longer need a three-quarters vote of the owners at a general meeting to obtain an order to make owners, tenants and occupants comply with the bylaws. A strata council can now seek a decision through the tribunal that may order an owner, tenant or occupant to do something, stop doing something, or to pay for something.

If your strata council doesn’t exercise its obligations and duties, any owner or tenant may apply to the tribunal to obtain a decision ordering the strata corporation to enforce the bylaws. So if the strata does not enforce its bylaws, the owners and tenants can take action to make them enforce them.

In the 1999 decision Kok vs Strata Plan LMS463, the court noted: “The imposition of fines does not serve to correct, remedy or cure violations of the bylaws, but rather their purpose is to discourage violations of the bylaws.” In a later decision with the same strata corporation, the court reduced fines from $28,754 to $2,500. 

The down side of long-term fines without the next step of enforcement is the likelihood the courts or the tribunal may discharge excessive fines and you are back to square one.

The Standard Bylaws of the Act retained by most strata corporations, including yours, do not permit the enforcement of bylaws to be delegated to any single party. The council must determine whether a person has contravened a bylaw or rule, whether they should be fined and the amount of the fine, and whether a person should be denied access to a recreation facility. 

Convene a council meeting and have the council vote on what happens next. For more information on starting a claim go to www.civilresolutionbc.ca

© 2017 Postmedia Network Inc.

Read your bylaws, as rules for strata may vary by situation

Tony Gioventu
The Vancouver Sun

Dear Tony:

At our first council meeting since the AGM, we spent two hours arguing about how strata councils make decisions at council meetings.

We think the problem is the way the act was written, as it has two separate interpretations for majority votes. The definitions define a majority vote as a majority of those votes cast by eligible voters who are present or by proxy at the time the vote is taken and who have not abstained. The standard bylaw defines a majority vote as a majority of council members present at the meeting.  These are not the same definitions and treat abstentions differently.

Could you possibly clear this up before we have another round of council debates with nothing accomplished? 

Martin B., Courtenay

Dear Martin:

You are correct that there are two different definitions and there could be even more if your strata amended its bylaws to different definitions. 

We have to start with the Strata Property Act, which first states that at an annual or special general meeting, matters are decided by a majority vote unless a different voting threshold is required or permitted by the act or regulations.

This definition applies to general meetings, which is the definition in section 1 of the act. It ensures owners may be represented in person or by proxy, and compels those who are eligible voters at the meeting to vote in favour or oppose a resolution or motion if they wish to have their vote matter. The definition also precludes any type of absentee or advance balloting at general meetings, as it requires the vote calculation at the time the vote is taken by eligible voters present at the meeting. 

A majority vote for council is different for a variety of reasons. It requires that council members must be present, which includes electronic attendance if the council agrees. Council members are not permitted to assign proxies as they are not representing their strata lot; as individuals, they are elected to a position on council and, of course, if a council member abstains, their vote is technically a no, as the vote is based on the number of council members present.

For example, under the standard bylaw, if six council members attend, at least four will have to vote in favour of the motion for it to pass, and this applies to every decision of council. The definition also helps resolve the issue of council members who are required to leave a meeting in the event of a conflict of interest. They are no longer present at the meeting, which should be recorded in the minutes, and the majority is reduced by that number. 

This is also the reason why the president or vice-president is given a tie-breaking vote. All council members vote on a motion, and if the result is a tie, the president or vice-president has an additional vote to break the tie. That would also be recorded in the minutes.

Before strata councils make any assumptions, it is essential that you read your bylaws first.

Want to learn more about winding up your strata?  Join us for a public forum at the Vancouver Public Library on Sunday April 30 at 3 p.m. In partnership with a legal team from Clark Wilson, we will take you step by step through the winding up process. Call 1-877-353-2462 for complimentary advance registration or email Donna at [email protected]

© 2017 Postmedia Network Inc.

List property publicly to get best price, but be ready for a court fight

Tony Gioventu
The Province

Dear Tony:

Our strata is considering the option of selling. We have been approached by a developer who has offered us all 20 per cent above our current assessed values. 

Because our strata is only 32 units, it has been suggested that we each negotiate directly with the developer, but what happens if only 10 owners sell? How does an 80-per-cent vote apply if one owner controls more than 20 per cent of the votes and tries to block the sale unless we agree to the conditions they set out in the sale? 

Our owners are trying to look at the best option to consider, and we still have eight owners who are very much opposed to a sale, so the chances of winding up are unlikely. Several owners are suspicious because the developer is dealing directly with one council member and the remaining owners have not been a part of the discussions. 

Our real question relates to the best method of a sale. How do we get the best deal that is fair and treats everyone fairly?

JTR

Dear JTR:

The concept you are looking for is transparency. Your strata corporation is a collective of owners considering whether to wind up your strata corporation and sell it to a buyer. Other than the number of units and technical requirements of the legislation, think of this as a routine real estate sale. How do you get the best price? You list your home with an agent, go to market, review offers, counter offer and negotiate the terms and conditions of the deal. The best results come from the same process for a large-scale windup. 

The strata corporation retains a commercial broker, acting in their sole interest who markets the property on a worldwide scale, and depending on your location and development potential in the next three to 10 years, will bring you a number of offers.

Your strata council act as your representative and may counter offer to the highest bidders and ultimately negotiate an offer it can bring to the owners to consider. 

I would strongly recommend you retain a lawyer who has experience with the winding-up process to review your brokerage agreement and terms and conditions of a sale before you sign. The technical and legal requirements of the Strata Property Act, and the requirements for resolutions and accurate governance at the meeting where you vote by 80 per cent are daunting and mistakes are easily made. If you pass an 80-per-cent vote, but less than 100 per cent of the owners are in favour, a court application is required to approve the sale of the strata and winding up of the strata corporation.  

If one person is trying to convince your owners to negotiate with only one developer, the only logical conclusion for resisting open competition for your property is that they likely have a side deal that no one else is aware of.

The change in the vote to 80 per cent is less than a year old and a number of conflicts around undisclosed settlements with individual owners have already arisen. Avoid conflicts and undisclosed settlements, list your property and go public. 

© 2017 Postmedia Network Inc.

Extensive system installed without notifying strata council

Tony Gioventu
The Province

Dear Tony:

Our strata council has used money from our annual budget that was left over in our maintenance fund to purchase and install video cameras.  Without any notice to the owners, we suddenly have cameras in our elevators, lobbies, parking areas and our exercise room.  The council president and treasurer decided without telling the owners.  Two council members have resigned, and owners are signing a petition for a special general meeting to figure out what to do next. We hear the mess has cost our strata almost $25,000, but no one will release any information on the costs.  Even if owners have a meeting to raise this issue, what can we do about it?

Bob C

Dear Bob: 

 In addition to the restrictions imposed on use of operating funds, the purchase of assets over $1,000 and the introduction of surveillance in your building all require the approval of the owners at an annual or special general meeting.

When the owners approve the annual budget, they are authorizing the strata corporation to collect the funds through strata fees and pay expenses as set out by the budget details.  If there are surplus funds at the end of the fiscal year, the strata corporation has four choices, three of which are by majority vote. The strata can vote to retain the funds in the operating account as an accumulated surplus, carry the surplus to the next year revenue to offset strata fees, or deposit the amount into the contingency fund. The fourth option is to approve the funds on a project that is approved by 3 / 4 vote and remember that strata corporations are required to obtain the approval of the owners at a general meeting by 3 / 4 vote for the acquisition of assets that exceeds $1,000.

Before a strata corporation is permitted to conduct surveillance, it will also be required to adopt bylaws that permit the installation and use of cameras and the collection and management of the recorded information. The surveillance of common areas in a strata corporation falls under the Personal Information Protection Act in B.C. The Office of the Information and Privacy Commissioner has published a guideline for strata corporations that indicates that the approval of the strata corporation is required for the installation of such a system, as is the adoption of a privacy policy that permits surveillance and the management of the information.  Allyson Baker, a lawyer with Clark Wilson LLP in Vancouver advises strata corporations to adopt and publish privacy and surveillance bylaws before you approve the installation of cameras or fobs that collect personal information.  “A strata corporation needs to understand the collection of information is much more than simply a recorded video.  Your bylaw and privacy bylaw will have to define where the cameras are located, how and when the information is collected, who has access to use the information, what the information will be used for, and how it is stored and eventually disposed of.”

The owners may choose to authorize the installation of the cameras, or they may oppose and require the removal of the cameras. Ultimately, the dispute may result in a claim through the Civil Resolution Tribunal against the president and treasurer for the unauthorized use of funds and purchase of the assets.

Always review your strata bylaws as they may have been amended to authorize higher amounts for unapproved expenditures or the purchase of assets.

© 2017 Postmedia Network Inc.

Soaring demand for property puts greater pressure on strata to sell

Tony Gioventu
The Province

Dear Tony:

Our strata corporation is considering calling for an 80 per cent vote to sell our property. The council brought a proposal from a developer to the owners four months ago with a recommendation that we consider selling. The reasons were that the offer would give us each 40 per cent above our current assessed values and we would avoid a special levy of $15,000 a unit for repairs coming up in 2019. 

We have two issues that owners require more information before we consider the options.  Since the offer, our assessments have been published in January that have increased our values by 20 per cent, so suddenly the 40 per cent offer above value has been cut in half. 

Is the strata allowed to renegotiate the deal with the developer? Is there a good reason why our strata is only negotiating with one buyer?

Dan L

Dear Dan: 

Since the change in the Strata Property Act in 2016, the vote to wind up a strata corporation was reduced from a unanimous vote (100 per cent of the owners) to an 80-per-cent vote (80 per cent of the votes on the schedule of voting rights). 

The reduction in the voting threshold has made it marginally easier for strata corporations to consider an offer and the increase in demand for property to develop new projects has significantly increased the pressure on strata corporations to consider selling their strata.

What consumers want is the best price for the least complicated terms in the shortest period possible. To ensure your strata attracts the highest price, it is in your best interest to retain an experienced commercial broker who can establish the best profile for your property and then go to the world market and bring offers to your strata. Once your strata has the authority to market the property — normally a vote of the owners at a general meeting instructing council to retain a commercial broker and  proceed with marketing — it takes up to 90 days before for the offers to be considered by council.

Once your council has short listed a number of offers, like any conventional transaction, it has the ability to counter back and negotiate the price and the terms and conditions of the offer. At this point, the council will call a meeting of the owners to provide the information and get instruction from the owners on what to do next.

The owners may reject all the offers, in which case the sale option may end, or they may instruct the council to direct their lawyer to set up the special general meeting for the owners to pass an 80-per-cent vote to wind up the strata, and the resolutions for the sale, the Supreme Court application to approve the sale, the appointment of a liquidator to receive the funds, wind up the strata corporation and distribute the funds to the owners. 

The time period for the process is significant. As a result, there may be inflationary pressure on property values and what seemed like a good deal may be suddenly marginal.  If the proposed deal fails, nothing prevents the strata from renegotiating a new deal for the owners to consider. 

There are many variables that affect value. Location, current zoning, future zoning, community plans, demand, market conditions, and negotiations will impact every potential deal.

Until the strata goes to market for an open-bidding process, you have no way of knowing what your development potential may be. There is no way to verify maximum value in negotiating with only one investor. To get the best price and terms, consider using a commercial broker to conduct a broad marketing process and experienced legal services to act as your negotiator for the terms and conditions. 

© 2017 Postmedia Network Inc.

Perceived conflict does not render owner?s representative ineligible to vote

Tony Gioventu
The Province

Dear Tony:

I was the developer on a recent project and sold the 18 residential units and retained two commercial units as our head office.

We gave notice of the first annual meeting as soon as 50 per cent of the units were sold and have fully complied with the act. In addition to the approval of the annual budget, the owners requested a number of bylaws be added to the first AGM to deal with parking, storage lockers and barbecues on balconies. As the developer, we agree to add the items to work cooperatively with the strata.

At the first AGM last week, an owner who has been bullying everyone refused to allow our representative exercise the vote for our two commercial strata lots. She claimed that as the developer, we were in a conflict of interest because we still owned units in the strata. This has occurred before and we understand this is not valid, but would appreciate a column to address the issue of conflict of interest at an annual or special general meeting that may affect voting rights.  

CWR

Dear CWR:

Denying someone a voting right as a proxy holder for any reason that is not permitted by the Strata Property Act is a serious matter for the strata corporation.

There is no such provision in the act about conflict of interest. The act deems a person may be ineligible to vote for a strata lot for two reasons.

It applies a court action specifically against an identified strata lot where that strata lot is not permitted to attend those portions of a meeting where the lawsuit is discussed and voted on; and if a strata has a bylaw that establishes voting eligibility, if the strata is entitled to file a lien against a strata lot. These applications may only apply to a majority vote or 75-per-cent vote. 

Strata councils or managers who are administering the registration desk often believe they have the authority to determine if a proxy is valid or not and whether a person is an eligible voter.  They do not. The chairperson, whether as president or vice-president of council or elected by the eligible voters present, is the only person with the authority to deem whether a strata lot is an eligible voter and whether a proxy meets the requirements of the act. 

Proxies must be in writing and signed by the person (owner) appointing the proxy. The owner may impose other conditions or directions on the proxy but the strata cannot.  If the proxy or voter is valid because neither of the two earlier conditions apply , the proxy is is exercised in the same manner as if the owner was standing there. 

It may be helpful to know that the bylaws of your strata will not be enforceable because both residential and non-residential strata lots must separately vote by 75 per cent vote to approve new bylaws for a strata corporation. By denying your proxies and voting rights, not only were your property rights denied, but the strata disqualified its ability to adopt and register new bylaws. 

Any owner may challenge the validity of proxy status or voting eligibility by applying to the Civil Resolution Tribunal. The tribunal has the ability to order a strata corporation to do or stop doing something. That could include a requirement for the strata to call new meeting to address the agenda items and respect your voting rights. 

© 2017 Postmedia Network Inc.

Owners need permission for changes that affect other lots

Tony Gioventu
The Province

Dear Tony:

We live in a 26-unit townhouse complex in the Tri Cities. Unlike conventional side-by-side townhouses, we have one of top of the other. Thirteen enter their units from the lower road to a garage, and 13 through the upper road into a garage.

One owner on the lower level has requested permission for a makeover of their unit that would include the removal of the interior walls, creating a large open-concept area. They claim it would have no impact on any other strata lot.

The neighbours on both sides and above have opposed the request, citing concerns the changes in the structure could significantly impact their units. The owner has threatened court action if we don’t grant her permission, as our bylaws say we cannot unreasonably withhold our approval.

What does the term unreasonable mean?  There is nothing in our bylaws or the act that provides a definition and council is concerned that whatever decision we make, we will be exposed to a possible court action from the neighbours or the owner requesting the alterations.

JR Winston

Dear JR:

The Schedule of Standard Bylaws of the Strata Property Act requires an owner to obtain the written approval of the strata before they alter a strata lot that involves any of the following: the structure of the building, the exterior of the building, chimneys, stairs, balconies or other things attached to the exterior of the building, doors, windows or skylights on the exterior of the building or front on to common property, fences, railings or similar structures that enclose a patio, balcony or yard, common property located within the boundaries of a strata lot and, most important, those parts of a strata lot that the strata must insure under section 149 of the act.

The parts of the strata lot the strata must insure include all the original fixtures installed by the owner developer, such as the original flooring, kitchen and bathroom cabinetry and plumbing fixtures.

What often seems like a simple alteration can easily turn into a nightmare if the strata does not enforce its bylaws and impose reasonable conditions on alterations. (The bylaw says: “As a condition of its approval.”)

Before granting approval, the strata may require independent engineering reports on the proposed alterations, a detailed report of the proposed construction and any alterations, and any other conditions such as environmental abatement in the event any asbestos is discovered. As a condition of granting permission, the strata corporation may also require the owner pay any of the costs associated with the request, including any professional consulting costs or the cost of any legal agreements, building permits, or costs associated with the construction, demolition and disposal.

A good question to test whether the alteration is unreasonable it whether it will have a negative impact on other strata lots or an alteration that may significantly change the use or appearance of common property or a common asset, which may require a special general meeting and a three-quarters vote of the owners for approval.

Part of the spring CHOA seminars addresses alterations and hearings. For more information, go to ww.choa.bc.ca to register or search “alteration agreement” guide 200-001.

© 2017 Postmedia Network Inc.

It?s OK if multiple financial ideas are presented

Tony Gioventu
The Province

Dear Tony:

Our strata sent out notice of the annual general meeting in February with three separate budgets. One has no increases in fees and less than $10 a door going into our contingency each month; the second has a modest five-per-cent increase in operations; and the third, a 25-per-cent increase that puts almost $100 a month in the contingency.

The footnote says we must vote on one of the budgets by majority vote as no amendments are permitted at the meeting. What happens if we don’t approve any of the budgets?

Rhonda FR, Tsawwassen

Dear Rhonda:

There are many myths on the approval and amendment of annual budgets.

However, simply put, the proposed annual budget issued with the notice may be amended by majority vote at the annual general meeting before it is approved, and there is no limit to the amount or number of amendments.

The only proviso is that those items in the annual budget occur once a year or more frequently, and you meet the minimum contingency contribution of 10 per cent of your annual operating budget if your balance has fallen 25 per cent below the amount of your annual operating budget.

There is nothing that prohibits multiple budgets as examples so the owners understand the impact on their strata fees.

You will be required to choose one of those budgets to vote on, and it could be amended before it is approved by majority. But if it is defeated, your strata corporation will have defeated the annual budget and be required to convene a special general meeting within 30 days to present a new proposed budget to the owners.

My experience of multiple budgets or resolutions for special levies is always the same.

The strata owners become divided and nothing is approved.

The proposed budget is an estimate of known and projected expenses for the coming fiscal year. The amount that is contributed to the contingency reserve fund is approved as part of the majority vote for the annual budget and reflects upcoming expenses, depreciation planning recommendations, possible emergencies such as insurance deductibles or an unpredictable snowy winter, and may vary year to year.

Everyone agrees that 10 per cent of the annual budget is never enough to plan for the future.

Look closely at your depreciation report estimates. The more you can plan for future costs, the less likely you are to need special levies.

Special levies are simply deferred strata fees. According to Stephen Hamilton, a Vancouver strata lawyer: “While special levies may appear attractive, they often result in failures to pay the levy and court actions to order the sale of a strata lot. Everyone in the strata pays the price. While the strata will still be able to collect their special levy, the court and legal costs are not always fully covered and the strata can be left picking up the remaining costs that can easily reach $5000 to $7,500.”

Compound that by five or 10 units and it is a significant expense the remainder of the owners end up paying.

It is easier for owners to plan monthly contributions over the long term than it is to be faced with a $10,000 special levy they cannot afford.

If you annually look at the major projects in the next 10 years of your strata, you can start a financial planning process that will be easy for your owners to understand.

© 2017 Postmedia Network Inc.