New ownership leaves repairs in limbo

Tony Gioventu
The Province

Dear Tony:

Our strata corporation is 164 units, mixed-use highrise, townhouse and commercial. Over the past 15 years, a number of strata lots of all three types have made some significant changes to the use of their property. 

Our strata took a pretty casual approach to managing the alterations, with the assumption that each owner would be responsible for their own repairs. Now we have issues with changes of windows and balcony enclosures that are causing damage to other strata lots. 

Several units have sold multiple times and the new owners are refusing to perform the maintenance or pay for the damages. In many circumstances, we had alteration agreements drawn up, but with multiple changes of management companies over the years, none of these records have been retained, so subsequent owners knew nothing of the alterations. 

Can we impose new agreements on the current owners through our bylaws, or are we stuck with the repair costs? 

Natalia W.   

Dear Natalia:

The Strata Property Act requires strata corporations to disclose to buyers who request a Form B Information certificate whether there are any agreements to which an owner has taken responsibility for the cost of requirements of maintenance and repair relating to an alteration. 

There are several problems with the disclosure process if the agreements were not drawn up correctly or have not been disclosed in every circumstance. Strata corporations are notorious for inconsistent record-keeping. In addition to multiple changes of management structures, where documents are frequently lost or destroyed, council members with oversight for alterations associated with other council members frequently ignore the obligation of an alteration agreement or the requirement to retain and disclose the documents to subsequent buyers. 

In addition, alteration agreements are often incomplete, randomly applied, or may vary greatly depending on the experience of the current strata council. All this means it is unlikely and extremely difficult to impose a retroactive agreement or condition on a buyer who was unaware of the obligations. 

Bylaws may remind people of their obligation to maintain and repair their strata lots and their obligations on limited common property, but a bylaw is not permitted that makes an owner responsible for the maintenance and repair of common property.

Check your registered strata plan to determine the allocation of the property. In your case, all balconies and decks are common property, so the obligation to repair and maintain common property automatically defaults to the strata corporation.

If the strata corporation has maintained alteration agreements and properly disclosed those agreements to subsequent purchasers, you may be able to recover the costs of the repairs and maintenance of the balcony or deck associated with those agreements. It may be in the best interest for the strata corporation to address all the decks and balconies as one project of repairs to ensure there is no further damage to the building. This often requires the removal of balcony enclosures to repair the areas attached to the building exterior. If any owner wishes to have a new enclosure reinstalled, or a deck enclosure reinstalled, the strata corporation may consider these as alteration applications under your bylaws, and if approved, council may set a series of conditions such as to who pays for future maintenance and repair costs, building permit requirements, engineering services and the cost for legal services to set up the agreement. 

© 2017 Postmedia Network Inc

A world-first online dispute-resolution forum for BC strata owners is revolutionary but will cause certain headaches

Oscar Miklos Haddock & Company
REW

In July 2016, the long-awaited Civil Resolution Tribunal (CRT) opened its doors to the first wave of strata disputes. The CRT’s goals are ambitious, to say the least. It is the world’s first online dispute resolution tribunal of its kind and it aims to increase access to justice for thousands of British Columbians. Given the problems plaguing our province’s justice system, this goal is commendable without a doubt.

Notably, this same platform, while starting with strata disputes, will soon expand its jurisdiction to take over a large chunk of disputes currently resolved by Small Claims Courts. This will have a significant impact on British Columbia’s justice system as there are already talks to increase the monetary jurisdiction of Small Claims Courts from the current $25,000.00 limit such that these courts would then take over some larger disputes currently heard by the Supreme Court.  

Improved Access to Justice

While my goal is not to provide an exhaustive assessment of every facet of the CRT, I have had enough experience in resolving strata disputes in the pre-CRT era to acknowledge the fundamental change that the CRT has brought about. In short, prior to the CRT’s existence, strata home owners had virtually no cost-effective or easily-accessible options to resolve their disputes with their strata corporations. As such, many of these disputes simply remained unresolved. So, as far as increasing access to justice is concerned, the CRT gets my resounding approval.

Limits of Self-Representation

Like any system, the CRT is imperfect and at least one design flaw was obvious from the very beginning to perhaps all but those who despise the role of the legal profession in helping resolve disputes. The Civil Resolution Tribunal Act and the CRT’s Rules provide a general mandatory self-representation rule for parties. In other words, unless one of a narrow list of exceptions applies (ex. a party is a minor or of impaired capacity), parties are generally required to represent themselves before the CRT.

This self-representation rule has the potential to cause headaches for both strata owners and strata council members. Despite having legitimate causes of action, home owners are often ill-equipped to determine the adequacy of evidence, to make legal arguments or to understand the nuances of the Strata Property Act. The same applies for strata council members who volunteer their time to participate in the governance of their strata corporation. I cannot imagine many of these council members would have run for council had they known they were going to be asked to represent their strata corporation before a dispute resolution tribunal.

In all fairness, I understand that involving lawyers can sometimes serve to complicate matters and actually delay the resolution of a dispute. However, it is important to keep in mind that this unfortunate outcome occurs in only a small minority of matters. More often than not, adjudicators of all stripes are thrilledwhen at least one lawyer is involved in the dispute resolution process as it tends to focus the process on legal issues instead of getting side-tracked by emotional aspects of housing disputes. By removing emotion, lawyers can often assist parties in settling a dispute earlier than otherwise possible.

I gather that the logic behind the self-representation rule was to ensure that parties actively involve themselves in the dispute-resolution process rather than letting their legal representatives do all the heavy lifting for them. Without going any further, this goal can be achieved by simply mandating that parties remain actively involved throughout the process regardless of whether they are represented. In fact, it appears this has already been accomplished with a procedural rule that states a party who is represented “must be present, or otherwise fully informed and providing direct input, during facilitation, unless the facilitator excuses the party from doing so.”

Potential for Frivolous or Unfounded Claims

Another important consideration is that access to justice should have its limits (yes, you read that right). A fundamental problem occurs when a self-represented party (or otherwise a party that does not have to undertake any real cost-benefit analysis before launching legal action) decides to bring a frivolous, vexatious or unfounded complaint against another party. The end result is a waste of the other party’s and the justice system’s resources- in terms of both time and money.

Addressing Concerns

In response to the first of these two issues, I suspect the founders of the CRT will point out that the CRT’s rules contain a broad provision allowing its tribunal members to grant requests for representation when it is “in the interest of justice and fairness”. While the CRT’s founders have indicated that this rule will be applied liberally, it remains to be seen what percentage of requests for representation will actually be approved. In any event, this roadblock may dissuade some home owners from applying to the CRT in the first place given the uncertainty as to whether their request for legal representation will be approved.

Finally, in response to the second issue, the first phase of the CRT dispute resolution process features the “Solutions Explorer” – a web-based self-help tool for home owners to assess the merits of their dispute before undertaking further action. This tool can clearly benefit those who would otherwise not be able to afford a consultation with a strata lawyer. However, given the ability to simply click “next” and to breeze through the process, it is unlikely this web application will act as a sufficient deterrent for a party with a frivolous or unfounded case and an axe to grind.

For additional information on the Civil Resolution Tribunal and other strata property matters, visit HousingGuide.ca and StrataLaw.ca, both free online references for home owners in British Columbia. Finally, always remember that this article provides general information, not legal advice specific to your situation. If you have a legal problem, speak with a strata lawyer.

© 2016 Real Estate Weekly

Understanding rental rules

Tony Gioventu
The Province

Dear Tony:

We purchased our condo in 2013 with the understanding that our strata corporation could not impose any rental bylaws.

We started using our condo as an Airbnb in 2015 and in the summer of 2016 our strata corporation passed a bylaw that prohibits the business use of strata lots for Airbnb, VRBO or any other type of short-term rentals. To date, it has imposed over $5,400 in fines against our strata lot and is trying to get us to pay $1,700 for damage to the parking gate it claims was caused by one of our guests.  

Have we misunderstood the rental exemption? We purchased the strata lot because of the exemption and were assured by the developer that the strata could not prevent our use of the condo for any types of rentals.  How much control do strata councils have over our property rights? We wouldn’t have purchased the unit had we known.

Amir D.

Dear Amir:

 In 2010, the Strata Property Act changed to include an exemption for strata lot owners under a rental disclosure statement. The exemption is granted to any of the strata lots that are listed on the form for the period of time indicated, at which time the exemption expires. In your case, your exemption extends until June 1, 2013; however, Airbnb and VRBO are not rentals as defined under the act or the Residential Tenancy Act, but are business activities such as short-term hotel-type use.

In addition to the strata bylaws, there may also be zoning issues. The specified use for your property may not permit short-term hotel-type accommodations. While the type of bylaw that prohibits or limits short-term business-type use in strata corporations is yet unchallenged, it is easy to challenge their enforceability by filing a complaint through the Civil Resolution Tribunal.

Owners who are facing penalties and costs related to bylaw infractions may start a complaint through the CRT, and the CRT has the authority to determine if the fines are valid, whether they were properly imposed or have been imposed fairly, whether the bylaw was passed and filed properly and if the bylaw is enforceable. The cost for a CRT application is under $300 and a straightforward online process.  

Owners who are using their accommodations for Airbnb need to understand they will be responsible for any damages caused by their guests, and subject to any penalties that may also arise due to noise, smoking or matters that relate to nuisance. You may also be subject to penalties for parking violations or security violations and costs when a guest loses keys or fobs.  

If you are renting your strata lot as a long-term tenancy, be aware that your potential tenants may be subletting or using your condo for an Airbnb. As the landlord/property owner, you will still be liable for any of the related penalties and costs.  For more information on the Civil Resolution Tribunal go to http://www.civilresolutionbc.ca

© 2017 Postmedia Network Inc.

Retain a commercial brokerage when considering liquidation

Tony Gioventu
The Province

Dear Tony:

Our strata owners have been enticed by an agent to consider selling our entire property and liquidating. At a recent information meeting, the agent brought a proposal from a developer to purchase our entire strata property for about 40 per cent above the current market value of sales per unit.

A small group of owners has started asking questions and challenging who the agent is working for and if we are getting the best offer. For example, how could an agent bring an offer from a developer and then ask us to sign an agreement for sale, where we are paying the agent three per cent of the gross sale? The amount in our situation would be $840,000. 

It doesn’t seem ethical to us that the agent is representing both parties. Some owners have suggested we consider other offers and the agent has advised his client will cancel his interest if we shop around. How do we ensure the owners are getting a fair price? 

Vince M., Vancouver

Dear Vince:

Your owners don’t want a fair price; your owners deserve the best possible price for your property, along with the best terms and conditions for the sale, and the most competitive rates of brokerage fees and administrative costs. 

The easiest step for any strata corporation that is considering selling is retaining a commercial brokerage to market your property to its best profile and attract as many investors as possible to compete for the price. Don’t expect ridiculous prices as greed tends to cloud everyone’s perspective, but you should be expecting the best price the market is prepared to pay.

The sale price will vary greatly depending on zoning, current land use, future planned zoning changes, increased zoning in community plans, nearby amenities such as transit, waterfront, parks and shopping centres, and the overall potential for future development. The amounts that are offered may also be affected by the number of competitors bidding on the property.  

Your strata council requires the authority of the owners to sign a brokerage agreement and proceed with a marketing program. That can be reached by a simple majority vote of the owners, where the brokerage agreement exposes the strata to the obligation of sale, only if the strata corporation successfully negotiates terms and conditions of an agreement for sale that results in a successful 80-per-cent vote.

For a small investment on legal services to review the brokerage agreement before you sign, the strata has the opportunity to test the waters and find out if there is an interest in the property and the value. If there are credible offers, council can call a general meeting of the owners and find out if the offered value and terms of the sale is sufficient for the owners to consider the vote.

There is no point in holding an 80-per-cent vote if only half of the owners are willing to support a sale. The general meeting to approve the 80-per-cent vote will be time consuming and costly. 

When your strata is ready to go to market, interview several commercial brokerages and find out what they propose for a commission rate, how they will market the property, whether they will be prepared to be your sole broker, and any other conditions that may affect your brokerage agreement.  

The process of selling a strata corporation is rampant with speculation. If you really want to know, consider a formal marketing process and take your property to market.

© 2017 Postmedia Network Inc.

Snow removal pushes strata budget into red

? Tony Gioventu
The Province

Dear Tony: 

 I am the president of my townhouse strata in Surrey.

The snowfall that we experienced over the Christmas season will result in our year-end budget being in a deficit and our council is not sure how to handle this. We budgeted for a few days of normal snow, but this has resulted in a dramatic overrun.  Does the council have the authority to allocate this to other parts of the budget or do we simply run a deficit?

Jeannie P.

Dear Jeannie:

The Strata Property Act has a simple requirement for operating budget deficits. The deficit must be eliminated during the next fiscal year.

There are two types of budgets expenses that occur during the year: those that your strata had planned, and the unexpected. Depending on your budget for the year, it may be possible to have an overrun in one category but still end up with a balanced or surplus budget, but when adverse conditions or emergencies occur, all plans are vulnerable.

The act provides strata corporations with options to deal with emergency expense or deficits. 

A strata corporation may have experienced an emergency, which could be the sudden failure of a boiler, a roof leak or a safety crisis such as a sudden heavy snowfall. These crisis events occur as emergencies if there are reasonable grounds to believe that an immediate expenditure is necessary to ensure safety or prevent significant loss or damage, whether physical or otherwise. 

Adverse weather conditions do not permit a strata time to convene a special general meeting with the required notice for approval of the funds. The strata council is responsible for determining whether the expense is necessary, immediate and an emergency. As a result, the strata may spend the funds necessary from the contingency reserve fund for the emergency cost.  

There are a few methods to resolve the deficit as part of the operating budget. Strata corporations often maintain a cash surplus in their operating account, and the deficit payment from the surplus may be approved as part of the approval of the annual budget for the next fiscal year, or you may insert a new line item in the next year’s budget for “deficit elimination”, which would be paid as part of the strata fees throughout the year. 

Your strata corporation may also propose a special levy to pay the deficit, or the amount paid from the contingency reserve fund, both of which require a three-quarters vote. However, if the vote fails, the strata is left with a debt it cannot reconcile. 

If your strata has a choice, avoid using the contingency funds to pay for deficits. If they are legitimate emergencies, they may be directly expensed to the contingency fund, but if they are just a result of poor financial planning, your strata will not only deplete its reserves, but fail to recognize it requires better budget planning. 

The estimates from the hard-hit strata corporations having to address snow removal for lanes and parking areas is indicating a 300-to-400-per cent cost overrun in those line items, so I suspect many strata councils could be facing deficit budgets this year.

© 2017 Postmedia Network Inc.

Focus on future costs as well

Tony Gioventu
The Province

Dear Tony:

Our situation is something every first-time homebuyer should be aware of. 

We purchased into an older four-floor wood-frame apartment building in Richmond in September 2016. At the time, we were aware of a new roof being planned from the contingency fund, but nothing else was disclosed in the minutes of the strata meetings or as an immediate issue in the depreciation report. 

What we didn’t realize at the time is that the depreciation report was written by a volunteer and did not include an assessment of all the building components. We purchased the unit because it had three bedrooms and was affordable in our budget. However, buyer beware. 

Older affordable homes are not necessarily a bargain, as we discovered. We are now facing a $37,000 special levy for major exterior repairs, and that is just the beginning.

Brad and Margaret M.

Dear Brad and Margaret:

Buying a new home, whether a condo or detached house, is often charged with nothing but enticement and it’s exciting the day we sign the papers for our first home. 

Because we are so intent on purchasing a first home, we are unwilling to look at the disadvantages that may discourage our purchase. As buyers, we are often willing to accept information as reliable on face value without closely scrutinizing the source, reliability of the ters and whether the information is relevant or dated. 

The strata corporation provided you with a depreciation report attached to your Form B information certificate. It was the obligation of the strata corporation to ensure the report met the requirements of the Strata Property Act and Regulations. If the strata failed to provide you with a reliable report, you may have a valid claim against the strata corporation for the undisclosed liabilities (the additional repairs it was hiding). As a result, you may want to file a claim through the Civil Resolution Tribunal for damages against the strata corporation for the undisclosed projected repairs.

There are three conditions in depreciation reports I always double check. Who was the writer and their qualification? Is the writer insured for the purpose of providing a depreciation report? And lastly, I check a summary of the common property/assets and their projected renewal dates. 

I am surprised at how frequently the summary of common assets omits critical items, like an elevator or pipe replacement. Even if the strata is planning for a new elevator, there is no authority to remove it from the report as it only exposes the owners in the strata corporation to a possible claim from a buyer.  

The B.C. Home Partnership Interest Free loan program launched this week is a great opportunity for new homebuyers to get into the market and build equity into their future, but buyers still have to manage their risks. Newer buildings will generally have predictable fees for the first one to 10 years of operations, but as building components age, maintenance and renewal cycles will increase. 

No investment is 100 per cent secure. Before you buy, try to set a date and value to the next major repair the property will experience and whether you can pay the levy. If the plan is for a new roof in 2018 and the cost is $200,000, how will the strata pay the cost?  Are there enough reserves to cover the new roof or will it be special levies? If there are special levies, do you know what your share will be? Apply this test to all know future costs and then make your decision. 

© 2017 Postmedia Network Inc.

Bylaws deemed unenforceable

Tony Gioventu
other

Dear Tony:

I have owned my strata lot in East Vancouver for 22 years. In September, I received a notice from my strata council that I had altered my balcony without written permission, and unless I was prepared to have the alteration removed, I would be fined $200 a week.

I responded it has always been this way and if altered, it was done before I purchased. Council responded that it didn’t matter as it was my balcony and started fining me.

To make matters worse, our strata has a bylaw that authorizes council to receive monies paid for any item to be first applied to outstanding fines and penalties, and within two months it had forced me into arrears and filed a lien against my strata lot. I have just received a notice of order for sale if I don’t pay the back fees, fines, lien costs, legal fees and the balcony corrections.

How is this even enforceable? Nothing has changed in 22 years.

Elizabeth P.

Dear Elizabeth:

The funds collected for strata fees or special levies must be applied to strata fees and special levies.

In a recent court decision, Strata BCS 3648 vs Podwinski and the Royal Bank, the judge determined such a bylaw is invalid because it would prevent an owner from stipulating that fees are being paid and that fines are not.

This type of bylaw denies the owner the right to challenge the bylaw enforcement decision, which includes an application to the Supreme Court of B.C., arbitration or an application to the Civil Resolution Tribunal.

Because the owner had paid the strata fees within the terms of a pre-authorized payment form — now common for most strata-fee payments — the strata corporation accepted the monies on only that basis.

 The judge rejected the strata corporation’s argument the terms of the bylaw override the terms of the pre-authorized payment form.

Strata corporations who have adopted payment diversion bylaws will be faced with similar challenges and should seek legal advice on enforcement or amending them as owners can now use the Civil Resolution Tribunal (www.civilresolutionbc.ca) to quickly file a claim to challenge the bylaw.

Under the CRT, owners and tenants can challenge whether a bylaw is: legally enforceable, whether it was passed or filed correctly and whether it has been enforced fairly. The application process is on line, inexpensive and the matter is resolved in a few months with a binding decision or settlement.

© Copyright 2017, Penticton Herald

Prudent to spell out details in council minutes

Tony Gioventu
The Province

Dear Tony:

Our strata council and property manager have had the habit of recording a simple ending to each council decision. MSC: motioned, seconded, carried. Several council members are unhappy with this as they want the owners to know they sometimes disagree and are wanting more detailed information in the minutes. We have the same problem with our general meeting minutes.

What is the general rule of thumb or best practice for minutes? Is it better to have more detail or simply keep it generic? 

Our owners have disputed the results of decisions on a number of occasions, resulting in unnecessary conflict.  

Margo R., Victoria

Dear Margo:

 It is important to understand the reason for decision making. When a vote is taken on any matter, it results in authority being created for an action. While many decisions are often minor, many decisions have a significant impact on the owners in a strata corporation.

Accuracy in voting results may be a critical part of a court or Civil Resolution Tribunal challenge that could find the voting was flawed, not reported correctly, not calculated correctly, or that there is simply no evidence to support the outcome shown in the minutes.

Consider a special levy where each is paying to $50,000 a unit for major repairs. Would “motion, second, carried” be sufficient if the vote was challenged? It is always better to act on the side of prudence and accuracy for strata decision making. Exact numbers are certainly the best option as they ensure the vote was conducted correctly, the correct threshold was applied, and the outcome was calculated correctly. 

In a 2016 court decision, Mr. Justice Punnett recognized the potential flaws in voting outcomes, which should give us some pause for concern over our strata minutes and record-keeping practices. 

“Standard Bylaw 18(3) simply requires that the “results” of the votes be recorded in the council minutes. It does not require the details of the votes as does bylaw 27(4), which deals with voting at an AGM or SGM. However, transparency, accountability and disclosure, which council meeting minutes provide, favour a broader interpretation of the word “results”, including an indication of the number of votes for, against and any abstentions to properly inform strata owners. The word “results”, while referring to an outcome broadly construed, includes its context, which favours inclusion of the information referred to. I am satisfied that the strata corporation is not in compliance with Bylaw 18 in the manner in which it is recording its decisions. That said, given the evidence does not show that the decisions made were not by a majority, the failed voting and reporting does not affect their validity and it would be unreasonable to now invalidate them after the fact and after performance of the decisions taken.”

The best solution, always record what actually happened and detail accuracy. At a council meeting for example, five in favour, two opposed, carried by majority vote, or in the case of a general meeting special levy, 66 in favour, 21 opposed, and seven abstained. 66+21=87.  Three quarters of 87 is 65.25, the vote is carried.

© 2017 Postmedia Network Inc.

Single claim cannot be split

Tony Gioventu
The Province

We have an unusual situation. A flood occurred in our building and the damages were below the deductible, which is $25,000. As a result, three suites — 301, 201 and 101 — were damaged, and each owner was instructed to contact their own insurance company to file a claim to repair their units.

The flood was caused by the owners of unit 301 changing their kitchen faucets. Unit 201 did not have homeowner insurance and has refused to repair their strata lot, and now the owners on the second floor are complaining about the smell of mould coming from the unit. One owner visiting the unit has advised that all the carpets are mouldy and damaged.

If we weren’t responsible for the insurance, how can we make the owner repair their strata lot?

The strata council, Seaview Towers

Dear Council:

The duty to maintain and repair a strata lot is set under your bylaws and is the responsibility of each strata lot owner. If there are damages to the original fixtures, the strata corporation or the owner would file a claim with the strata insurance provider, if the amount was not under the deductible of the building. If there were three units affected, all three would be under the same claim/incident, so don’t attempt to split the claim to avoid the strata insurance deductible because the homeowner insurance companies will refuse to pay the claim. In your case, no one knows the total amount of the claim because a claim was not filed, and an adjuster did not estimate the total cost of the damages.

If the total amount was under the deductible, then yes, each owner would be responsible to maintain and repair their own strata lot under the bylaws. This is how your strata gets an owner to repair their unit: you enforce the bylaws.

Give notice of the complaint that the unit has not be repaired, and if the owner does not take any action, the strata corporation may enforce the bylaws by imposing fines, and may also use the Civil Resolution Tribunal to obtain a decision ordering the owners to repair their strata lot.

If an order is issued and the owners do not comply, the strata may take further action by making an application to the courts for an enforcement order. In addition to the order for repairs, the strata may also, under the bylaws, request access to inspect the strata lot, which may include an inspection by the local bylaw officer for the city if there are life-safety risks, such as unapproved structural alterations, removal of fire stops or suppression, or a grow op or meth lab. The order for repairs may also name the strata corporation to ensure that if the owner does not make the repairs, the strata corporation will undertake the repairs.

The moral of the story is this: If an owner doesn’t repair and maintain a strata lot, the strata corporation must take the steps necessary to have the repairs done, and the owner will pay the price.

A holiday tip for 2016: If you are going to be away, don’t turn off your heat to save money; turn your hot water heaters down and turn your water off.

© 2016 Postmedia Network Inc

Council members have specific limitations imposed by act

Tony Gioventu
The Province

Dear Tony:

Our strata corporation is over 100 units and we are about to start some major construction.

Two of our council members have construction backgrounds and both have ongoing working relationships with the consultants, potential contractors and suppliers we might eventually end up using. The issue of conflict of interest has been raised by a number of owners in the strata because of these relationships, but these council members feel they have no conflicts because they are owners like everyone else and were elected by the owners knowing they work in the industry.

How do we resolve this issue and maintain a level of goodwill with these council members that will be important to our projects?

John G., president of council

Dear John:

 In addition to the possible conflicts you have identified, it is crucial strata councils, strata managers, consultants and contractors understand they have a duty to disclose and manage potential conflicts before they are a problem. This is not the time where you want to live by the motto “it’s only cheating if you get caught.”

All my red flags go up when a person or contractor insists there is no conflict of interest. The potential for conflict exists in almost any business relationship; the key is how it is managed.

As volunteers, strata council members have specific limitations imposed by the Strata Property Act, the bylaws of the strata corporation and common law. The act requires that whenever a council member has a direct or indirect interest in a contract or transaction with the strata corporation or a matter that is or is to be the subject of a decision of council if the decision could result in the creation of a duty or interest that materially conflicts with that council member’s duty or interest as a council member, that council member must disclose the conflict, abstain from voting on the matter and leave the council meeting while the matter is discussed and voted on.

In simple language, if the council member somehow gains or potentially gains from a personal benefit or interest in a decision, they cannot be a part of that decision-making process. For the protection of the council member and to ensure full disclosure of the potential conflicts, the direct or indirect interest of the council member should be disclosed to the strata council and minuted. And when a decision is required on this matter, the council member is required to leave the meeting and the minutes should show when the council member has left the meeting and they did not participate in the decision.

This doesn’t mean council members or their family members who own companies cannot bid on construction contracts or services, but they do have to ensure they are not part of the decision-making process. Even though owners’ voting rights due to conflict are affected as council members, they are not affected at annual or special general meetings.

© 2016 Postmedia Network Inc.