Tribunal to help resolve strata disputes

Tony Gioventu
The Province

“How do we get our council to….” This is the opening line to the many thousands of emails and letters our offices receive every month.

Ever since the first strata was filed in B.C. back in the mid 1960s, strata councils, owners, tenants and occupants have struggled with the challenges of accessible justice. The cost was not the only barrier that prevented many strata corporations and owners from taking action when there rights were violated, or the strata bylaws were breached or the strata had to try and collect a large sum of money.

Before a strata could commence an action in the Supreme Court of B.C. or give notice of arbitration to order an owner, tenant or occupant to comply with the bylaws or stop doing something, it had to convene a general meeting of the owners, approve the action by three-quarters vote and approve the funding for the action. Either way, the strata owners often rejected the action because of the potential cost, which could easily reach $50,000 and may have taken 24 months or longer.

While all of these procedures were underway with little hope of proceeding any further, owners and councils were plagued by chronic nuisance problems, unauthorized alterations or activities that put the residents and property at risk, or chronic non-compliance with the act or bylaws of the strata.

While a noise complaint from an unauthorized flooring installation seems trivial for many of us, it is a nightmare for the neighbours who have to live with the consequences. Likewise, a strata council that is not complying with the act and refusing to disclose financial information may be leading a community down the path of financial disaster.

The solution now in full effect and operation is the Civil Resolution Tribunal of B.C. Along with the introduction of the CRT under the B.C. justice system, the public is also the beneficiary of significant changes in procedures for dispute resolution.

The CRT is an online system that returns the justice system back into the hands of the public and provides a cost-effective, speedy resolution to the common day-to-day issues for strata corporations. Strata councils can now file CRT action by a simple majority vote of the council for the enforcement of bylaws and collection of debts.

The CRT is essentially an online hybrid small claims/Supreme Court that includes the authority to enable the tribunal to order a strata corporation, owner, tenant or their occupants to do or stop doing something, or to pay for something without any financial limits.

There are three stages to the tribunal. First, there is the solution explorer, which is anonymous and no cost. It’s a guided question-and-answer process to help the users identify the nature of their problem and provide a series of solutions including information guides, sample letters and procedures to resolve their issue.

Failing the self-help solutions, the second stage is starting a CRT complaint, paying a nominal fee, and involving a case manager to work with the parties. If the parties come to a consensual solution, the outcome can be a consent order that is binding on both the strata, the owner, tenant and occupant.

If the parties do not agree, the matter proceeds to stage three: adjudication with an additional fee. The adjudicator reviews the evidence and issues a decision, which has the appearance of a mini court decision.

All of this for the parties costs a couple hundred dollars, and the result is a binding order. There are provisions for appeal within 28 days of the decision being issued with some limitations. All of this basically comes together for under $300 and in about 90 days.

The best news: the first decision was published on the CRT website last week. The decision ordered an owner to cease smoking substances on the strata property in violation of the strata bylaws. What once required a general meeting, unrealistic voting threshold, a major expense and an eternity for the communities is now cost efficient, timely, and easy for anyone to start the process.

© 2016 Postmedia Network Inc.

Tony Gioventu
The Province

Dear Tony:

Our strata council presented two resolutions at our AGM last week to approve $100,000 for a new roof and $68,000 for balcony membranes. They included these as a majority vote because they were recommended to be replaced in 2017 and they are planning to have the work done through next summer. 

The problem with blankly presenting these resolutions is no one knows what the real amount is going to be. Will it be more, less, require additional services, or require a special levy to meet any of the differences we can’t fund?  When questioned about quotes, the council response was that it would reach out to contractors once the funds were approved and negotiate contracts. 

Doesn’t this seems to be a backwards way to do business? Needless to say, the projects were voted down because our owners did not have any reliable information. 

George M., Langley

Dear George:

Yes, the changes made to the Strata Property Act now permit a strata corporation to approve a contingency expense by majority vote when that expense is recommended in the report. The provision is for the convenience of strata corporations to reduce barriers around funding of the contingency and expending funds by implementing a depreciation report, but it does not replace common sense practices of buying goods.

Apply the principle to most of the goods and services we purchase every day. Once we have an idea of a product or service we are interested in, we immediately want to know what it will cost. Then we manage our budgets to meet the needs. A simple sequence for strata corporations to follow will achieve both the projected renewals and the funding without delays. 

The deprecation report is based on estimates — estimates of values of components, cost of renewals or major service requirements, and estimates on the remaining life of the product.

Before the owners will approve the funds, they require facts.

Step 1: The council annually reviews the depreciation report to determine which projects are imminent and require a purchasing process to start. This generally applies to projects that will occur within the next three years. Assuming your roof is estimated for replacement in 2018, the strata will engage a consultant to set up specifications. (Legal services are recommended for any major construction.) 

Step 2: Once the specifications are completed, the consultant will be in a better position to closely estimate market pricing for the construction. At this time, the strata may wish to approve the range of funds recommended for the scope of work or wait until it has competitive bids for the cost of the construction.

Step 3: Confirm the costs and call a general meeting to approve the cost of the recommended renewal by majority vote from the contingency reserve fund. By setting up the renewal as a major project, the strata will have investigated the scope of the construction being proposed, have estimates or bids on costs, engaged a legal review on the bidding process and proposed contracts, and the owners will be satisfied that what they are approving is what they will be ultimately getting. 

© 2016 Postmedia Network Inc.

Following proper process is key

Tony Gioventu
The Province

Dear Tony: 

Our Kelowna strata complex actively fines owners whenever there is a violation of bylaws — from parking in the wrong spot to late payment of strata fees to the slightest bit of noise that may arise from normal living.

The owners are starting to get upset about the constant harassment from the bylaw officer, and we want to know how we encourage some moderation in our strata. Owners requested specific details at our annual meeting about the fine revenues and we were told by the council president the fines automatically went into the contingency fund, which offset our contributions each year and this gave the council more money to spend in the annual budget.

It seems to be a weird method of accounting. How are fines designated when they are received by the strata? 

Jill S.

Dear Jill:

Fines and penalties may only be imposed on an owner/tenant for the violation of a bylaw once the strata complied with the basic procedures of the Strata Property Act.

Before a strata imposes a fine or penalty, it must give the party who is being complained about a notice of the complaint, a list of the particulars of the complaint, what the complaint is about, which bylaw(s)/rule is being breached, when  the incident occurred and who filed the complaint.

The owner or tenant is then entitled to respond in writing to dispute the claim of the breach or request a hearing. If the individual requests a hearing, council must convene a meeting to hear the owner or tenant, and within seven days of the hearing provide a written notice to the owner/tenant. 

Fines are only allegations of a breach and not a judgment, which is the reason why you must follow this process and why a strata corporation cannot impose a lien for fines and penalties. Unless your bylaws stipulate otherwise, the decision to impose a fine and the amount is part of the strata minutes. Because council is not permitted to delegate the authority to fine a person for breach or enforcement of a bylaw, this is the best method to prove council by majority vote decided upon the penalty.

Even though councils are not permitted to delegate the enforcement of bylaws and rules, we routinely see strata council members appointed as “bylaw officers” who wander around their complexes and hand out fines like speeding tickets. No! No! No!  In addition to the strata councils using the Civil Resolution Tribunal to be able to collect fines and to seek a decision to order an owner or tenant to do or stop doing something, owners and tenants may also use the CRT to challenge enforcement procedures, the validity of a bylaw, whether the bylaw was passed properly, whether it was filed in the Land Title Registry correctly, and even whether a bylaw is enforceable.

Revenues such as bylaw fines, damages, costs of enforcing bylaws are all part of the operating fund and financial statement of the strata. If there are surplus funds remaining at the end of the year, the owners by majority vote at the AGM can decide to either contribute the surplus to the contingency fund, carry it over as revenue to the next year’s budget, retain it in the operating fund or by three-quarters vote spend it on another project. 

It is important the strata corporation maintain a receivables chart of accounts to ensure the fines are collected, and the strata takes some sort of action such as tribunal or small claims before the two- year limitation period runs out.  

© 2016 Postmedia Network Inc.

Up-to-date forms a must

? Tony Gioventu
The Province

Dear Tony:

We put an offer in on a condo two weeks ago and requested a Form B Information Certificate.  

The strata we are looking at was built in 2008, and has a rental bylaw that limits the number of rentals to 10 at any time, but the Form B shows there are 17 units currently rented out. Does this mean the strata corporation is not enforcing its rental bylaw?

We are interested in the building as a retirement option, but would probably want to rent our unit for the next two years.  We also noticed the form does not indicate any claims that relate the Civil Resolution Tribunal, but we have been told by the seller there is an owner who has commenced a claim. 

It appears the form is not current. Does this make the form void?

Cliff Rogers

Dear Cliff: 

When the amendments to the Strata Property Act came into effect that enacted the Civil Resolution Tribunal, several sections of the legislation were amended, including the section that creates the conditions for the Form B.

The Form B Information Certificate is essential for buyers who want an overview of the business of a strata corporation. The forms indicates parking allocations, storage lockers, rentals, whether the unit is responsible for an alteration agreements, outstanding levies, bylaw amendments, court, tribunal or arbitration actions or judgements against the strata corporation, current financial information including projected deficits and  work orders issued to the strata. In addition, the form must attach the rules of the strata, the current budget, the owner developer’s rental disclosure if filed, and the most recent depreciation report.  

There were two defects in the form package that you received. The form is outdated, and does not include the Civil Resolution Tribunal as a disclosure requirement. If the strata is currently a party to a proceeding under the CRT, it must disclose this information on the form.  

The other problem is the form did not include or attach the rental disclosure statement, which would have answered your question about the number of rentals. Even though the strata limits the number of rentals, there are still three categories of exemptions. They are family members who are children or parents of you or your spouse, hardship exemptions or owner developer rental disclosure exemptions. 

The section of the form relating to rentals is a representation of all the units rented. Whether a strata rental is permitted under the bylaws, or an exemption, landlords are still required to provide a Form K, notice of tenants’ responsibilities to the strata corporation.  A strata council and its property manager create a rental inventory from their Form Ks they have collected, and that is the number they disclose on the Form B.

In every case of a strata, before you proceed, read the bylaws and submit a written request for permission to rent or to request detailed information.  For updated versions of any B.C. legislation go to www.bclaws.ca .

© 2016 Postmedia Network Inc.

Q&A: Broker can provide clear information about policy coverage

Tony Gioventu
The Province

Dear Tony:

We live in a 110-unit bare land strata in the Okanagan Valley. Our recent building appraisal increased our property valuation by more than 500 per cent because the in-ground systems of water, sanitation and roads were included in the assessment. As a result, our insurance doubled.

We have been talking to our insurance broker over the reason for the increase and questioning whether the costs cover anything new. Our policy includes earthquake coverage, but we don’t know what is actually covered because our homes are insured by each owner.

We have also noticed our earthquake deductible is now 15 per cent of the appraised value, but we are confused about what the earthquake insurance actually covers, if anything.

Patricia V.

Dear Patricia:

The Strata Property Act requires that strata corporations be insured for full replacement value, which is the reason for your appraisal values.

Bare land strata corporations are a bit “out of the box” when it comes to typical commercial/strata insurance coverage because they rarely cover buildings. As a result, your strata corporation will want to verify whether the insurance you purchase is covering anything in your strata corporation, and under what conditions the assets would be covered.

I always recommend a strata corporation use a broker to assist with insurance placement. This provides the strata with an agent who acts on their behalf and somebody who can provide clear information about your policy coverage.

Earthquake coverage for bare land strata corporations is a good example as it is optional. Before your strata adds and pays for earthquake coverage, have your broker provide you with a written confirmation of the value of the coverage, under what circumstances the coverage is applicable, what assets are actually covered, and what exemptions apply. Does the earthquake coverage apply to the in-ground services like water and sanitation? Does it apply to roads and electrical/lighting? Would the coverage apply in the event of a tsunami, dike breach, slope shift, landslide, sinkhole or overland flood?

Once your strata corporation has determined the value of the coverage, it may be best for your owners at your next general meeting to decide whether to continue the additional coverage or not.

Earthquake deductibles are based on the total appraised value of the strata corporation’s common property, assets and fixtures. A deductible of 10 per cent applied to a 100-unit highrise with an appraised value of $35 million is $3.5 million. That amount would be shared by all 100 units based on unit entitlement.

In the event of an earthquake claim, that would average out to $35,000 per unit. While the first week after a disaster is critical, the subsequent months and years that follow are devastating for homeowners if the strata corporation cannot collect the deductible amounts or has insufficient insurance. Without the deductible amounts being paid, reconstruction will be interrupted. Homeowner policies that cover an owners’ share of earthquake deductibles or other types of claims such as water escape may make all the difference.

© 2016 Postmedia Network Inc

Watch for amended agreements before buying a condo

Tony Gioventu
The Province

Dear Tony:

Our strata corporation has changed our rental exemptions and we have lost the right to rent our units, even though the developer told us when we purchased that we would be able to rent for 100 years and there could be no limitation.

As investors, we didn’t think this could change, so we didn’t pay attention to the notice package. We received a notice last week that the rental disclosure had been amended and that when our tenants leave, we have a year to rent and then we can no longer rent our units. This is insane. How could the government let this happen?

Carol W.

Dear Carol:

In 2010, the Strata Property Act was amended for rental disclosures that permitted a developer to designate strata lots that would be exempt from rental bylaws for a definite period of time. Most developers set the time period at 50 or 100 years.

This exemption provided for more flexibility of strata lots as rentals, and more options for investors. The legislation also provided for some flexibility if a strata community wanted to amend the Rental Disclosure Statement; however, that had to meet specific conditions.

The owner developer may change the statement by changing the number of strata lots to be rented or the rental period for the strata lots, or both.

The developer could do this if it owns all of the strata lots; if not, the strata would be required to pass a three-quarters vote resolution to approve amending the disclosure.

There is a quirky condition in the three-quarter-vote process that no one anticipated, and makes little sense. If you are an investor, and are currently renting out your strata lot, you are not an eligible voter at this meeting approving the amendment of the rental disclosure that would directly affect your interest.

If 40 per cent of the owners were renting, only 60 per cent would be eligible to vote, and because it is a three-quarters vote, a small number of those could potentially make a decision that adversely affects investors who relied upon the owner developer’s disclosure and marketing.

Even if the Rental Disclosure Statement is amended, the strata will still need the developer to agree and file the amendment. Afterwards, the strata would still be required to pass a bylaw amendment that would limit or restrict rentals.

Several strata corporations have approved the amendment to their rental disclosures because the communities ended up being owner occupied with no rentals. As a buyer, if this issue is raised, you may want to have your lawyer contact the developer before they consider such an amendment. Marketing programs actively advertised “no rental bylaws and long-term exemptions” to attract investors. The owner developer may be breaching your purchase and sale agreement if it now agrees to change those conditions.

© 2016 Postmedia Network Inc

Strata not required to obtain three quotes

Tony Gioventu
other

Dear Tony:

Our strata corporation is having our deck surfaces replaced on our external balconies. The owners approved $10,000 for engineering and we are being asked to approve $300,000 to proceed with the repairs. When we asked for information around the process, owners were told: “We are getting a good deal, so stop making trouble and more work for everyone.”

Is it a requirement of the act that our strata obtain at least three quotes for a specific value of project?

Jeremy L., North Vancouver

Dear Jeremy:

There are no requirements in the Strata Property Act that would force a strata corporation to follow specific practices when it comes to purchasing products and services.

The act requires the strata council to act in the best interest of the strata corporation, disclose any conflicts and seek the approval of the owners where required to approve contingency expenses or to impose special levies. Some strata corporations have adopted bylaws that set specific conditions for awarding of major contracts, or owners by majority vote at a general meeting may give a strata very specific instructions on how they want the strata to proceed.

Multiple bids are not always the best solution. It’s possible only one or two companies are qualified to bid on a project, or there are so many unknown conditions that it’s impossible to develop any type of fair bidding process.

The first step your strata took to engage an engineer to investigate your decks, define the scope of work and set up the specifications for bidding or negotiation is by far the most important. Whether you have one or five bidders, the only way a multiple-bid process works is if everyone is bidding on exactly the same scope of work.

Roofing is a good example of this. A strata calls three companies, who all give quotes, but none are quoting the same product, the same installation or the same site conditions, and your strata can easily find itself paying more than it anticipated.

Strata councils should always remember that they are handling the owners’ money. We all want the same results: the best product, the best service and the best price. The only way we can secure the result, whether by negotiated contract or a tendering process, is to get the contractor to quote on a specific scope of work that includes product and materials, labour, installation, warranty and insurance conditions, site-management conditions, waste-management conditions, environmental protection and safety, and cost.

I would hope that for a $300,000 contract, your strata has considered that it will likely only cost $2,500 for a legal review of the terms and conditions of your contract.

© Copyright Times Colonist

Air space parcel agreements worth auditing

Tony Gioventu
The Province

 

Dear Tony:

Our strata is a combination of condos, a hotel and businesses on the ground floor.  We share a number of common expenses for maintenance and repairs, on-site staff and insurance.

The expenses are based on a formula  included in our bylaws provided by the developer in 2007. The condos pay 62 per cent, the hotel pays 30 per cent, and the commercial units pay eight per cent.  

No one has ever questioned how these costs have been allocated, but recent increases in operations have encouraged council to start looking at better efficiency in costs, bringing up the issue of the cost formulas.  When we started looking into the efficiency of our common costs, we discovered that while the cost-sharing formula is in the bylaws, no one can confirm how these formulas were created. 

The bylaws refer to our strata as sections, but our strata condo is a separate air space parcel. Is an air space parcel the same as a strata with sections?  

SVR, Vancouver

Dear SVR: 

A strata corporation with properly created sections is completely different from separate properties within air space parcel (ASP) agreements. 

A strata corporation with different types of units, or different uses such as residential and non-residential units, is permitted to define and create sections. These are additional legal entities, basically mini stratas within a strata.  Expenses by section may be allocated only if they are exclusive to that section; otherwise they are a common expense of the strata corporation.

Formulas that change percentage of allocation of common expenses are not permitted in the bylaws. Formulas that change allocation of common expenses require a unanimous vote of the strata corporation, and must be filed in the Land Title Registry in the correct form. 

Air space parcels are essentially side-by-side separate properties; just think of them vertically on top of each other with geometric/horizontal boundaries.

The registered strata plan for your condo will show only the property boundaries of your strata corporation and refer to the ASP.  In your strata, there are four separate properties: the strata plan of residential condos, the property of the hotel, the property of the commercial mall, and the parking garage. 

To confirm the percentages of expenses shared between the ASPs, who is responsible to maintain, repair and insure certain areas, the right of access and use of certain areas, and the passage of services such as utilities and mechanical equipment and the share of expenses, review the complete air space parcel agreement filed in the Land Title Registry.  The agreements are frequently several hundred pages and the formulas are captured in complicated language, so it is essential that whoever reviews the ASPs can competently read and interpret the document — usually an experienced real estate or strata lawyer. 

Cost sharing of an ASP are not formulas that are created through a strata corporation’s bylaws. Once the share of costs has been confirmed, compare it to the formulas that have been applied.  It is quite possible that your share of costs created by the easements and covenants may be lower or higher, especially if they were included in a disclosure statement used for marketing well in advance of the ASP agreements being created.

I encourage every strata in an air space parcel to conduct an audit of the ASP agreements and utilities to confirm the formulas and allocations of services are being administered correctly. 

© 2016 Postmedia Network Inc.

Commissioning crucial first step

Tony Gioventu
other

Dear Tony:

We purchased our Burnaby condo in the spring and our strata is about to hold its first annual general meeting. One of the agenda items posed to the property manager is the requirement for commissioning of the building before the strata council takes over responsibility.

We were told there is no such thing as commissioning a building, and other than approving the first budget, the insurance report and the election of a strata council, the meeting would be very short.

Our owners have some serious concerns about the administration of the utilities and the property operations and are not sure how to address these matters at the meeting.

How do the owners know we are getting what we bought? That would seem to be the purpose of commissioning a building.

Carlos V.

Dear Carlos:

We live in many complicated building systems that include shared parking garages, mixed-use residential and commercial property, social housing and community amenities.

Commissioning of new buildings is a crucial exercise for new strata councils to ensure that as the strata corporation’s representatives, they have received all of the records and documents, the strata has received what was intended by the developer, and the strata is only paying for direct costs in shared relationships.

If your strata is in an air-space-parcel arrangement, a building audit/commission would be the only way of confirming the allocation of costs is being administered properly. (Air space parcels are multiple properties that are stacked on top of each other, and share building systems and facilities).

Building commissioning is more of a procedural concept than a duty required by the legislation. Commissioning is the process of verifying the performance of the building systems for mechanical, plumbing, electrical, energy consumption and efficiency, fire safety, building envelopes, interior systems, sustainable systems, lighting, wastewater, controls and building security to achieve the owners’ requirements as intended by the building owner and buyers, and as designed by the building architects and engineers.

The Strata Property Act does not specifically require any such action, but the act does require that at the first annual meeting of the strata corporation, in addition to the records of the strata corporation, the owner developer must provide to the strata corporation: all plans relating to building permits, documents that show locations of pipe, wires, ducts and building systems, all contracts entered into for the strata corporation, the land-title documents, names and addresses of all contractors, subcontractors and suppliers, and all warranties and manuals that relate to operations, installation, construction, maintenance and repair.

Due to lack of experience, most new strata councils fail to verify whether the information is provided, who received the records and how the information is available to the strata council.

Once your new strata council has been elected, a complete review of the records and documents required for operations and warranty administration is essential.

Once you have received and reviewed the documents, review your warranty contract to determine your obligations and the expiry dates of the warranties, and verify that your utility and operations costs are consistent with the obligations of your strata.

Glacier Community Media © Copyright 2013-2016

Sex offender has a right to live in strata

Tony Gioventu
other

Dear Tony:

No one in our strata has been prepared to talk about this issue, but we have found out we have a convicted sex offender living in our townhouse complex. Our strata is predominantly families and seniors.

We think the council knew six months ago and decided not to tell anyone, and now the rumours have started spreading and people in our complex are afraid.

We have two questions. As owners who live in our complex, do we have a right to know about the person, their history and the risks to our residents?

If there is an incident, does our strata council have any liability because it did not tell the owners?

GMR

Dear GMR:

While on the surface, this is not exclusively a strata problem, it is a housing issue, which in B.C. includes the almost half of our housing that is strata titled in some form. Housing for offenders is a complicated problem, as the Charter provides for freedom of mobility for all citizens who have essentially served their sentence.

It’s complicated partly because of limits on available housing, but also because of the proximity of housing to areas that may pose a conflict or violation of the terms of release — for example, schools. Correctional Service Canada makes every effort to determine where offenders will reside after their criminal sentences end, and in virtually all cases, knows the offender’s destination.

The correctional service works in close collaboration with the RCMP and regional police forces to determine what information is released and shared with the public about offenders.

The Crown and police have several tools to protect the public from high-risk violent and sexual offenders. These include orders to provide DNA samples, orders to comply with registration requirements, imposition of probation orders with conditions set by the sentencing court, peace bonds imposing strict conditions on individuals in the community, and orders imposing strict conditions on individuals convicted of offences against children under the age of 16.

Owners need to avoid speculation and gossip and go directly to the source. It doesn’t take much misinformation for a community to become paranoid and panicked.

If your strata has a safety concern, contact your local police immediately. Your strata council has no concerns if you have placed the matter into the hands of your local police.

Many B.C.communities have community police offices that provide daily support and information. As in any emergency situation, if there is an imminent threat to public safety or an incident in progress, call 911.

For more information, go to the Government of Canada website under public safety: publicsafety.gc.ca.

© Copyright Times Colonist