Be clear on strata management

Tony Gioventu
other

Our strata council is interviewing for a new management company. Our previous company constantly changed our manager and council did all of the work we had contracted for.

In the past three months, no one has come to our council meetings or provided us with any assistance, so we convened a special general meeting and terminated the contract.

Are there basic pitfalls we should watch out for when negotiating a new contract?

Martin K., Coquitlam

Dear Martin:

When you engage strata management, the company you retain and their staff are your agents. Meaning, they do what you instruct, what you contract for and act as you whenever they are doing your business.

Your strata must be clear on roles and responsibilities within the scope of the contract and the services being provided if you are expecting a successful relationship. Confirm that everything a company claims they will do for you is detailed in the written service contract. Clearly define the performance description of the manager, when the duties are performed and how they are reported to the strata council. My contract mantra: “If it isn’t in writing, it likely isn’t true or going to happen.”

A number of strata-management companies demand compensation or user fees from the contractors/service providers that are often not disclosed to a strata, and many councils are unaware that they have signed a consent of some sort permitting other fees or compensation from third parties.

The complication with this relationship is establishing who your manager is acting for: you, the contractor/service provider or their own interests. Under an agency agreement, they have a duty to act in your best interest. That’s why you hire them.

There are two options to solve this problem. Insert a clause in the contract that a) prohibits any fees, compensation or commissions from any third party, or b) as required by the Real Estate Services Act, any fees, compensation or commissions are disclosed to the strata corporation, and your consent to retain the fee is required.

A legal review of strata-management contracts before you sign is always advised. The company holds your trust funds, acts as your agent and business manager, adviser, record keeper and represents your strata through most business transactions.

Negotiate a fair contract that holds both the company and the strata to a mutual level of accountability. Usually, for under $2,000, you can have a legal review of your contract and save yourself many heartaches. Put this into perspective: What is it worth to protect your 150-unit high rise with an asset value of $45 million and a $1-million budget?

When things go wrong, make sure you can end the agreement fairly. While the act defaults to a three-quarters vote, you can negotiate termination by majority vote, or unanimous vote of council. If your strata can hire a company by a majority vote, then why can’t you terminate them by a majority vote?

It is a reasonable expectation that the owners at a general meeting would be competent to make this type of decision. This is a contract and may be negotiated. There is no such thing as a standard form of contract or contract that cannot be negotiated.

Finally, review the schedule of fees closely and ask questions. Are there additional costs for extra services? How are they authorized? Do you pay additional fees to manage major projects or collect special levies? Have you authorized the company to transfer your assets and services to another company in the event they sell?

How are decisions made that affect investments and trust funds?

Many strata corporations have successful management relationships that span more than 20 years. A fair contractual relationship is essential.

 © Copyright Times Colonist

Borrow from contingency fund to avoid loan charges

Tony Gioventu
The Province

Dear Tony:

Every year, our strata corporation insurance renews at exactly the same time as our new budget is approved. As a result, we never have enough money in the our operating fund to pay the bill, so the strata corporation finances the insurance policy over 12 months for easy payment, which is more than $80,000.

One of our owners has challenged this practice, claiming we did not disclose the amount of the financing in the budget, and the strata did not get approval for the financing. Have we violated the Strata Property Act?

Marilyn J. Vancouver

Dear Marilyn:

Before a strata corporation borrows money, and this includes financing of projects or service agreements in the form of a loan, the strata corporation must approve a 3/4 vote resolution at an annual or special general meeting. Include the term and cost of the loan in the resolution to ensure your strata has the authority to borrow the funds. There are three other issues with financing relating to insurance that your strata corporation must also be aware of.

First, the cost is significant and may be anywhere from eight to 15 per cent of the total policy. Why would your strata corporation not borrow the funds from the contingency reserve fund, which is only generating one to two per cent at this time, and pay the amount back to your CRF over the year as the cash flow from strata fees is collected?

Your strata will be paying $7,480 in financing charges this year. Your CRF of $250,000 is not currently invested, so your strata could be saving that financing charge. Borrowing from the CRF is permitted by the Act, and the council can approve the loan by majority vote, and must report the loan in the minutes.

Second, if you do finance, check the terms of the financing and insurance contract closely. There may be conditions, that in the event of a missed payment, the policy may be cancelled with no refund or there may be penalties that increase the financing costs. If the strata council was responsible for the failed payment and there was a void claim you may be personally liable for the losses.

Third, confirm whether anyone is receiving a fee for the loan. It is not uncommon for lending agencies to offer finder’s fees for loans to strata corporations. This includes strata managers, brokerages and council members. The Real Estate Services Act requires strata managers and brokers to disclose the amount of a fee or commission that is received from any third party on services provided to the strata corporation. Council members must disclose a direct or indirect interest in any transaction with the strata corporation.

Strata councils and managers are often uncomfortable with probing questions that are raised at general meetings about transactions and disclosure, yet those are the very questions that the council members should be asking. Just because council members are volunteers doesn’t mean they shouldn’t closely scrutinize the business practices of their strata corporation, the strata management company or service providers. Put inquiries in writing/email. Confirm conversations in writing/email whenever a service provider or contractor provides verbal information. Above all, question everything. If someone is uneasy about a question, there is likely a problem.

© 2016 Postmedia Network Inc.

BC has progressive and effective legislation for strata corporations to collect and secure debts that are owing

Tony Gioventu
The Province

Dear Tony:

Our townhouse complex has been using a collection service to deal with unpaid strata fees, special levies and fines.

A number of owners have complained about being harassed and bullied for fees they do not owe, or additional fees on top of what they owe, and council members are having a rethink about this decision.

Our management company offered to act as our collection agent, but has proposed that it retain a 40-per-cent fee of the amount owing in exchange for the collection. Could you write a column outlining the simple steps for collection fees from owners?

Glen J., Abbotsford

Dear Glen:

British Columbia has some of the most progressive and effective legislation for strata corporations to collect and secure debts that are owing.

There are fundamentally two types of debts owed by a strata lot: secured and unsecured.

Strata fees, special levies, interest authorized in bylaws or resolutions for special levies, and cost for work orders issued by an authority are debts that may be secured against a strata lot by filing a lien. A strata can also make an application to the Supreme Court of B.C. for an order for sale to pay those debts. When a lien is filed, the cost of the lien and the amount of the debt are secured as a priority above mortgages and personal debts.

If a strata lot is sold or forced into sale, after taxation matters are settled, the strata corporation is paid first, then any remaining funds satisfy the mortgage debts, loans or other charges registered on the title. This priority ensures the other owners don’t pay for the default and the strata recovers the debts without the requirement of other collections actions.

Fees like bylaws fines, user fees, damages and insurance deductibles are unsecured debts because they are allegations of a violation or cause of action resulting in a claim. The strata corporation is not allowed to file a lien for unsecured debts; however, it may start a court action, arbitration or make an application to the Civil Resolution Tribunal for a decision on the amounts owing.

Once the strata has a decision, you can register that decision on the title. Your strata can also withhold a Form F Payment Certificate required for a sale of a strata lot until the amount is paid or satisfactory arrangements for payment have been made.

Either option provides a strata corporation with secure economic collection solutions far below a 40-percent fee.

It is critical your strata maintain a monthly aging collections roster to make collection decisions before the two-year limitation period expires.

A strata corporation can negotiate additional service costs for management; however, it is not the manager collecting the fee, it is the manager acting as the agent of the strata corporation — therefore, the strata corporation collecting the fee. The amount collected is shown in the strata revenues, and any amounts paid for the collection services are shown in the expenses as set by the strata management service agreement.

Before your strata signs any service agreements or addenda, seek advice on the consequences of the agreements. Forty per cent of a $50 fine is $20. Forty per cent of an $18,000 special levy is $7,200, plus court costs, if necessary.

A valuable method of assessing fees and collection costs is to determine whether your strata council has the authority to spend the funds for the collection proceedings.

If they are not within budgets, special levies or the bylaws, your council may be authorizing a collection cost beyond your scope of authority.

© 2016 Postmedia Network Inc.

RISKS: Take the right steps to ensure the security of residents is maintained

Tony Gioventu
The Province

Dear Tony:

We have an owner in our building who should never have been moved into a condo. There have been a number of fires in her suite, she is constantly giving strangers keys to our buildings and her safety is always a problem.

We have two residents who reach out to her every day to make sure she is safe, has a good meal for dinner and is taking her medication.

How does a strata council deal with families who buy a condo to simply house an elderly parent to avoid the costs of care facilities?

Lindsay F., Kelowna

Dear Lindsay:

The growing trend of family “warehousing” is a significant security and safety risk for the occupant and residents of any multi-family building. This is a daily complaint to our offices about abandoned parents who are a danger to strata communities and themselves.

Family members often look at the cost of independent-care facilities and realize if the family member survives 10 to 20 years, the estate can be easily depleted, leaving the family with no inheritance or remaining resources to maintain the continued care requirements for longer periods.

So they purchase a condo, usually older and at a lower price, from the proceeds of a downsized home. This ensures the family member has housing and the estate is left intact with a likely increase in property appreciation. It all seems like a simple solution, but it is a tragic symptom of divided and broken family systems, families who do not have space or resources to maintain home-care services or heirs who have abandoned family members to protect inheritances.

The implications are far reaching for strata corporations when faced with a problem resident. Kitchen fires often caused by forgotten cooking, floods from abandoned tubs and overloaded washing machines and erratic activities are all frequent complaints — and affect everyone in the community.

A strata has a number of options that can hopefully yield some success.

A family meeting with the strata council and the resident is always the best start. There may be valid reasons for the owner living independently. Maintaining a close family contact will be essential when emergencies or medical problems arise.

The family member may also be a good go-between, saving the council from conflict.

Failing the family contact, working through health authorities is a good starting place. A strata may contact home health services, generally by city or region, which can be found by Googling home and community support through your local health authority. The service line will take the information from a concerned neighbour, landlord or strata council and set up an appointment directly with the resident to evaluate their needs.

Strata councils also need to remember that strata bylaws still have to be enforced. We often avoid applying bylaws where there are sensitive issues, but the application of fines or collection of insurance deductibles when claims arise may be the catalyst to force family members to act.

Let’s not forget the residents and council members who care for people in need. Their kindness and compassion is what makes our strata communities a great place to live across our province.

© 2016 Postmedia Network Inc.

Garage work disrupts memorial garden

Tony Gioventu
The Province

Dear Tony:

Our strata is undertaking a major renovation to our parking garage. The landscaping over the garage has been allowed to grow out of control for over 25 years and we now have serious leaking and some problems with the structure. 

We have run into a bit of a snag, though. When the landscaping company came on site to salvage as many shrubs and trees as possible, a group of owners intervened and advised that the area being removed first was our memorial garden.

Now I have lived there for 15 years and have never heard the words “memorial garden”.  As a result we stopped work and canvassed owners about the garden to discover that owners have been placing the cremated remains of pets and family members in this secluded area for quite some time. One owner has had his lawyer write us a letter advising that we cannot disturb the area, and another owner has threatened to disrupt any work being done on the property.

We have no choice; we must clear this area to repair the highest damaged areas. 

Sharon W.

Dear Sharon:

Your issue is similar to a problem in 2013 when a highrise community discovered a rooftop planter had been used as a memorial garden.

The disposition of human remains in British Columbia is regulated under the Cremation, Interment and Funeral Services Act.  We are not permitted to dispose of cremated human remains on public property, and on private property, we require the consent of the property owner.  As a strata corporation, the property owner is the strata corporation, which at the very least would require the consent of the owners at a general meeting. 

There is no law that prohibits the strata from removing the soil and plants for the construction; however there are a number of sensitive cultural issues and the dignity of removing interred remains. Perhaps a compromise could be the sensitive removal and relocation of the soil and plants or the restoration back to the site once construction is complete. Ultimately, the strata corporation will have to proceed with the construction.

There are several strata corporations across the province that have designated landscape areas as memorial gardens for past residents and their pets; however, they have also obtained the consent of their owners to permit the interment of the cremated remains and the specific location of placement, either scattered or in appropriate containers. 

B.C. is home to people of many cultures and faiths. It is important to respect their wishes and practices, as well as the requests of others. The interment of the deceased is not the same for every culture.  To avoid offending any party, violating any traditions, or creating the potential for a claim against the strata corporation, your council should seek legal advice before permitting remains to be interred on the common property.

Memorial sites often become a pilgrimage for the current generations. Before anyone inters remains on a site, consider the permanence of the location.

© 2016 Postmedia Network Inc.

FINANCES: Stratas must disclose details on Form F Payment Certificate

Tony Gioventu
The Province

Dear Tony:

In order for us to sell our condo, our strata recently forced us to pay $1,500 in fines for an alteration that we did not make to the exterior of our condo; it was made by a previous owner and not disclosed to us by the strata when we purchased.

Unfortunately, we did not know the amount was owing until the Form F Payment Certificate was requested a few days before our sale. This seems to be a serious problem with condo sales and leaves sellers vulnerable to the claims of stratas or managers.

Carla D., Nanaimo

Dear Carla:

Whether listing a home for sale or confirming the debt status of a strata lot, an owner at any time can request a Form F, Payment Certificate.

The certificate is valid for 60 days from the date of issue and provides an excellent opportunity to review any financial claims a strata corporation may have against a strata lot.

The certificate must be provided by the strata corporation or strata manager contracted to provide the service within seven days of the request being received, and the strata may charge up to $15.

By requesting the form early, the owner has the ability to dispute the charges and avoid paying any rush fees for a form request of less than seven days.

Sellers have always had the ability to challenge charges claimed on a Form F, but the time and costs were often barriers. With the Civil Resolution Tribunal in effect, owners now have a convenient and simple access to be able to dispute a claim if they cannot resolve it with their strata.

A certificate must not include claims of damages including insurance deductibles against an owner that have not been determined by a court, by arbitration or by the civil resolution tribunal, but can include strata fees, special levies, allowed interest, fines or user fees or claims for work orders. Sellers need to know what they owe, the amount and nature of the claim.

If there is a dispute over the amount claimed, an owner can now pay the disputed amount to the strata corporation in trust, and an initiating notice has been given under the Civil Resolution Tribunal Act.

If you are considering selling, request a Form F early. Review the amounts claimed. The strata corporation must disclose the details of any amounts claimed.

If you want to dispute the amount through the CRT, go to civilresolutionbc.ca and start a tribunal proceeding. Use the solution explorer first to determine if you have any easier options to resolving the dispute over the claimed amounts. These could include a hearing with council or sample letters to help you dispute the claims.

If the matter cannot be resolved, start a CRT action. Pay the amount in trust to the strata corporation if your sale is imminent and you require the Form F for the transaction or include the amounts on your CRT claim if you have time to resolve the dispute.

Tony Gioventu is executive director of the Condominium Home Owners Association. Email [email protected]

© 2016 Postmedia Network Inc.

COMPLICATIONS: Strata owners expect security and privacy

? Tony Gioventu
other

Dear Tony:

Our strata corporation has been contacted by census staff requesting access to our building.

We have been advised that we have no choice and the law requires our strata corporation to provide access so the census staff can go door to door and contact owners and occupants in the building.

They are also demanding owners/occupant lists to our buildings, which we refuse to release as they are private information.

This issue has affected our building on a number of occasions. Is there someone we can contact to find out the answer?

Melanie B.

 Dear Melanie:

The census collects information on every man, woman and child living in Canada under the Statistics Act. Anyone living in a building must be counted in the census.

The act outlines the mandatory requirements for completing and returning the census questionnaire.

All Statistics Canada representatives carry official photo identification and are sworn to secrecy under the act. They must keep any information that is provided by a resident or the strata corporation strictly confidential.

That’s the basic information. Now for the complicated part. Strata owners reside in buildings with an expectation of security and privacy. As a result, a few complications arise because of building designs and bylaws of different strata corporations.

The front door of a detached house, like a townhouse, is essentially the same as the front door of an apartment-style building. Like the front doorbell, the lobby will house an entire phone system that allows for access to a building, at the permission of an occupant.

The difference in many strata buildings is the complications of security systems and privacy that prevent anyone from accessing a floor in the building unless an occupant on that floor permits their entry.

Many new high rises and apartments have isolated lock- off systems that prevent anyone from accessing any floor other than their residence.

While the strata corporation is not permitted to provide access codes or fobs without the consent of the owners, there are some steps the strata can take to assist the census process.

Some strata corporations may set a scheduled time for a census taker to be set up in the lobby of the strata enabling residents’ easy access to participate.

This permits direct access between the census staff and the residents, and does not require the strata corporation to release personal information or breach building security.

It is helpful if your strata has a council member or volunteer to assist the census staff.

© Copyright Times Colonist

Tony Gioventu
The Province

Dear Tony:

We are a 65-unit bare-land strata in the Okanagan. Generally, everyone gets along well, but we have had an owner move in who has decided he can do whatever he wants. His neighbours on both sides are constantly his targets and noise, constant construction and blocked access occur daily.

We have tried to enforce the bylaws and impose fines, but he ignores us. We had a special general meeting on the advice of our lawyer to approve a court action to obtain an injunction, but the owners voted it down because they didn’t want to pay a special levy for the Supreme Court action.

Is this a common problem for other stratas in B.C.?

Margery K.

Dear Margery:

Active enforcement of bylaws has been a chronic challenge for strata councils since condo life began. Reasonable people comply with bylaws, pay fines, change habits and activities and work with strata communities.

The challenge we face is our frequent bylaw violators are rarely reasonable. They know the strata will likely avoid a major confrontation because of the cost, time, two-year limitation period and the need for a three-quarters vote at a general meeting.

All that has changed in favour of strata corporations and owners. On July 14, the Civil Resolution Tribunal commenced operations. At this time, strata corporations, owners and tenants are able to officially start a claim to address a variety of strata matters once possible only through a Supreme Court of B.C. action or arbitration. The implementation of the CRT will be in stages over the coming months, so while your strata, or an owner or tenant, can file a claim to stop the two-year limitation period from running out, it will be a few months before case management and hearings are functioning.

Here are the big changes of the types of disputes that can be addressed through the CRT either as strata, owner or tenant. The CRT will be able to determine whether a bylaw is enforceable, whether it was passed and registered properly, whether it is being enforced properly and fairly, and whether a party owes the fines and damages that may have been imposed. It will be able to issue an order for a party to comply with bylaws and to pay fines or damages that may have been incurred. In addition, the tribunal will be able to issue orders to strata corporations, orders and tenants, ordering them to comply with the Strata Property Act, the Regulations and the bylaws of the strata.

Owners and tenants may commence a claim online, and a strata council may commence a claim once it has passed a majority vote at a council meeting, authorizing it.

This no longer requires a three-quarters vote. In addition, there is no monetary limit to the amount that may be claimed. If there is a dispute over who owes a $100,000 insurance deductible, that dispute may be resolved through the CRT.

As you proceed through the CRT, the parties will be required to engage in a case-management process in hopes the parties can reach a consensual solution.

These solutions will form a binding agreement. Once a decision is reached by an adjudicator or is agreed in case management, the decision or agreement may be registered and enforced through the courts.

For more information go to: www. civilresolutionbc.ca.

Tony Gioventu is executive director of the Condominium Home Owners Association. Email [email protected]

© 2016 Postmedia Network Inc.

OWNER WON?T PAY: Without bylaws, strata has no authority to maintain or fix the lot

Tony Gioventu
The Province

Dear Tony: 

What happens when an owner refuses to repair water damages to their strata lot?  Last year an owner had a pipe break in his strata lot resulting in $8,000 damages to the drywall and carpets. Our insurance deductible is $10,000 so we did not have an insurance claim. The owner did not have insurance to cover the damages, and refused to have the repairs done, so our council decided to repair the strata lot and charge back the amount.  The owner has not paid the amount and our strata manager filed a lien against the strata lot, but now the owner is selling his unit and his lawyer demanded that we remove the damages from the Form F Payment Certificate, so he can sell his unit.  What now? How do we collect the money? 

 Jason L.  Richmond

Dear Jason:

Unless the strata bylaws require the strata corporation to maintain and repair a strata lot,  the strata is not responsible to maintain and repair a strata lot.

If the strata had an order from an authority, such as the local government or fire marshall, and the owner has not met the obligations of the order, the strata would have the authority to perform the repairs.

It is easy to understand why the council wanted the repairs completed — to avoid problems with adjacent units, mould, rot, and pest infestations, but the strata has no authority to do the work.

At some point if the owner does not do the repairs and maintain their strata lot, the council would make an application to the courts or the Civil Resolution Tribunal (CRT) to seek an order the repairs, and the costs.

The owner’s lawyer is correct, a strata corporation is not permitted to include damages on a Form F payment certificate.  They could include a judgement for damages from the courts or the CRT, and while those amounts cannot be included in liens filed against the strata lot, they may be registered against the title of the strata lot and a judgement may be claimed on a Form F. 

Strata corporations must closely monitor amounts owing for strata fees, special levies, fines, damages and insurance deductibles.

The Limitation Act sets out a period for the collection of the amounts to two years under specific conditions.  The Civil Resolution Tribunal has started strata claims for early intake as of July 13, which will stop the two year Limitation Period from running out.

Once the CRT is fully operational this fall, strata councils will be able to use the CRT for decisions on bylaw enforcement, collection of fees,  fines, damages and insurance deductibles.

To commence an action with the CRT, the strata council are required to pass a resolution at a council meeting authorizing the action. A strata council member accesses the CRT web site and commences the action on line.  For more information about the CRT, go to:  civilresolutionbc.ca

© 2016 Postmedia Network Inc

Condo Smarts: Failure to file bylaw changes causes

? Tony Gioventu
The Province

Dear Tony:

As the new president of our strata council, one of my tasks was to get a handle on our bylaws so everyone could understand what was in effect and what no longer applied.

Our strata has filed 14 bylaw amendments since 1989. At no time were the resolutions we voted on filed and when I reviewed the minutes of our annual general meeting from 2014 I discovered we passed a pet bylaw that reduced the number of dogs to one per strata. It was never filed and we have more than one dog in several suites belonging to new owners.

Does this mean all our bylaws may still be in effect even though some are conflicting or do only the current filings apply? We’re getting conflicting information from our property manager, past council members and a retired lawyer who lives in the building.

Gordon W., Vancouver

Dear Gordon:

There are a few methods to determine which bylaws are in effect and which are enforceable. One option strata corporations consider is to develop a new template of bylaws, including the previous bylaws that have been in effect, and proposing those as an updated set to be voted on at your next general meeting. This helps to reduce the uncertainty of which bylaws apply.

The resolution you vote on to amend the bylaws is as important as the bylaws. The resolution will determine what happens to your previously registered bylaws; this could potentially affect bylaws that limit rentals, age restrictions and pet restrictions.

The resolution should also be included in any new bylaws that are approved and filed in the Land Title Registry, as it was part of the bylaw-amendment process.

It is important to seek legal advice on bylaw amendments because your bylaws must not only comply with the Strata Property Act, they must also comply with the B.C. Human Rights Code and any other enactment of law.

The issue you raise with pets is common. Under the act, if a new bylaw that limits the age of occupants or the number of pets is adopted, the bylaw comes into effect when passed to ensure the current non-compliant parties are exempted, but that the new bylaw applies to all new parties. A unit with two dogs at the time of passing would be permitted to keep their two dogs and when one dog dies the bylaw would limit them to one. In principle, this works if the strata files the bylaw and discloses it to buyers; however, new bylaws often sit on the books for months or years without being filed, are often forgotten, not disclosed to buyers or filed incorrectly. At this point, it may be best for the strata to seek legal advice.

Remember, bylaws are only enforceable if they have been filed in the Land Title Registry.

Tony Gioventu is executive director of the Condominium Home Owners Association. Email [email protected]

© Copyright (c) The Province