Using a section of the property act could provide a way out

Tony Gioventu
Province

Dear Condo Smarts: We’re stuck with an old bus on our property. Our apartment strata has an underground parking lot and a back lot for the second car of each unit, and visitor parking. The bylaws permit only domestic cars and light trucks, and short-term parking of motorhomes for up to 14 days in any calendar year.

Last year, an owner was given written permission to park a motorhome in the back lot for a period of nine months, with the condition that the bus be licensed, operable, and not pose a safety risk to the owners.

Now we’re in the 10th month. The licence has expired, the motorhome turned out to be a bus, it smells of gas, and weeds are starting to grow from the roof. We’ve given the owner 14 days notice to remove the bus, or strata has advised that it will be removed at the owners’ cost.

The owner claims we have no authority to remove his personal property from the complex and that he uses it as a motorhome, therefore we can’t tow it. The owners are concerned for the safety of their personal property and the risk it poses to the building. Surely we must be able to have the bus towed and enforce our bylaws?

— The Strata Council of Nelson Court

Dear council: The Strata Property Act does give strata corporations assistance in the enforcement of bylaws that strata councils frequently use. Section 133 of the act is in addition to your bylaws and acts as an enforcement tool.

Strata corporation may remedy a contravention:

133 (1) The strata corporation may do what is reasonably necessary to remedy a contravention of its bylaws or rules, including

(a) doing work on or to a strata lot, the common property or common assets, and,

(b) removing objects from the common property or common assets.

(2) The strata corporation may require that the reasonable costs of remedying the contravention be paid by the person who may be fined for the contravention under section 130.

Section 133 can be used in a number of applications. For example, townhouse or bare land complexes may have single vehicle roadways or lanes. Those roadways and lanes also serve as the emergency access and fire lanes and may not be blocked. As a result, strata corporations have bylaws prohibiting parking in the fire lanes, but because the fire lane is on strata property, the enforcement of the bylaw and removal of parked vehicles from the fire lanes must be undertaken by the strata corporation.

The strata corporation must still comply with the requirements of enforcing bylaws by giving notice of a complaint and providing the alleged strata-lot owner or tenant the opportunity to respond to the complaint, either in writing or to request a hearing before they proceed with imposing fines or penalties. If, after the notice of allegation is provided to that strata lot, they still fail to comply, the next step may be the strata corporation removing the objects from the common property and remedying the damages to the cost of the offending strata lot.

Tony Gioventu is executive director of the Condominium Home Owners’ Association. E-mail [email protected]

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Termination language is a critical component of agreements between corporations and property-management contractors

Suzanne Morphet
Sun

A concern I too often hear about from owners of strata properties is about the contracts their strata corporations sign with the managers of strata properties.

Under the law, the manager of a strata property must have what’s called a “service agreement” in writing unless waived by the customer, the strata corporation. The absence of an agreement can generate sanctions. Last November, for example, the provincial government’s Real Estate Council of B.C. reprimanded a Vancouver property manager for “professional misconduct” for providing strata services without an agreement.

The regulator fined the company $1,000.

So, if the intention of the law is to protect the owners of strata properties — and they are the ones who get to waive the requirement for a contract, not strata managers — why do the contracts generate so many concerns?

The contract provided by the Strata Property Agents of B.C., to which about one-third of the property-management companies in the province belong, is one source.

Owners who have spoken with me have a number of issues with it, including the absence of a termination date.

According to the Real Estate Council of B.C., “a service agreement for strata management services must include the duration of the agreement.” The SPABC contract governs relations between contractor and council “indefinitely” or until it’s terminated by either contractor or council.

The contractor can terminate on two months’ notice. But for a strata corporation to terminate requires a resolution passed by a three-quarters of the owners, which means either calling a special general meeting or waiting until the next AGM.

“Either way, it’s a long, uncomfortable and often unworkable time with a property agent who knows the owners are going to be asked for permission to fire them,” says Oscar George, a strata property-owner on Vancouver Island who created a website dedicated to property-manager affairs and the SPABC contract.

When I asked the real estate council if a contract that continues “indefinitely” violates the council’s “duration of the agreement” requirement, representative Tyler Davis replied: “A service agreement that is for an indefinite period of time satisfies this requirement.”

So, if the contract is right, by law, is it good, by owners? There seems to be a lot of confusion around the contract in general.

Davis acknowledges that some strata corporations believe either the SPABC agreement is mandatory or that it can’t be changed.

I asked Kevin Thom, the executive-director of the Strata Property Agents of B.C., about the contract, its “indefinite” expiry date and the apprehension that strata corporations must sign it, as is.

“The body of the contract is copyrighted, yes. You can make any change you want to that in the schedule,” he says.

“You could make it a two-year term with an expiry date, you could make it subject to the whim of the council, the council could meet at any point in time. You can do what you wish and every one of our members has been advised of this.”

But no matter how well intentioned the Strata Property Agents of B.C. are, it’s impossible for the association to ensure that each of its members explains these options to strata councils.

It’s one more reason for the owners of strata properties to ensure either they or their strata corporations belong to an owners’ association with contract expertise.

© Copyright (c) The Vancouver Sun

Some tests are used to set out whether he comes under heading of employee or contractor

Tony Gioventu
Province

Dear Condo Smarts: Our strata corporation has extensive landscaping that requires a full-time gardener. We have hired this man as our contractor for the past seven years, and have decided to put out new specifications so we can confirm we are getting good value for our services. Unfortunately, our gardener took this personally and resigned on the spot, citing the hours of additional work he has given to us at no charge, and now he is claiming that we owe him for vacation pay for the past seven years. Our manager at the time advised it would be better to keep the man as a contractor so we didn’t have to address the employee relationship issues.

Everyone including the gardener agreed, but now it looks like it has come back to bite us.

How do other strata corporations deal with workers as employees or contractors? There must be all types of relationships, from caretakers, to managers, to service technicians, bookkeepers, maintenance personnel, and even casual in-house owners being hired for odd jobs. Where do we cross the line from contractor to employee?

Karin P. West, Vancouver Dear Karin: The relationship between an employer and employee/ contractor is set by a number of conditions through B.C. Employment Standards, through the Ministry of Labour.

Here are some of the tests used in determining the status of your relationship, which can be found on the ministry website:

Control — Is the person under the direction and control of another regarding the time, place, and way in which the work is done? Is the person hired, given instruction, supervised, controlled or subject to discipline? Was the person told what to do, how to do it, and when to do it? Did the person have to do the work him or herself, or could that person give the work to someone else to do? Does the person perform work normally or previously performed by an employee? The greater the degree of control, the greater the likelihood the person will be found to be an employee.

Ownership of tools — Does the person use tools, space, supplies and equipment owned by someone else? If so, this would indicate an employment relationship. However, it is recognized that some employers require employees to provide their own tools or vehicles.

Chance of profit — Does the person have a chance of profit? If their income is always the difference between the cost of providing the service and the price charged for the service, the worker may be someone other than an employee.

Risk of loss — Is the person at risk of losing money if the cost of doing a job is more than the price charged for it? This may indicate a nonemployment relationship.

Payment — Is the person paid regular amounts at set intervals? Does the person get paid regardless of customer satisfaction or customer payment? These factors indicate an employment relationship.

Common misunderstandings — One or more of the following factors is often wrongly believed to establish an independent contractor relationship: Agreement: The act of signing an independent contractor agreement does not necessarily create an independent contractor relationship.

The actual work relationship determines if a person is an employee or independent contractor. Any agreement to waive employment standards entitlements is prohibited by the act.

Tony Gioventu is executive director of the Condominium Home Owners’ Association. E-mail tony@choa. bc.ca.

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Tony Gioventu
Province

Dear Condo Smarts: We are looking to buy a condo on Vancouver Island and find ourselves at a crossroads of information. Our agent told us we really only need two years’ worth of minutes, but our lawyer suggested we obtain at least five years if the property is old enough. This is where the confusion begins.

Just because we obtain the minutes doesn’t mean that what we are really looking for is actually published in the minutes. We looked at a property in Nanaimo two weeks ago that was built in 1992. The owner insisted it was a great building with no problems, the minutes gave the impression that everything was running normally and nothing on the horizon. We casually spoke to an owner in the lobby who hoped we would be able to sit on council and help them with the major repairs coming up.

We discovered the building has had an engineering report since 2004 to address major defects. Could you shed light on the purpose of strata minutes?

— Mrs. G.B. Evans

Dear Mrs. Evans: Minutes of strata corporations document the historic record of the decisions, reports and general information presented at council meetings, committee meetings and at annual and special general meetings. Every strata corporation relies on the skills of its recording secretary to document the proceedings and disseminate the necessary information.

The minutes are also intended as a tool to inform the owner and tenants of information that may be material to the ownership or tenancy in the strata.

In the event of a court action over bylaw enforcement or order-for-sale proceedings for unpaid strata fees or special levies, the lawyer representing the strata corporation or the defendant, and the courts may rely on minutes to identify if a strata corporation has properly enforced bylaws, applied fines and have accounted for claims properly.

For more information, recording secretaries may want to refer to Mina’s Guide to Minute Taking, published in B.C. The publication is available through local book stores or the CHOA office.

Tony Gioventu is executive director of the Condominium Home Owners’ Association. E-mail [email protected].

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Administration and management of a phased strata project can be a daunting task

Tony Gioventu
Province

Dear Condo Smarts: Thank you for the previous column on phased developments.

As a result of your column, we have already addressed the issue over unpaid strata fees by the developer.

Our strata is in a different situation with our phased development. We are in a seven-phase development that is 11 years old.

Two years ago, the developer completed the sixth phase, but never handed it over to the strata. Our development is doubly complicated because some phases were constructed before the new warranty program came into effect, while others had the backing of the warranty system to cover a problem that came up between 2001 and 2003.

We now have a dispute over who has access to the reserve funds and who has to pay for a special levy that relates to a boiler replacement in the first phase.

We have operated as separate strata corporations for the most part because each of the phases was different in design, but we also jointly used our reserve funds to pay for legal support for our warranty claims, and collections for unpaid strata fees.

We know we have not complied with the Strata Act, but for the most part, our strata has operated reasonably well.

How do we resolve the problem of the developer not completing the final phases or handing over the next phase as part of the plan?

— Vivian Mah, Richmond.

Dear Vivian: Depending on what phase you are in, it is very easy for a phased strata development to get into the behaviour of “what’s yours and what’s theirs”. Much to the detriment of the strata corporation, l have often seen “have-not” phases. The administration and management of a phased development is a daunting task for the most dedicated strata council; however, complicate that with a new council each year, the different evolving conditions of each phase, new owners who have never lived in a strata, inexperience of the council or a manager, and the strata corporation can easily get into serious trouble.

There is no provision in the Strata Property Act for a phased development to operate as different sections, unless the buildings are different types.

Sections can be created in a phase for separate legal entities if, for example, they are residential and non-residential or different types such as a townhouse section and a highrise section. There are many variations of sections; however, if the strata corporation by bylaw, has not legally created the separate sections, you are required to function as one common entity, including joint operating budgets, bylaws, reserve fund contributions and joint common costs for special levies.

Just because a strata is phased does not mean that separate sections have been created.

Vivian’s strata has never adopted bylaws that created separate sections, and their history has been complicated by inconsistent use of common funds and the inconsistent allocation of common expenses.

In a phased development, every phase is part of the same single strata. The reserve funds collected by the first, second, and third phases are also the reserve funds that may be accessed by the fourth, fifth, and sixth phases.

If you buy into the seventh phase of a strata, it is quite possible you could be facing a special levy for expenses relating to the earlier phases. Once the plan is deposited, you are amalgamated; it’s one for one and one for all.

When the developer deposits a new phase, the land of that phase is consolidated with the land in the previously deposited strata plan, and the strata corporation established with the deposit of the phase is amalgamated with the strata corporation deposited as the first phase. The developer must immediately notify the strata corporation when a phase is deposited, and when 50 per cent of the units are sold or within six months after the deposit, the annual general meeting (AGM) of that phase must be held.

Even if none of the units are sold and the phase is deposited, the meeting for the phase has to be held within six months, the AGM is held, new council are elected, and the strata council and common operations and expenses are all consolidated into the original strata corporation.

The final completion of the phases may be delayed or even not completed. The complications arise when the developer does not complete amenities or recreational facilities as intended, or if they delay the timing of the next phases, or intend to make significant changes in the next phases to be developed. Under any of the above, the developer must give notice to the strata corporation, and the strata should seek legal advice on what options exist before the strata corporation considers granting any concessions.

Tony Gioventu is executive director of the Condominium Home Owners’ Association. E-mail tony@choa. bc.ca.

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Open to all sorts of problems

Tony Gioventu
Province

Dear Condo Smarts: We are the first strata council of a new development in the Kootenays that will eventually be nine phases. Our first meeting was in October of 2009. The annual budget was approved that identified a fiscal year for the strata from Nov. 1 to Oct. 31 each year.

In December, another meeting was held to bring on phase two and add two council members. In March, a third meeting was held to bring on phase three and to add two new council members; however, the developer changed the fiscal year of the strata corporation without the consent of the strata council and used all of his votes from phase four and five to force the issue.

In short, our finances are a disaster, we have no reserves, and the bills far exceed our expenses. When we calculate the fees, there should be more than enough money in the accounts to cover all costs, yet the manager has told us the developer doesn’t have to pay their strata fees until the units are sold. Why should the new owners be subsidizing the developer? None of the common amenities have been built, and we’re paying all the bills.

— Sheila Kelly

Dear Sheila: Phased strata developments can be very complicated to administer. They are vulnerable to market conditions; the developer changing intentions; multiple developers if, for example, the original developer sells their interest, goes bankrupt or is forced into bank foreclosures; changes in legislation and building codes; or simply the intent of the developer not to proceed with completing the project.

There are many misunderstandings of how the strata corporations convene their annual general meetings and how the meetings for each phase are implemented. Once the strata corporation has set a fiscal year, the only way that can be changed is if the strata corporation passes a 3/4 vote at a general meeting to amend the period. Once the strata corporation has been created by the filing of the first phase, and the first AGM is held, the developer no longer acts on behalf of, or controls the strata corporation.

Voting and the payment of strata fees are frequent violations of the Strata Property Act in phased developments. Once a unit is conveyed (sold) in a phase, the strata fees commence for all units in that phase on the first day of the month following the date of that sale. The developer has no exemption to pay fees deferred to when the units sell; they must pay their fees like everyone else on the first of the month, or as set out in the bylaws of the strata. The owner/developer is the same as any other owner in that they must pay their strata fees for the unsold units. This also includes a bare land development, after the first sale, if the phase or bare land has been filed in the land title registry creating the titles.

Voting rights do not exist for any phase, until the phase or strata plan is filed in the Land Title Registry to create the titles, which subsequently creates the voting rights. In Sheila’s strata, phase four and five have not yet been filed; therefore, the votes did not exist to be exercised at the meeting by the developer. Once the first phase is filed, the strata corporation is created.

If you have questions about the implementation of your phased development, seek advice. It’s too late to try to fix the problems or collect the losses once the developer is finished and has sold all of the units.

Tony Gioventu is executive director of the Condominium Home Owners’ Association. E-mail: [email protected]

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Who ya gonna call?

Suzanne Morphet
Sun

If there’s something strange in your neighbourhood Who ya gonna call? Ghostbusters!

That little ol‘ tune popped into my head while researching this column, perhaps because strata property owners often need their own “ghostbuster.”

Maybe your strata council withholds information.

Perhaps your AGM is “a farce,” as one reader complained recently, saying his strata council refused any discussion about the strata corporation’s budget.

Or maybe you suspect your strata manager is stealing money from your corporation’s bank account.

Who ya gonna call?

The Strata Property Act of B.C. is the legislation that lays out how a strata corporation should operate and govern, but there’s no 1-800 number to call if your strata council isn’t doing its job. Enforcement of the act is up to you — the owners. But when it comes to strata managers not complying with the Real Estate Services Act, that’s a different matter. You have a “ghostbuster” — the Real Estate Council of B.C.

This is the body that licenses real estate agents brokers, as well as strata management representatives. It collects licence fees, inspects office records and disciplines licensees for “wrongful actions.”

A wrongful action may be deliberate — such as theft — or a result of carelessness. Either way, the council (comprised of 13 elected real estate licensees and three people appointed by the B.C. government, and supported by 37 full-and part-time staff) investigates complaints and renders judgment.

Penalties include a reprimand, a fine of up to $10,000 for an individual representative and $20,000 for a brokerage, and the cancellation of a representative’s licence.

In 2009, the council meted out 13 “sanctions” related to strata management; the year before, 17.

But the number of complaints it receives each year about strata managers is far greater: 53 in 2009, 64 in 2008 and 28 so far this year.

The council thinks it’s doing a good job, pointing to the fact that successive governments have “broadened its role.”

Others vehemently disagree.

Deryk Norton, editor of the online Strata Advocate, says “short of stealing from a client, it seems anything goes as far as the RECBC is concerned,” and points to a council decision to suspend a property manager’s licence for six months after he was convicted of four counts of indecent assault against young girls. “Why not license termination?” Norton asks.

Tyler Davis, spokesman for the real estate council, points to an earlier court decision that lowered a 60-day licence suspension the council imposed on a real estate agent to 45 days after he appealed.

Clearly, determining an appropriate penalty isn’t foolproof, but Davis says discipline committees are aware of the principles in sentencing.

Still, Norton and Bob Harper, the creator of StrataWatch.ca,believe that having a mandatory code of ethics for strata managers, as there is for engineers, optometrists, pharmacists and others, would go a long way.

Something else that would help? That would be for the real estate council to routinely accept complaints from individual owners, not just strata councils.

But as Davis points out: “It is the strata corporation as a whole that is the client of the strata manager, not the individual owners.”

One thing both sides agree on is that the real estate council is not responsible for enforcing the Strata Property Act, even though “that’s where all the complaints are,” according to Harper.

As Norton says, the real estate council “can turn a blind eye to strata managers’ ignoring the Strata Property Act.” And this is perhaps the biggest problem for condo owners. The act they live by is “self-administered,” or as Harper puts it, “nobody’s accountable.”

© Copyright (c) The Vancouver Sun

Tony Gioventu
Province

Dear Condo Smarts: How are the following terms defined? A) “fixtures” in a strata lot and B) “fixtures built or installed by the owner developer as part of the original construction”?

We are a newer strata (five years old) and most of our units were sold as pre-sales. When people arranged for the pre-sale, they negotiated upgrades. The upgrades included granite countertops, solid wood kitchen cabinets, hardwood floors and marble finishing in the bathrooms.

Our council originally assumed that because these items were negotiated by the purchasers, they would automatically be considered the owner’s responsibility for each series of upgrades. Now we’ve had a water leak, and a claim on the strata insurance for the hardwood floors and kitchen cabinets, from the unit below. The insurance company defined these as “betterments” and declined the claim. The owner’s insurance company says no, they are fixtures as part of the original construction and the strata insurance must cover the cost.

Council has no interest in either position; however, we really have to know where we stand so that we can advise the owners of their liabilities when buying their own insurance. If the fixtures were installed by the developer, how could they be called betterments? We’ve asked to see the sales agreements and betterments or increases for upgrades are not shown on the documents.

— John G., Vancouver

Dear John: Your confusion is absolutely justified. There are no provisions under the Strata Property Act to treat owner developer improvements or upgrades separately from the total construction. In a recent building that I toured where upgrades were offered, 50 per cent of the buyers opted for hardwood floors and granite countertops while the other 50 per cent remained the standard. While there is a significant difference in cost to replace, why would the strata corporation or insurer determine that only the lowest standard is the only option for insurance appraisal and coverage? According to Veronica Franco, a lawyer with Clark Wilson: “As long as the improvements, installed by the owner developer, were part of the original construction, then those improvements should be fixtures that are insured under section 149. The contract of purchase and sale is just evidence that the developer installed them as part of the original construction.

“The problem really is whether the strata corporation/owner can prove that the improvements are part of the original construction. Obviously, if all betterments were insured under the strata corporation’s policy, then this takes care of some of the problems that arise when homeowners do not purchase their own homeowner insurance policy. However, not all betterments are alike. Someone’s betterment may be far more expensive than another owner’s betterment, and could affect the premium in ways not necessarily proportional to unit entitlement. In addition, insuring for betterments would require a lot more work on the part of a strata corporation. The strata corporation would have to make sure it kept track of all the betterments and then advise the appraiser of all the betterments. Any errors in reporting could result in liability to the strata corporation if the betterment is not properly insured. As a result, strata corporations that do not want to take on the extra work or potential liability will leave it to the individual owners to insure their betterments.”

The general practice of the developer in the first year of a new development is to provide the insurer with the costs of construction values to determine the appraisal rate of the building when the units are first conveyed to the owners, but the strata corporation will have to commission appraisals in the future to establish the full replacement value as required by the Strata Property Act. In the first year, it would be prudent to create an inventory of upgrades; however, if owners wish to additionally insure the upgrades on their homeowner insurance, they can guarantee that if a claim does arise, they will be insured for the additional coverage.

Tony Gioventu is executive-director of the Condominium Home Owners’ Association. E-mail tony@choa. bc.ca.

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If that doesn’t work, get a lawyer to investigate strata corporation’s out-of-date information

Tony Gioventu
Province

Dear Condo Smarts: I don’t know who to turn to. I bought a condo in Vancouver in February, moved in with my dog on March 15, and March 20 began to receive threatening letters from the strata about my dog. It claims the strata has a “no pets” rule, and that I have to either get rid of my dog or move. Before I purchased, I requested information about the strata corporation, and my agent was given the strata website and password to access the minutes of the strata meetings, bylaws and rules of the strata corporation, as well as other information, including a maintenance and building report done in 2008. Absolutely nothing indicated on the website that pets were prohibited and that there was a no-pets rule. As the information we received was provided by the agent, doesn’t the strata have to abide by the information that individual disclosed to a buyer? I admit that since talking to my lawyer, I should have requested a copy of a Form B Information certificate before I bought. Now what am I supposed to do?

— Frankie D.

Dear Frankie: While online information may be helpful in investigating

a strata corporation, it may also be seriously misleading. The blame is not entirely yours however, as the strata corporation, through its agent, provided you with access to the strata corporation’s current records, and nothing was disclosed in those records at the time regarding the prohibition of pets.

You should have been advised to obtain an information certificate, and to obtain a registered copy of the bylaw amendments. Relying solely on the information posted to the website, you only viewed dated materials. Had you obtained a copy of the registered bylaws through the Land Title Registry, you would have immediately noticed that the strata amended its bylaws in December of 2009, adopting a bylaw that prohibits pets. Unfortunately, the website had not been updated since Nov. 15, 2009, so the information posted was inaccurate.

The other challenge for the strata is that while the manager provides the access-code information, the website is actually maintained by the strata council. The manager was not advised that the council has not been maintaining the website, and as of April 30, the same dated material is still posted on the site. If a website is only archived information, then it should provide dated signatures to identify the periods of information posted. If the website is active current information, it should have a “real person” or company you can contact to obtain written verification of the claims or data posted on a website.

The CHOA website, for example, hosts over 600 information bulletins and articles, all of which are routinely reviewed and updated for changes in legislation, contact information, access to links, changes in case law, or regulations that impact strata corporations.

Whether you are investigating a strata corporation to consider a purchase, or generally surfing the net, look for indications that the information is reliable and there is a person to contact. For Frankie, the best option now is a hearing with council to find a solution for both her and the strata, and failing that, retaining legal counsel to respond to the strata corporation’s disclosure of inaccurate information and its claim of bylaw violation.

Tony Gioventu is executive-director of the Condominium Home Owners’ Association. E-mail tony@choa. bc.ca.

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Tony Gioventu
Province

Dear Condo Smarts: I am on the strata council of a large development of over 250 units in Surrey. We are interviewing prospective management companies and a question has come up that no one seems to have the correct answer for. How much of our strata funds, which are held in trust by a strata manager, are insured?

One company indicated that the trust funds are insured for $200,000, another indicated it was $100,000, and a third advertised that they were fully bonded and insured.

We need to know what the real risks may be.

Paula M.

Dear Paula: It is almost impossible to insure large amounts of money, so there is always going to be some level of risk. However, as the strata council, you need factual information so that you can assess the risks before you have to make a decision. I rarely, if ever, take anyone’s word for it.

A real estate brokerage, licensed for strata services under the Real Estate Services Act, may be contracted to hold the strata funds in trust, and the company may be contracted to administer the collection of the funds, payment of invoices, accounting of the funds, and the administration of the investments and banking services. Under the Real Estate Services Act, the strata brokerage is covered for total losses to a limit of $500,000 and a maximum of $100,000 per strata corporation. The implication of this limit is that each strata is covered to a maximum of $100,000 in losses, but that could also be reduced if there are more than five strata corporations affected, as the $500,000 limit would apply. Does your strata know that potentially only $100,000 of your $1.2-million reserve fund is insured? Is there a risk that a loss could occur?

Absolutely, as there has already been a loss where the compensation fund has been called upon to cover claims for losses by a strata manager. There is also a risk where a strata corporation holds its own funds, as there have also been losses where a treasurer has unlawfully used the strata funds.

What about the claim that a company is fully bonded or fully insured? If the claim is valid, then the broker should provide copies of current valid insurance certificates showing that your strata corporation and your strata funds are insured for specific amounts, specific types of losses such as theft or fraud, and the specific period of time; however, it is virtually impossible to insure large sums of strata funds for theft or fraud. The CDIC, bank deposit insurance, which applies to funds deposited in Canadian financial institutions, insures an account for up to $100,000 in losses. This does not include fraud, theft or misuse of the funds by an authorized party with access to the account.

“The best way to manage the risks is the full disclosure of all limitations of the insurance, and monthly transparent reporting to the strata council of bank statements and transactions,” notes the Real Estate Services Act and Rules. “The licensed broker/ strata manager is required to provide reconciled financial statements and bank statements to the strata corporation/ council each month, and the same practice should apply to self-managed strata corporations.”

Section 7-9(7) of the Real Estate Council Rules obliges the brokerage to provide the strata corporation with a copy of the bank statement and monthly reconciliation referred to in section 8-2(b) in relation to that bank statement. The strata can also add a provision to a service agreement to provide monthly financial statements.

As the acting strata council, you must review the financial reports monthly and declare or report any errors or material changes in finances that are not within the scope of the operating budgets, contingency reserve funds or special levy funds.

Tony Gioventu is executive-director of the Condominium Home Owners’ Association. E-mail tony@choa. bc.ca

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