Several exemptions under Strata Property Act, including grandfathering of existing residents

Tony Gioventu
Province

Dear Condo Smarts: My parents have lived in our Okanagan condo for eight years, and our strata council adopted a new bylaw on March 15 that limits rentals to one. Being committed owners to the strata, we supported the bylaw, but my parents have just received a notice from our manager that they are in violation of the rental bylaw and have 60 days to leave the property; otherwise, fines will be imposed. The letter says there is already one unit rented and they do not qualify. This is a terrifying or my parents, who have been good residents, but one council member resents that they live in the penthouse unit and complains about my mother’s gardens. Her goal has always been to force the tenants out and find a way to move in. We think we’re right on this position to defend our parents so they can remain, but can the strata really force a tenant to leave when the bylaws change?

— Mark D., Tsawwassen

Dear Mark: There are several types of rentals that are exempt under the Strata Property Act, and different conditions on who is affected when a new bylaw is passed.

A tenant who resides in a strata lot when a new rental restriction bylaw is adopted is exempt from the bylaw.

Once that tenant leaves, if there are no other rental vacancies, the owner may still rent for an additional year without penalty. In addition, the act exempts family members from rental restriction bylaws; they are the children or parents of you or your spouse. So under both conditions, you and your parents are exempt from the bylaws, in any case.

There is an additional change under Bill 8 that exempts family and hardship rentals from bylaw counts.

This exemption, along with the exemption of owner developer rental exemptions for first purchasers, has a dramatic impact on many strata corporations in the province. For example, if your strata permits 15 rentals, none of those counted within the limit can include family rentals, hardship exemptions, or the owner developer rental exemptions. As many strata corporations have adopted bylaws that stipulate family rentals and hardship exemptions as part of the rental count, they now find themselves in a conflict with the Strata Property Act as a result of the amendments introduced under Bill 8, if they are applying family or hardship rentals to their bylaw limitation counts.

In the event that a landlord rents a strata lot contrary to the act or bylaws, there is one other provision to remember. If an agreement for the rental of a residential strata lot contravenes a bylaw that prohibits or limits rentals, the tenant is not in contravention of the bylaw, and may, within 90 days of learning of the landlord’s contravention, end the tenancy agreement without penalty.

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

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Relationship of strata council and the contracted providers of services are sometimes strained

Suzanne Morphet
Sun

Condo living is carefree living, right? Your strata council hires a strata management company and it takes care of the bills, the bookkeeping, the AGM, the council minutes … whatever needs to be done. For that full management service, your strata corporation pays anywhere from $20 to $30 per “door” per month in Greater Vancouver.

Since 2006, all strata managers must be licensed by the Real Estate Council of B.C.

Another reason you can sit back and relax; your affairs are in good hands.

If everything’s rosy, then why am I hearing so many complaints about strata management companies?

Let’s start with bullying. According to Tony Gioventu, the executive director of the Condominium Home Owners’ Association, “there’s a number of property managers who simply do not want [strata councils] looking for any information or scrutiny against the services they’re providing. They don’t want anybody questioning what they’re doing.”

Gioventu told me he’s been in the room when a strata manager has threatened a strata council by saying, “‘you belong to a (condo owners’) association, we are not going to manage your property.”

Here’s another complaint, this time from an owner. But since I can’t verify the information, I’ve taken out names.

“We as a council have had lots of problems with [strata management company] awarding contracts without quotes, etc., etc. The last thing they did was give themselves $1,000 more a year for management fees at the last AGM and it was not mentioned at the AGM and was picked up a month after the meeting. The rep from [the insurance company] stated that if we left this strata management company our insurance premiums would go up thousands of dollars. They work like a good cop, bad cop.”

Of course, not all strata management companies are unscrupulous or unprofessional. Maybe -hopefully -only a very tiny fraction are. But as the adage goes, one rotten apple spoils the whole barrel. And strata management is a big barrel.

As of last week, 302 brokerages and 1,045 individuals were licensed to provide management services in the province. (As with realtors, managers must operate under a licensed managing broker.) They offer their services to strata councils who represent the owners of almost half a million homes in the province.

A strata corporation is not obligated to hire a manager, but it’s estimated that somewhere between 50 and 60 per cent of stratas in B.C. pay someone to help them manage their affairs, even if it’s only a bookkeeper. However, most — about 80 per cent — want and pay for a complete management package.

The strata management industry has its own association, the Strata Property Agents of British Columbia, with over 90 members.

I asked executive director Kevin Thom about the industry and whether he personally thinks there are weaknesses in the law that account for the wide-ranging complaints I’ve been hearing. His response?

“The entire industry has been self-regulated. Has it received the attention of governments that are necessary? Most likely not … I think the regulation that’s out there is getting better, it has never been a top priority of any government, I don’t care, Liberal, NDP or otherwise, it just has not been.”

So what does that mean for strata council members who just want to get on with their carefree life and without their current strata manager? “It’s a free marketplace,” Thom says.

In other words, shop around.

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It’s important to carefully review all the paperwork to understand your contractual rights

Tony Gioventu
Sun

Dear Mr. Gioventu: My husband Barry and I were planning to move to Vancouver this winter for our retirement, but our condo that we purchased two years ago on a pre-sale purchase agreement was not ready. It appears it may not be available for occupancy for at least another six months, but the contract said it would be ready by Jan. 15, 2010. So now we have to live somewhere in the duration, keep our furniture in storage and hope there is a completion date soon. Do we have any legal recourse for the delays and the additional costs?

— Marg and Barry C., Vancouver

Dear Marg & Barry: A pre-sales agreement is a contractual agreement to enter to a purchase agreement upon completion of the project within the conditions of the contract.

So it’s not an agreement for sale yet, it’s simply a contract giving you those rights in the event the conditions of the contract are met.

Wesley McMillan, a lawyer with Harper Grey in Vancouver, has some helpful insight into pre-sales contracts. According to McMillan: “Only a careful review of your contract will help you understand your legal rights and obligations in these circumstances.

“There is no standard pre-sale contract. Many pre-sale contracts contain multiple closing dates.

“One contract may refer to as many as three dates, such as an estimated, target and outside completion date.

“The terms of the contract will set out the legal effect of missing any one of these dates. In addition, pre-sale contracts often provide the developer the right to unilaterally extend the completion date for no reason at all.

“Only with a careful review of the entire contract and an understanding of the legal principles governing these contracts can you understand your rights, if a date is missed. It may be that you have the right to the return of your deposit (in which case you would have to find a new home to buy) or a claim against the developer for monetary damages.

“In addition to any rights you have under the contract, you may have rights under the Real Estate Development and Marketing Act (REDMA).

“The marketing and sale of all pre-construction condominiums in British Columbia is subject to the REDMA, consumer protection legislation in force since 2004. Failure to comply with these obligations may give a purchaser the right to cancel the contract. The right to cancel the contract, if it exists, may exist and be enforceable at any time after the contract is signed.”

If there is a breach in the agreement or compliance with REDMA, act quickly to exercise your rights and seek legal advice. Delay may result in the loss of your rights or a significant weakening of any legal claim you may have.

For new investors/buyers who are contemplating entering into a pre-sales agreement, remember you have the right to seek legal counsel on the agreement before you sign on the dotted line or provide your deposit.

Also review the conditions of common expenses, parking, storage lockers and common amenities. If the projected development subjects your future strata to leases for elevators, parking lots, storage lockers, entry and security systems, or use of shared facilities at an additional cost to the operations of the strata, those future costs can easily double or triple your planned cash flow.

Tony Gioventu is executive director of the Condominium Home Owners’ Association of B.C. tony@choa. bc.ca

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Tony Gioventu
Province

Dear Condo Smarts: Our property manager suggested we pass a 3/4 vote as soon as possible so we wouldn’t get burdened with the additional fees for a depreciation report that’s required with the new amendments to the Strata Property Act. So at our AGM in February, we passed a 3/4 vote to exempt our strata. Now we have a challenge with the resolution, because we also voted to not be obliged to contribute any amount, yet the regulations still require a minimum contribution of 10 per cent. So if we change back and reverse the 3/4 vote, we have two questions: How do we proceed with a depreciation report and who is a qualified person?

— John Fischer, Richmond

Dear John: Your strata is a bit ahead of the legislation. Yes, the amendments to the Strata Act under Bill 8 were passed; however, only certain sections were brought into force by the regulations.

The sections that deal with depreciation reports, audits, arbitration, Provincial Court, and amendments to Form B Information Certificates all require extensive development and consultation before the regulations can be created, and are therefore not yet in effect.

However, exempting your strata from the funding obligations has significant repercussions in the future, especially if your neighbouring properties are participating in active depreciation/reserve fund reports and are funding them over the long term. At some point, your strata will be faced with substantial special levies to address repairs, and future buyers, mortgage providers, mortgage insurers and insurance companies will begin to view your lack of long-term planning and financial commitment as a significant risk. That will have a negative effect on the value of your properties.

Before you decide to exempt your strata from these obligations, think of what the future may hold for your property values and owners’ personal financial risks.

The Condominium Home Owners’ Association is hosting three forums on reserve fund studies that are open to the public at no cost.

Their purpose is to provide strata corporations with an understanding of reserve fund studies (depreciation reports) and to seek feedback on the issues that strata corporations will be facing in the near future.

The forums will be held on Saturday, April 17 from 10:30 a.m. to noon at Douglas College, 700 Royal Avenue in the New Westminster Large Lecture Theatre; on Saturday, May 15 from 2:30 p.m. to 4:30 p.m. at the Days Inn, 152 Riverside Drive in Penticton; and on Saturday, May 29 from 2:30 p.m. to 4:30 p.m. at the Comfort Hotel, 3020 Blanshard Street, Victoria.

Space is limited, so please contact the CHOA office to register, toll-free, at 1-877-353-2462, extension two.

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: The Strata Property Act says strata councils must convene a hearing if an owner requests one. But what does it mean to convene a “hearing”? Our council, of which I am a member, recently convened a hearing at the request of an owner and he showed up with a two-page list of gripes. When the hearing was over he wanted to know why we didn’t answer any of his questions and demanded another hearing in the next week.

We want to respond, and in writing, but because we have no request for any decisions in front of us we simply do not know what to do.

Jeff C., Chilliwack

Dear Jeff: An amendment to the act, introduced last fall, makes hearings on request the law of the land. And that’s because too many strata councils ignored a standard bylaw requirement for hearings by removing the provision or amended the bylaw limiting the ability to request a hearing: owner rights were being affected. The amendment moves the requirement from the bylaws to provincial legislation.

Here’s Veronica Franco, a lawyer with Clark Wilson LLP in Vancouver, on the hearing requirement: “The concept of a hearing is vague and not well understood.

“Most assume that hearings are generally for the purpose of seeking or disputing a decision of council. The owner[s] or tenant[s] demanding the hearing are often seeking a decision on an interpretation of the bylaws as they may be applied to rentals, pets, age, parking, alterations, or use of property.

“Once they have obtained a decision of council, they can then decide on how to proceed with resolving their concerns.

“Hearings that appear to have no specific purpose other than to provide an opinion will not likely result in any decision or actions being taken, wasting the time of all the parties and potentially generating a conflict within the community.

“The [hearing requirement] defines a hearing as ‘an opportunity to be heard in person at a council meeting.’ Owners are required as part of the request for a hearing to advise of the purpose of the hearing. Before owners request hearings, they may wish to contemplate their intended result of the hearing. Before the hearing starts, councils may also want to explain the way the hearing will be conducted to avoid any misunderstandings. “

Because the hearing is being conducted within the proceedings of a council meeting, the council also has an obligation to create minutes of the meeting, and without the context of a decision what will council write in the minutes?

How can you describe the proceedings of a hearing if no decision is being sought, or there is no context to the hearing.

While there is no obligation to provide any response in the hearing, it may be an excellent opportunity for the strata council to ask questions and gather information to better manage your community. If owners raise genuine concerns, the sooner they are addressed, the less chance of a growing conflict in your strata.

Tony Gioventu is executive direction of the Condominium Home Owners’ Association. E-mail:

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Tony Gioventu
Province

Dear Condo Smarts: Our strata building had major renovations over the past three years, and the project is just coming to an end.

I am moving back east and selling my unit, but the strata council has told everyone we have a refund of about seven per cent coming because of interest earned on our money during construction, rebates, and coming under budget. My closing date is in mid-April, but the refunds won’t be settled until June 1. I advised council that I would be selling and notified it to send the refund to my new address. It has advised that it does not have the authority to refund me the money once I have sold the unit. So how do I get the refund?

— Mark, Saanich

Dear Mark: When a refund comes due, that refund is payable to the owner of the strata lot. The owner is defined as the person who is on title at the time the refund is due.

As is similar to the payment of a special levy, if your sale is completed before the refund from a special levy becomes due, the obligation or benefit is transferred to the owner at the time of the due date. The resolution that first approved the special levy three years ago may have identified the owners or the process differently, so it would be important to review the original resolution, as well; however, this is more common with a lawsuit where the individual parties may be named as opposed to the strata corporation. Vendors who are wanting to secure their rights to a refund need to seek legal advice on the contractual agreement for sale and the enforceability of such an agreement.

Tony Gioventu is executive director of the Condominium Home Owners’ Association. Send questions to him at [email protected]

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Understanding that your interest is the lesser interest and the strata corporation’s is the greater is a start

Suzanne Morphet
Sun

‘Another election,” we’ll complain, when faced with going to the polls yet again.

During that triple whammy between October 2008 and May 2009 that had us voting in federal, then municipal and finally provincial elections, most of us were worn out by our democratic obligations.

Pity then, those of us who live under yet another level of government, this one with annual elections.

I’m talking about what’s sometimes called the “fourth” level of government, the one that the million or so British Columbians who live in strata developments are part of, whether they like it or not.

When you buy a strata property, developers and their brokers like to say you’re buying a “lifestyle.”

True enough, though it may not be the relaxed, carefree one they suggest.

The lifestyle of a strata owner involves not just elections, but annual budget decisions and — if you’re on council — record-keeping and bylaw enforcement.

This column isn’t intended to scare you away from buying a strata property.

There are good reasons why half of all taxable properties in several of B.C.’s larger urban centres are strata properties: they’re more affordable and carry a lighter environmental “footprint” than detached homes.

Rather, this new column is intended to help you better understand the obligations that go with owning a strata property and to ensure your fourth level of government is operating in your best interest.

Let’s face it: sitting on a strata council or even participating at your council’s annual general meeting isn’t the way most of us would choose to spend our Saturday afternoons.

Retired people often buy a strata property to lighten their load.

And the young adults at the other end of the strata-ownership spectrum are often so preoccupied with careers and families that they have little free time to get involved with their strata councils.

Yet, in many ways, living in a condo requires more knowledge and obligations than other kinds of property ownership.

Consider this list of activities condo owners should be willing to take on, according to our provincial legislators, who passed the Strata Property Act:

– Attend meetings and help make important decisions.

– Understand the bylaws and rules of your strata corporation.

– Educate yourself about the Strata Property Act.

– Compromise your interests for the good of the strata corporation as a whole.

So much for spending all your free time on the golf course!

Elaine McCormack, a lawyer at Alexander Holburn Beaudin & Lang LLP in Vancouver, helps strata corporations and owners resolve problems.

She says the biggest challenge for council members is exercising their quasi-judicial role, which means enforcing bylaws and rules.

“Because you’re standing in judgment of your neighbours and you’re obliged to follow the rules of natural justice and deal with it in a fair and appropriate way,” she says.

“That is something most people aren’t trained for and something that’s very difficult to do.”

Not surprisingly, many strata councils hire management companies to help them run their affairs. But that can be problematic, too.

Imagine handing your life savings over to a financial adviser, giving him or her free reign, then finding out that individual is incompetent, but you can’t easily “fire” him or her. Now what?

Four condo-owners associations exist to help.

The Condominium Home Owners Association, the Vancouver Island Strata Owners Association, the Pacific Condominium Association of B.C. and the Vancouver chapter of the Canadian Condominium Institute all offer seminars and have websites with online information.

Membership ranges from $20 to $550 annually, depending on whether it’s for an individual or a strata council.

At that price, joining an association may be the smartest thing you and/or your strata council do.

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Tony Gioventu
Province

Dear Condo Smarts: I work as the resident manager for a large strata corporation in the Tri-Cities area. We have an ongoing situation with owners who do not pay strata fees, fines, special levies and insurance deductible claims. Right now, we have four owners who each owe more than $13,000 in unpaid fees, most of it strata fees and levies. Our strata council has decided that rather than using legal services, to assign the collection of the fees to a collection agency. If we use a collection agency, how do we cover the cost of the service? It seems to me that we have a better chance of collections through the courts. What is your view?

-Sincerely, JM.

Dear JM: The strata corporation has better authority and financial gain by using the provisions set out in the Strata Property Act.

For starters, special levies, strata fees and the permitted interest on those fees, are amounts that may be liened against the strata lot, thereby securing the debt as a priority over most charges on the title. The strata corporation interest will even come ahead of a mortgage or loan debt filed on the title. If the strata lot has not paid those amounts and either the amount owing or the period of time requires further action, the strata council has the authority to retain legal counsel, without the need of a 3/4 vote, to then proceed with a court action for an eventual order for sale.

The strata will recover the fees and interest owing and a reasonable portion of the legal and court costs. At the same time, the owners have a reasonable period of time to attempt to resolve their financial position without the constant harassment of a collector.

Using a collection agency requires the strata corporation to assign the debt owing to that collection agency. The strata corporation cannot assign the debt to another party unless it does so by 3/4 vote resolution. Also, once the debt is assigned, the strata corporation might not be able to charge back the cost of the collection agency’s service to the defaulting owner.

The best solution the strata corporation can employ are the provisions set out in the act and regulations. No one wants to see an owner lose his or her home, but that’s the decision a buyer makes when that individual moves into a strata, and owners must pay their fees and levies. Strata corporations who run their operations like a business and vigilantly collect fees rarely have problems with owners paying. The expectations are clear, and so are the penalties.

Tony Gioventu is executive-director of the Condominium Home Owners’ Association. Send questions to him at [email protected]

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Owners allowed access to records

Tony Gioventu
Province

Condo Smarts: Our strata corporation has just finished our major construction for our leaky condo repairs. We have had several sales in the past three months, and are just about to finish the final statements for the accounts. One purchaser demanded to see a copy of the engineering reports and the final report identifying what work was done. We have two questions on which we get mixed answers. Do we have to disclose the reports and the repair results? What gets credited back to the account as revenues and who gets the refunds, if there are any, and how is the refund date created? We can’t find anything in the act that establishes the refund date.

— Cy Merrill, Surrey

Dear Cy: The contracts, records of repairs, warranties, and correspondence that relate to the repairs are all part of the documentation described under section 35 of the Strata Act. An owner or agent of an owner is permitted access to either review or request copies of those records, and the strata corporation must comply within 14 days of a request for copies of the documents. The strata may also charge a fee of 25 cents per page per copy.

The end of the project is a bit more complicated. The Strata Property Act does not set any description of how a due date or completion is established at the end of a special levy. Even though a project is complete, there may still be other rebates or costs associated with the special levy that have to be completed before the final accounting is complete. The strata council will have to decide when the project, including accounting, is complete and then issue the refunds, if any, based on that date. The recipient is the owner of the strata lot on that date, and that owner is the person/company registered on title at the time the refund is due.

Tony Gioventu is executive-director Condominium Home Owners’ Association. Send him questions at [email protected]

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Tony Gioventu
Province

Dear Condo Smarts: Our strata council is confused on how to apply our bylaws.

We live in a very harmonious strata building in Nanaimo. Over the years, owners have been permitted to install awnings, balcony enclosures, and make changes in their strata lots. Nothing has ever been documented and no one can provide any proof of the permission; however, we all remember at some point having been on council, and even I recall giving consent for an owner to change the windows.

Now one owner is challenging us because we will not allow them to change their carpets to hardwood flooring. This is the one alteration we have avoided, to guarantee that owners would not have excessive noise. She claims we cannot cherry-pick which alterations we will and will not approve, and she may have a point.

— Ms. H. Griffin, Nanaimo

Dear Ms. Griffin: The general enforcement of bylaws works well if a strata council goes by the book. The casual approach works well enough until there is a problem, and with the constant change of ownership in buildings, you can almost guarantee one.

The owner making the application is correct about one thing: you cannot cherry-pick your alterations. The bylaws are there for the regulation of the strata corporation’s use and enjoyment of property, but they are also there to ensure council applies the enforcement of bylaws in the same fair manner to all owners.

In fairness, council must comply with the bylaws in the enforcement as owners have to comply with bylaws in their compliance. The bylaws require written permission, and either through a letter to the strata lot or in the minutes of the council meetings, council has an obligation to provide written permission. Unless a strata corporation has a bylaw that specifically prohibits the changes to a strata lot that prohibit or limit certain types of flooring, the council is a bound to the standards of a reasonable approval.

There may also be extreme medically documented conditions of allergies to dust and particles produced from carpeted flooring that may require the owners to consider an alteration.

If your strata wants to regulate specific types of flooring, then a bylaw would be necessary.

Tony Gioventu is executive director of the Condominium Home Owners’ Association. Send questions to him at [email protected].

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