New law’s coming, but strata will have the right to approve installation

Tony Gioventu
Sun

Q: In September, one of our owners upgraded their gas furnace in their townhouse. The upgrade resulted in the mandatory change to a high-efficiency furnace and new venting from his unit. The new venting required that holes be cut into the siding of the unit and alterations were made to the strata lot without the permission or consent of the strata corporation. The strata council responded to the complaint from another owner and the furnace company told us we had no choice. “Because of the regulations we were just going to have to live with it.” Has a new regulation come into effect? What happens to all the units with gas fireplaces? Doesn’t the strata corporation have authority over what happens to common property?

— Sanjay G., Surrey

A: The British Columbia Energy Efficiency Act (EEA) comes into effect for the replacement of residential furnaces in existing dwellings as of Dec. 31, 2009. The new regulations affect townhouse and detached strata-titled houses directly, when they go to replace their existing gas fired furnaces.

Owners will still be required to obtain the written consent of the strata corporation before they alter common property, and the strata corporation as a result may set conditions to the agreement that include: being responsible for the future costs of maintenance, repairs or resultant damages of the alteration, any building/gas permits or engineering requirements, and any of the related costs of the installation. The strata council will also have the authority to approve the intended installation and alteration of the common property or structure of the building before the work commences. The changes also have a potential impact on building envelope systems, drainage and landscaping.

The change to a high-efficiency gas furnace typically requires changes to the venting system as the system uses a condensing technology where the products of combustion are direct vented through a plastic pipe commonly through a side wall.

Townhouses, of course, are much more complicated because many of them may only have one wall, or a basement or crawl-space furnace, in confined spaces, and under stairwells or in enclosed closets.

Owners should ensure they are only using a licensed HVAC professional, and that if there are any alterations to the structure of the building or common property, they need the written approval of the council before they proceed.

The council needs to remember they can place conditions on the approval in accordance with their bylaws, but they must act reasonably.

A failed furnace in the winter is going to require some quick action and an upgrade with approval. This is not a do-it-yourself job!

For more details go to @ housesmartcentre.com, “New Standards for Furnace Installation.”

Tony Gioventu is executive director of the Condominium Home Owners’ Association. Send questions to him c/o At Home, e-mail [email protected].

© Copyright (c) The Province

Tony Gioventu
Province

Q: I was involved in my condo in a fire a few years ago that has come back to haunt me many times over. We were barbecuing pork ribs and chicken on our balcony and the grease caught fire. Seven of the units in the building were damaged by the water, smoke and fire.

We have always been serious condo owners but we made two fatal errors. We did not have homeowner insurance as our personal possessions were of little value, so didn’t see the point, and we were unaware that the strata had passed a rule prohibiting barbecues.

We knew we were going to be on the hook for some expenses such as the insurance deductible costs. What we didn’t know was that we also had the liability for the uninsured losses of the owners in the other units that were affected.

We have finally just settled the balance of the claims (out of our own pocket ) but want every owner to know how important it is to have home-owner insurance.

The costs almost bankrupted us, and had it not been for a recent inheritance we would have certainly lost our home. Please publish our letter so all owners know that a homeowner policy can also cover all the other losses caused by your strata lot.

— D.B., Metro Vancouver

A: I am asked to respond to letters every week from owners who have chosen not to insure their personal liability and have paid the very steep cost.

If a strata lot is responsible for a claim, the owner of the strata lot is most likely going to be responsible for the cost of a deductible if there is an insurable claim.

Strata corporations, owners and tenants need to review their insurance every year and make sure everyone knows what the deductible costs will be, and what is exempt from a policy.

If the strata corporation has a water-escape deductible in the amount of $25,000, then as a homeowner/tenant, ensure your homeowner/ tenant/ landlord policy can cover that potential claim. Landlords need to remember they may be ultimately responsible for the claims in the event the tenant does not have insurance coverage or defaults on the claim.

One of the most important products on your homeowner/tenant policy is your general liability coverage. In D.B.’s situation, had he (or she) purchased a condo homeowner policy, his general liability insurance would have likely provided sufficient coverage for the claims filed by all of the other affected owners or their insurance companies.

Nigel Kent, a lawyer with the insurance group at Clark Wilson LLP, points out that many strata owners are also unaware of a significant coverage benefit under the strata corporation’s own policy.

“Under Section 155 of the Strata Property Act, owners and tenants are named insureds on the strata corporation’s liability policy.

“As a result, in any given case, they [homeowners] may benefit from the general liability coverage afforded under that policy. Even if a homeowner did not have his own general liability coverage, the strata corporation’s policy may very well fill the void.

“But don’t rely on the strata policy for your own needs, though,” says Kent.

“There is nothing better for a homeowner and tenant or a landlord than ensuring you purchase the best coverage available for your personal property, betterments to a strata lot and your personal liability. Many strata policies may limit or restrict the coverage or the amount payable, so obtaining your own insurance is still the best bet.”

Tony Gioventu is executive director of the Condominium Home Owners’ Association. Send questions to him c/o At Home, e-mail tony@choa. bc.ca.

© Copyright (c) The Province

Tony Gioventu
Province

Q: Our property manager has advised us that effective Jan. 1, 2010, we must start paying the Harmonized Sales Tax on our strata fees. In addition, he has sent a notice to each owner in the building advising that it will cost them $50 per unit to create a statement for our claims for the Home Renovation Tax Credit. Our council thought we would not be paying HST on strata fees, and our owners are protesting the charge for the HRTC statements. Please clarify.

— Timber Villas, North Vancouver

A: It will be a while until we know the real impact of the HST on strata corporations. The government has indicated there will be no change on strata fees for residential units. Residential strata units do not pay GST and will not pay HST on their strata fees. Commercial units in many strata corporations do pay GST and will likely pay HST.

Until the legislation is actually tabled for debate, however, and is passed into law no one knows for sure what will happen.

The projected date for the HST, once it comes into law, is July 1, 2010. The effects on a strata budget will depend on the types of services that you currently pay for that incur only GST, and those that are included in the legislation. They will likely become HST items.

As for the Home Renovation Tax Credit, the obligation to provide the statement for strata lot owners is that of the strata corporation.

As a result, the strata agent/strata corporation is not permitted to charge or levy the owners for the statement.

Your strata-agency agreement may not make a provision for this service, but if requested and agreed to between the agent and the corporation, the agent may charge the strata corporation a fee to provide the statements to the owners. That fee cannot be charged to the owners and would be an operating expense. Review your contract and contact your strata agent to negotiate the service.

Each owner is given a statement showing their share of the annual eligible costs either from a special levy or from reserve funds. The amounts shown per strata lot are based on unit entitlement. For more information on the HRTC, go to the Condominium Home Owners’ Association website at choa.bc.ca under legislation alerts and updates.

Tony Gioventu is executive director of the Condominium Home Owners’ Association. Send questions to him c/o At Home, e-mail tony@choa. bc.ca.

© Copyright (c) The Province

Tony Gioventu
Province

Dear Condo Smarts: Our strata council has been polarized by a “repair gone bad,” resulting in damage to the building envelope.

It all started when the president of council told an owner that she had to arrange for the replacement of her own vinyl deck surface because our bylaws said owners had to maintain and repair limited common property. The deck of one owner is also the roof of the owner below. She hired an inexperienced contractor who left without completing the job, and without covering the exposed areas. He also tipped a bunch of scaffolding against the building. The result was damage to the siding and windows, and damage to the unit below.

The council has retained a licensed contractor and is satisfied with the repairs. Half of the council insists the owner of the unit has to pay for all the costs including the damages, and the other half thinks we should pay because we instructed the owner to conduct repairs.

The root of our problem is that we really don’t understand our bylaws.

— CW, Coquitlam

Dear CW: Your strata has the Schedule of Standard Bylaws from the Strata Property Act, plus a few additions that relate to pets and rentals. According to the standard bylaws, “an owner who has the use of limited common property must repair and maintain it, except for repair and maintenance that is the responsibility of the strata under these bylaws.”

When you look at the strata’s obligations, it clearly states that the strata must repair and maintain limited common property in the ordinary course of events that occurs less often than once a year, and the following, no matter how often: a) the structure of a building, b) the exterior of a building, and then c) balconies and other things attached to the exterior.

In common language, owners have custodial duties, sweeping, keeping drains cleared and cleaning, while the strata corporation is responsible for most types of repairs, including replacing deck surfaces.

It is helpful to remember that, like strata council members, owners for the most part are lay people. They have little, if any experience in construction, the contracting process or the negotiations necessary to protect your property.

One of the principal reasons that building exteriors are common property is that the exteriors, regardless of boundaries, protect all of the strata lots as a common asset. A strata corporation acting as a singular legal entity can negotiate contracts and services, ensure there is a qualified, insured contractor, obtain legal review of contracts, negotiate services on a larger scale to reduce costs and control the outcome of the contracts.

Collectively, the strata corporation is responsible for the common property (including the limited common property) to the extent that it acts in the best interests of all owners.

It seems to me your strata council never had the authority to make the owner responsible for the repairs, and should have ensured the scope of work was properly documented, contracted and paid for by the strata corporation.

Strata councils need to review bylaws before making decisions. Depending on each strata’s bylaws, the answer could vary significantly.

Gioventu is executive director of the Condominium Home Owners Association.

Email: [email protected]

© Copyright (c) The Province

rules: Bylaws can be complicated due to many exemptions and amendments

Tony Gioventu
Province

Dear Condo Smarts: We live in Toronto and will be retiring to Vancouver to be near our family in the next five years. We have been looking for a condo in either Vancouver or Victoria and are working with a real estate agent.

The agent has told us that we are best going into a building that does not limit rentals — that way we won’t be restricted on our use — but we are quite uncomfortable with a building that might be all rentals.

We understand you might not be able to answer this question but what is better: a condo that permits rentals, prohibits rentals or controls the limit?

— Adrienne Lefevre

Dear Adrienne: You have asked the million-dollar question that everyone asks regarding rentals in strata buildings.

Rentals are much more complicated than simply whether they are permitted or not and the impact they might or might not have on real estate values.

Your intended use of the strata lot ultimately influences your conclusion.

Our offices assist every type of strata in the province, and there is no hard and fast rule.

There are strata corporations that permit 100 per cent rentals that are model operations. And there are strata corporations that prohibit rentals, some of which are plagued with conflict and some of which are harmonious and efficiently run.

If a strata corporation has an enforceable rental bylaw, and the strata council is reasonably active regarding bylaw enforcement,

the community will likely function well.

Rental bylaws, however, are the most complicated of all to enforce. There are exemptions that apply to family rentals, hardship rentals, owner developer rental disclosure exemptions, and of course permitted rentals.

A strata bylaw might permit only 10 rentals in a 120-unit building, but in addition to those 10, there might be another 15 family rentals, a couple of hardships and, in a newer building, many of the first purchasers might still be exempt.

When a Form B Information Certificate is produced for an owner, one section refers to the number of strata lots that are rented.

It is almost impossible for this number to be accurate, especially in larger strata corporations,

without conducting routine title searches.

Even then, a strata would have to consider whether exemptions are included in the number or not, and if or how those would be reported.

Another new twist to rentals is the amendment under Bill 8 that effectively will exempt a new building after Dec. 31 from rental bylaws for a specific period of time.

If a developer files a proper rental disclosure statement, the building can be restricted from adopting a rental bylaw for that period. For an investor, that would be beneficial as the property’s use would not be altered in that period. But if you are looking for a resident owner community, this will prohibit the strata residents from regulating rentals in that period.

I visit excellent strata communities all over the province that vary in their rental bylaws. They all have one thing in common though. They are consistently well managed and well maintained properties.

It is important to remember when looking at a property that you review the minutes of meetings, do a site walk about, review the strata insurance, the financial operations, maintenance programs and long-term renewals.

If the strata is well run, it will show in the condition of the building, the finances and the effectiveness of its general operations.

Most important, get everything in writing. If you have any questions about engineering reports, alterations, building conditions and building history, put your questions in writing. Insist on a reply in writing, and keep those letters on file.

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

© Copyright (c) The Province

rules: It depends whether property is defined as common on strata plan

Tony Gioventu
Province

Dear Condo Smarts: The first flakes of snow have already started falling for our Interior strata and the owners are already fighting over who is responsible for the removal of snow.

Our council understands that owners are responsible for their own decks, balconies, walkways and driveways. However, an owner has come back to us with a legal opinion that the strata corporation is responsible for all snow removal. We suspect that every other strata is just as confused about this problem, and would appreciate your insight.

— Alderwood Strata Council

Dear Alderwood Council: This is not a question that anyone can answer without reviewing the strata plan and registered bylaw amendments and rules of each strata corporation. It is possible the obligations will be different for each strata in your neighbourhood.

The basic requirements of the act are easy to follow but, to determine responsibility, your council first needs a copy of your registered strata plan and all filed bylaw amendments.

Generally, the drawings of the strata plan will show what is part of the strata lot, what is common property and what is limited common property.

Areas not designated are generally common property. If the area is common property on the strata plan, the strata corporation must remove the snow as they are not permitted to make an owner responsible for the maintenance and repairs of common property, either through a rule or bylaw.

If the area is limited common property, and the strata has the schedule of standard bylaws, then the owner is responsible as the standard bylaws require an owner to maintain LCP for those items that occur once per year or more often and that is things like sweeping, washing, snow removal or general custodial items.

Where it gets complicated is when the strata has amended the standard bylaws or repealed them with nothing replacing the obligations of owners.

A basic guideline is, if the area is common property, the strata must perform snow removal. If the area is limited common property then it depends on what your bylaws say, including the standard bylaws if they still apply.

That satisfies the legislative part of the answer, but strata corporations should also think about the practical applications.

For example, if you have a townhouse complex of residents who are 55 and over, and each driveway is limited common property, does it really make sense to have each person shovel their own driveway? It would be much more economical for the strata corporation to arrange a single snow- removal contract, and it would not be placing undue physical pressure on owners.

Remember, one of the underlying principles of strata living is the benefits of scale.

It’s always cheaper to have one contractor do 25 driveways at the same time than each owner having to arrange their own contract with different contractors. The strata also has control of selecting a contractor who is insured and reliable. This is always a good item for owners to discuss and approve at your annual meeting when you approve the budget.

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

© Copyright (c) The Province

dispute: Owner moved into unit in 2005 but is being blamed for leak that started in 2003

Tony Gioventu
Province

Dear Condo Smarts: I recently sold my unit but ran into a load of trouble over an allegation by a council member that we damaged the parking membrane. The council claimed we had planted bamboo in the gardens next to our townhouse, and the bamboo roots penetrated the landscaping membrane, resulting in leaking in the parkade and a claim by council that this is going to cost over $50,000 to repair.

When our lawyer requested a Form F, the strata council refused to provide a copy of the form unless we provided an undertaking to put $50,000 into their trust until the repairs were complete. We have agreed to place the funds into our lawyer’s trust until Dec. 31 or earlier if the matter is resolved before then, but how can a strata council come out at the last minute and file such a claim? We had no notice, and no indication of such problems. Other owners tell me our parkade has leaked for more than five years.

— E. H.

Dear E.H.: When a strata lot is conveyed (sold), the seller must provide a Form F, Certificate of Payment, provided by the strata corporation.

Usually the strata lot conveyance cannot be complete without the form.

The payment certificate has to stipulate whether an owner does not owe money, does owe money but the amount has been paid into court or in trust to the strata corporation, or satisfactory arrangements have been made to pay the money owing.

Generally the lawyer or notary completing the conveyance will provide an undertaking to ensure the debt is satisfied as the sale is completed.

An alternative for an owner who is disputing a fee is to pay the amount into court pending a hearing on the dispute.

Under section 115, a Certificate of Payment must not include claims of damages against an owner that have not been determined by a court or by arbitration.

If there is a claim that an owner has acted in some manner that has resulted in damages to the strata corporation, they need to seek legal counsel and commence a court action as soon as possible to protect the interests of the strata.

The minutes of your strata corporation indicate that the leaking was first documented in 2003 and has grown to include most of the parkade areas, not just the area under your entry. In addition, you moved into your unit in 2005, long after the leaking had started.

If you are completing forms for a strata corporation, read the sections of the act that create the form. For example, Form F is actually Section 115 of the act, Form B is Section 59 of the act. Each of these sections contain information not published on the forms.

Check out the fall lineup of Strata Seminars on the CHOA website at www.choa.bc.ca

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

© Copyright (c) The Province

Tony Gioventu
Province

Dear Condo Smarts: As a strata owner I have heard a number of reports on the news about proposed changes to the Strata Property Act. How can the public find out more about the proposed changes and the debates?

— Arlene Smith, Maple Ridge BC

Dear Arlene: In September, the provincial government tabled amendments to the Strata Property Act that are contained in Bill 8. The 36 amendments apply to the legislation and they contain a number of significant changes that will have a significant impact on strata corporations and owners.

The greatest impact on consumers are amendments to dispute resolution, disclosure of storage lockers and parking spaces in sales agreements and forms, notice to the owners or the strata corporation by email, the requirement/waiver of depreciation reports, the requirement/waiver of annual audits, a change in rental disclosure exemptions after December 31, 2009.

Once the legislation is passed, the next step will be the implementation of regulations that will apply to some of the most critical changes.

The amendments to dispute resolution, depreciation reports and audits, will only take effect once the provincial cabinet adopts the enacting regulations by an order in council.

The creation of these regulations will be the real “meat and potatoes” of the changes. The regulations are not approved by the legislature; therefore, there is little or no opportunity for debate or public consultation.

Amending the Strata Property Act is far more complicated than addressing a solitary problem experienced by often a small group of strata corporations.

The legislation applies to over one million functional strata units that include: townhouses, apartment buildings, highrise, mixed use with commercial, parking lots, storage facilities, bare land use, marinas, airports, golf courses, industrial complexes, lease hold properties, and 1st nation properties in some cases.

Bill 8 creates the possibility of different classes of strata corporations, and the application of the different sections of the Act to those classes.

Go to the following sites to follow along with the proposed changes and the debates. BILL 8 — 2009 STRATA PROPERTY AMENDMENT ACT, 2009: www.leg.bc.ca/39th1st/1st_read/gov08-1.htm

The Hansard debates can be viewed on the Legislative Assembly of British Columbia website at http://www.leg.bc.ca/hansard/8-8.htm.

You can either click “Subject Index” near the top left of the page and scroll down the alphabetical listing to Strata1 Property Amendment Act, 2009 or if you know the date of the debate you wish to review you can view the transcripts which as posted chronologically.

As a consumer you have a powerful voice with your local MLA. Call or e-mail your local MLA’s office calling for a public consultation on the future regulations that will impact your investment.

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

© Copyright (c) The Province

Strata has a duty to collect the funds in order to protect other owners

Tony Gioventu
Province

Dear Condo Smarts: Three owners in our strata have not made payments on a special levy that was due at the end of February this year. They each owe roughly $9,000, and our suites currently sell for around $325,000.

Our property-management company has placed a lien against the strata lots, but has advised us not to proceed with a court-ordered sale as we are told the judge would be very unlikely to force a sale.

Part of the problem is our manager is afraid of one of the owners.

If we can’t go to court, how do we get money from these owners?

— N.B., Surrey

Dear N.B.: If a strata lot owner has not paid his strata fees or special levies, the Strata Property Act gives you substantial authority to protect the strata interests, and also to ensure those funds are collected.

Take this chronologically. On Feb. 28, the special levy was due. Those units that missed that deadline should then receive a demand notice advising if they do not pay the amount within 14 days, the strata corporation will be entitled to file a lien against a strata lot.

Once that period has expired, the strata council then needs to decide when a lien will be filed, if the owner is not co-operative in providing payment. The lien provision is there to ensure the strata corporation can collect the money, and it takes a priority over other items such as personal debts and mortgages.

The cost of filing the lien is also included in the lien amount the person owes.

If, at that time, the owner is not co-operative, the next step is to proceed with a court application for a forced sale of an owner’s strata lot.

Depending on a number of conditions, and with the advice of legal counsel at this point, you will decide on what the appropriate time and amount are for proceeding to the application for sale.

According to Stephen Hamilton, a lawyer in Vancouver, “Most strata corporations would consider proceeding to court for the application when the amounts reach $2,000 to $5,000, or a long period of time has passed for the amount owing.

“While most of the costs are recovered, the strata corporation does have some cost associated with court fees that may not always be recovered.”

Don’t wait for the owner to go into bankruptcy or, worse yet, lose their asset because of proceeds of crime, tax evasion or long-unpaid family maintenance requirements.

In such a case, your strata corporation might not be at the front of the queue to get paid what it is owed.

The strata corporation must enforce the bylaws and has a duty to collect the funds.

It is reasonable to take the necessary steps to protect the interest of the other owners who have paid their assessments and are shouldering the costs.

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

© Copyright (c) The Province

Limiting the number of proxies conflicts with the Strata Act

Tony Gioventu
Province

Dear Condo Smarts: A small group of owners in our strata is frustrated by the lack of interest of most of the strata owners in our complex. We often struggle to get a quorum, so we amended our bylaws to approve those attending as the quorum. Even with a recent major financial decision, fewer than 40 per cent of our owners showed up, and more than half of those were represented by proxy. While no one objects to proxies, we do object when a few people hold all of the proxies and then defeat our resolutions. At our recent meeting, the person holding enough proxies to defeat our vote forced us to make amendments to her liking before the vote could pass. Can the strata pass a bylaw that limits the number of proxies a person can hold?

— Denny, Vancouver

Dear Denny: The Strata Property Act requires only that a proxy be in writing and signed by the person appointing the proxy. A proxy may be either general or for a specific meeting or a specific resolution, and may be revoked at any time. Neither an employee of the strata nor the strata agent are permitted to hold proxies.

A proxy stands in the place of the person appointing the proxy, and can do anything that person can do, including vote, make motions and engage in discussion.

The proxy may limit the scope of authority, as well. For example, to limit proxy piling in council elections, the strata corporation may issue an optional proxy form with the notice that prohibits the use of proxies for the purpose of election of council.

If the person assigning the proxy agrees to those terms, then that restriction would apply. However, it should be noted that the person assigning the proxy does not have to use the proxy form issued with the notice and may simply issue a general proxy or amend the proxy form with no restrictions.

There are several problems with a bylaw that would prohibit or limit the number of proxies.

The act creates the use of the proxy and leaves the discretion of the assignment to the person assigning the proxy, and bylaws must comply with the act to be enforceable. Such a bylaw might conflict with Section 59 of the act.

The practical application of enforcement is an even greater problem. There is no provision in the enforcement of bylaws to deny voting rights of an eligible voter (either in person or by proxy), except when a strata has adopted a bylaw that permits the strata to restrict an owner from voting if the strata is entitled to register a lien against the title of the strata lot.

Even that action requires 14 days notice before a lien can be filed, and the person has an opportunity to respond.

Before you contemplate a bylaw on proxies, seek legal advice. Voting rights of owners are fundamental. Denying their proxies is denying their voting rights.

Tony Gioventu is executive director of the Condominium Home Owners’ Association. E-mail [email protected]. The association’s website is www.choa.bc.ca.

© Copyright (c) The Province