Tony Gioventu
Province

Dear Condo Smarts: During the heavy winter snow and rain, our ground-level condo experienced flooding through a bedroom window. The window has a well to permit light and manage water, but the amount of water held in the well because of the frozen ground, resulted in the water rising half way up our window before it started to seep into our home. The moment we saw the water, we started removing furniture and my husband put a fish pump in the well to remove the water and reduce the risk of further damage.

We then called the property manager to advise him of the damages, who called an emergency plumbing service to come and free up the frozen drains.

We received a bill in the mail yesterday for $813 for the emergency plumbing call and the itemized service to the drains.

Our strata council knew nothing of the claim or the cost being back-charged to our unit.

In the property manager’s letter, we are advised that if we don’t pay the amount in 14 days, a lien will be filed against our unit. Is this a common practice in the strata industry — to back-charge costs to owners when a common service fails? We were told by the manager that it’s our cost because we placed the call and failed to maintain the window according to the bylaws.

— D.C., Vancouver

Dear DC: Just because you reported the failure is no grounds for the strata corporation to back-charge the costs.

The strata corporation is responsible for the maintenance and repair of common property. In most building-type strata corporations, that includes common drainage, exterior building drainage systems, doors, windows, roofing, decks and balconies.

If an owner/tenant causes an insurance claim and is found responsible, the strata may charge back the amount of the deductible.

Likewise, if the strata has to enforce a bylaw contravention, they may require that the reasonable costs of remedying the contravention are covered.

For example, if the decks are limited common property, and you fail to keep drains clear as part of the bylaws, resulting in damages caused by your neglect, the strata may have reasonable grounds to enforce the bylaw to recover those costs.

The big question here, though, is how the decision was made. The decision to back charge or charge for bylaw enforcement or an insurance deductible is a decision for strata council, not for the property manager.

The decision to enforce a bylaw first requires a notice of the alleged violation from council and the opportunity for you to request a hearing or respond to the allegation in writing.

Review your bylaws, request a hearing with council to review the history and the allegation, and if it is unsuccessful, seek legal advice.

Tony Gioventu is executive director of the Condominium Home Owners’ Association.

Send questions to him at [email protected].

© Copyright (c) The Province

 

Inadequate insurance, violations could cost you dearly

Tony Gioventu
Province

Renting out a strata lot for short financial benefits might be very attractive for many strata owners in B.C. during the 2010 Olympics.

There are three parties that must be considered if you contemplate renting a condo or renting out your condo during the Olympics.

The landlord/owner/agent representing the rental of the unit; the renter/tenant; and the strata corporation/council all play a vital part in rental agreements in strata titled buildings.

The landlord/owner/agent representing the rental of the unit must comply with the bylaws and rules of the strata corporation when contemplating the rental of the unit and the allocation of a parking space(s) or use of common facilities.

A strata corporation might have a bylaw that prohibits rentals, or limits rentals to a specific number or time period. Before you attempt to rent out your unit, read the bylaws of the strata corporation.

Even if there are no restrictions, or you are exempt from the bylaws, you must still provide the strata corporation with a Form K notice of tenants’ responsibilities, and ensure that you have provided the tenant with a copy of the bylaws and rules.

If your strata has an age-restriction bylaw, your tenants must comply with that bylaw.

If there are any rental restrictions, first contact the strata council in writing requesting permission to rent. They will then instruct you on the procedures of the applications and determine within the bylaw limitations if you have permission to rent the unit.

LANDLORD’S RESPONSIBILITIES

As the landlord/owner of the strata lot, you could be 100 per cent responsible for any costs relating to the tenants’ activities, including bylaw violations such as noise, misuse of common facilities or parking violations. You may also be responsible for any losses caused or incurred by your tenants or their guests if there is resulting damage to the common property or common assets or any associated insurance-deductible costs.

Contact your insurance broker and confirm you have such landlord/tenant insurance to cover your liabilities in the event of such claims, and ensure you have a written agreement with your tenant and a reasonable damage deposit to cover potential costs.

It may be prudent for you, the landlord, to retain a licensed rental agency or seek legal advice on an enforceable rental agreement for the short-term period.

If you rent your unit in violation of the strata corporation bylaws you may be exposed to a potential fine of up to $500 per week, set by the strata bylaws, as well as other possible associated costs for enforcement.

Should your renter/guest flood the unit, cause a fire or damage the building, you could be faced with an insurance deductible claim from $2,500 to $100,000, depending on your strata policy.

Be accessible to your strata corporation. If the strata can reach you quickly, you may resolve a problem long before it becomes a costly headache.

Don’t forget that the zoning of your property may also restrict or prohibit overnight accommodations. While that may be relaxed during the Olympics, you should check with your local government bylaws and review zoning limitations first.

Vancouver, Victoria and surrounding areas all have restrictive zoning that may affect your property use.

tenants be aware

Protect yourself as the renter. Rent through a licensed agency representing strata owners/investors or a reliable booking agency, and obtain a written rental agreement.

Website postings make units available weekly or monthly, but the contact and deposit can be unsecure or anonymous, leaving the renter scammed with a lost deposit, compromised credit card, and the potential of not having their accommodations secure during the games.

As a tenant, you and your guests must comply with the bylaws and rules of the Strata Corporation.

Bylaws that pertain to noise, parking violations, security violations or nuisance can cost up to $200 per violation, and those costs, along with any unit damages or strata corporation claims, may potentially be deducted from your damage deposits.

ENFORCEMENT OF BYLAWS

The strata corporation, represented by strata council, must enforce the bylaws and rules of the strata corporation. They will respond to complaints regarding noise, nuisance to other residents of the building, parking violations, security breaches and damage to the common property or common assets.

Enforcement of bylaws might be easily administered if the strata corporation maintains an updated tenants list, a list of emergency contacts for property owners, and copies of the rules and bylaws readily available to all visitors.

Additional contact numbers for the strata agent and the council will also be helpful for visitors and owners seeking additional information during their stay in your buildings.

Strata corporations may consider additional security and operation costs to meet additional demands and ensure the least amount of disruption during the Games.

Update your parking plans and require parking passes or decals to ensure you are only towing offending vehicles.

If your strata has guest suites, everyone will be lining up to book the use of the rooms. Double-check the bylaws or rules regulating the rental of the guest facilities.

If the strata is intending on renting out suites to outside guests and visitors, check that you have the authority under the bylaws, and confirm that your insurance will cover the change in use. The strata corporation also becomes the landlord under these rental uses.

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

© Copyright (c) The Province

Tony Gioventu
Province

Dear Condo Smarts: Our strata has invested our reserve funds and operating surplus into a one-year GIC with a great return.

What we forgot was cash flow. We have some major expenses such as insurance, a boiler replacement and roof repairs and if we are permitted to cash our GICs we lose the interest. Our strata council were discussing options and our treasurer, who works for a bank, suggested we simply use the GICs to secure a line of credit for cash flow until the terms mature. We did, the owners were informed, and now we are facing a petition to remove council because of this decision. Doesn’t council have this authority?

— GD, Victoria

Dear GD: Strata council does not have this authority. A strata corporation is permitted to borrow funds. However, they are required to obtain a three-quarter vote of the owners at an annual or special general meeting before they may proceed. This is to ensure that the strata does not enter into a debt load without the consent of the owners, as that debt is an obligation of the strata corporation, not the individual council members.

The strata corporation may secure the borrowing, which your strata has done, against a negotiable instrument. It may also use a mortgage of property, but not common property, or an assignment of unpaid strata fees or special levies. So while you may borrow funds created by the line of credit, you need a three-quarter majority vote — and you need to approve how the principle and the interest on the loan is to be repaid.

It may be through a budget item through strata fees, a special levy or reserve fund expense. Strata corporations also need to consider that credit-card accounts are a form of borrowing. Those debts can easily swell out of control with crippling interest rates if balances are carried on the accounts, and because credit accounts are often unsupervised, a strata corporation can easily find itself laden with a uncontrolled debt.

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

© Copyright (c) The Province

Tony Gioventu
Province

Dear Condo Smarts: I own a unit in a highrise development in Vancouver.

Someone has anonymously put a note under everyone’s door in the building, advising that the strata corporation was sued in September and what are we doing about it? My neighbour and I started asking the council questions and they refused to answer.

Now a notice has been sent by the council advising that they, in fact, did receive notice of a suit in the fall. We found out it’s related to a cancelled sale because the strata corporation did not supply the proper forms or building reports on request. One of the council members has advised that the lawsuit is none of our concern and they will advise owners once it is settled. Our owners are fuming. Shouldn’t the owners have the right to know what’s going on?

— K.L., Vancouver

Dear K.L.: When a strata corporation is given notice of a lawsuit, including notice of arbitration, the strata corporation must inform the owners as soon as feasible that the strata has been sued.

The strata corporation also needs to notify its insurance provider of the claim. If there is any possibility that the claim may be covered under your liability or directors and officers coverage or another peril, your policy may also require that you inform your insurance provider of the claim as soon as feasible and that you mitigate any additional risks.

At the same time, your strata council needs to contact your lawyer and seek advice on the extent of information that should be provided to your owners in the notice, and to ensure they do not release information or evidence that may compromise the strata corporation’s ability to defend the suit.

The other side of this issue is the cost. Many strata corporation just believe whatever the cost is will be paid from their reserve funds or operating surplus, but does the strata have the authority to expend these funds without the owners’ permission?

Not likely, unless it’s an insurance deductible or within your budget limitations. If insurance does not apply, strata corporations may also convene a special general meeting of the owners to provide sufficient information to those persons/strata lots not suing the strata corporation.

It may also be necessary to have the owners vote on either the use of reserve funds or a special levy to ensure the defence is properly funded. Communication is critical for either the commencement or defence of a lawsuit, but the procedures and residual effects of the decisions of the strata are often much more complicated than they first appear.

If you’re on council, contact the insurer, contact your lawyer and inform the owners, as soon as feasible.

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

© Copyright (c) The Province

Tony Gioventu
Province

Dear Condo Smarts: Is a pre-sale agreement a finalized agreement for sale and purchase?

A group of investors that I am involved with from Alberta have decided that under the current market conditions we will not proceed with our pre-sale agreement on five units in a new development.

The developer’s lawyer has advised us that we will be in breach of the sales agreement and liable for any of the damages or losses incurred. How can we be held responsible for something that does not yet exist and is over one year behind completion? It seems to me that the purchasers have little or no protection in these purchase agreements.

— D.C.

To DC and everyone who has entered into a pre-sales agreement: The agreement for the most part is a contract between you and the developer.

It is not a sales agreement, but rather an agreement that reserves the right for you, the buyer, under the terms and conditions of the contract, to purchase the unit once the project is complete, at the specified price and cost adjustments set out in the agreement.

There are a number of issues that pre-sales buyers need to be mindful of:

– No two contracts are the same and whether you are entering into a new contract, completing the transaction, buying the transfer of a pre-sales agreement, cancelling the agreement or altering the terms of the agreement, you need legal counsel from an experienced real estate and contract lawyer.

– There is no actual conveyance of real estate until the product is complete, the titles have been created and the transaction documents are finalized.

– As this is a contractual relationship, it is quite possible that you will be responsible for much more than simply the loss of your deposit for cancellation.

– A breach of the contract by the developer might be reasonable grounds to terminate the contract without serious penalties.

There may be other associated damages and penalties in the contract. However, the developer may also wish to alter, postpone or cancel the agreement, so the terms and conditions of the contract are absolutely critical.

The current credit crunch has also placed a number of small investors at serious risk as they might be struggling to qualify for financing to complete their sales agreements.

Consult your financial adviser and your lawyer, and review the contract before you make any hasty decisions.

If you are planning on renting your unit as an investment, confirm that the pre-sales agreement contains a provision for a Form J “owner developer rental disclosure statement” that properly secures the exemption of the first purchaser to rent in exemption of possible future rental bylaws by a strata corporation.

Tony Gioventu is executive director of the Condominium Home Owners Association.

© Copyright (c) The Province

 

Tony Gioventu
Province

Dear Condo Smarts: Our strata corporation is having some emergency excavating done due to a pipe break and flooding of our townhouse. Several owners have been complaining about drainage problems for over two years, and we have had several minor incidents of flooding over that time. This time, our entire basement was flooded, including damage to our personal belongings. Our homeowner insurance is covering our personal items, but the strata said they will not repair the interior of our unit, and they refuse to file a claim on the strata’s insurance.How do we get the damage to the interior repaired?

Dear J.M.: Strata corporations do not have immunity from liability resulting from their neglect. If the strata corporation has been aware of the problem, owners have been filing complaints, and nothing has been done, the strata corporation could find itself not only paying the water leak and repairs to the unit, but for your personal costs as well. When a strata corporation refuses to repair a roof leak, for example, or they ignore an ongoing maintenance problem that results in greater damages, the strata corporation is potentially liable for those costs. Owners and tenants as set out in the Strata Act are deemed to be a named insured on the strata corporation policy. The strata corporation must maintain full replacement value insurance for common property and common assets.

Tony Gioventu
Province

Dear Condo Smarts: Three years ago when I purchased my condo, real Christmas trees were allowed. This was a huge deal for me when I was looking.

Two years ago the bylaws were updated and now we can only have artificial trees.

Because of this, I did not have a tree last year. Someone mentioned that I may be grandfathered in the same way as if I had a pet and they changed the rules.

Could you please clarify as I have never had an artificial tree and would love to enjoy Christmas with a real tree this year.

— GO, Langley Dear GO: If the strata changes their bylaws and prohibits live cut trees then those bylaws apply to everyone.
There are no grandfathering provisions in the act for general building-use bylaws. However, there are specific exemptions under certain conditions that apply to pets, age and rental-restriction bylaws.

For example, a pet residing in a strata lot at the time a bylaw prohibiting pets is passed is exempt for the duration of the pet’s residency. When the pet ceases to reside in the strata lot, that exemption expires and the owner cannot replace the pet.

Real trees pose a number of hazards to buildings systems, including an extreme fire risk when trees are not cared for or when located next to heaters or gas fireplaces.

Unfortunately, it only takes one person to spoil it for everyone, but we receive numerous complaints every year from strata corporations that have had to clean up the mess from trees dragged down hallways, tossed off balconies, or had to repair damage to elevators jammed with needles or scratched and scraped by trees.

It’s not surprising that strata corporations have had to prohibit cut trees to avoid serious problems. It only takes one tragic fire during the holidays to remind us of the shared risks in strata living.

Tony Gioventu is executive director of the Condominium Home Owners’ Association (www.choa.bc. ca)

Tony Gioventu
Province

Dear Condo Smarts: I made an application to my strata council in October for a hardship exemption from the strata rental bylaws. The strata council requested that I provide them with personal financial information as a condition of the application. I agreed, provided them with original documents, and requested a hearing. They have refused my hardship request — and to make matters worse my personal financial information has leaked out to fellow owners in the building. The council admitted that they had their meeting to decide the application by e-mail, and scanned and shared my information in the e-mails. Those e-mails somehow managed to get into the hands of our resident busybody, and now everyone knows my personal business. Is there anyone who regulates the business of strata councils?

Dear WR: Strata corporations are self-regulated under the Strata Property Act. Disputes and enforcement of the act, regulations and bylaws are resolved either consensually by the parties, through mediation, arbitration or the courts in

— WR, Prince George

B.C. Strata corporations must also comply with every other enactment of law. In your situation, you may consider filing a complaint with the Office of the Information and Privacy Commissioner @ oipc.bc.ca.

Strata councils must exercise great care and caution with e-mails and electronic meetings, especially when handling any personal information of owners. It may seem efficient to share information by e-mail, msn, or a conference call to make a quick decision, but there is one serious flaw in the process: No one really knows who else is at the other end of the phone, computer or blackberry.

Most strata bylaws do not permit council decisions and meetings by e-mail. Even if they do, there are a number of issues such as bylawviolation hearings, hardship application hearings and the discussion of personal or confidential information that should never be transmitted electronically unless your strata council is absolutely certain there is no risk of a security breach.

Remember, once you’ve hit the send button, you can’t take it back.

Tony Gioventu
Province

Dear Condo Smarts: Our strata owners have tried unsuccessfully at two separate general meetings in the past year to pass a special levy for the replacement of one of our building’s roofs. The roof should have been replaced over five years ago, and since then our strata has paid almost $70,000 for emergency repairs. The assessment is going to cost our owners an average of $5,000 each, but we have a large group of new owners who purchased with high mortgages who are voting against the resolution, mainly because they can’t afford the cost. However, we can’t afford to delay this repair any longer. Several suites are damaged, and we’re facing a pending lawsuit if we don’t get the work done. Are there any alternatives?

Dear CS: Unfortunately, voting against a resolution because an owner can’t afford the payment is becoming quite common.

This is a symptom of insufficient reserve planning by the strata corporation, aging buildings, and the effects of high-ratio mortgages in aging strata properties.

As buildings age, the rate of deterioration accelerates and so do the costs. We receive many calls from owners who can’t pay their assessments and may lose their homes. In essence, they could afford to buy the strata but they can’t afford to own it. By the time they add up monthly strata fees, mortgages, taxes and utility costs, they are often too overextended to be able to manage a special levy.

I suspect that in addition to your emergency costs, the failing roof also now requires significant roof deck restoration and replacement. C.S.’s

— C.S.

building is a sobering example for any strata that is considering deferring repairs.

The costs are likely 50 per cent or higher than this strata would have paid had they replaced the roof five years ago, and now they’re on the verge of lawsuits.

Here are the options if the owners won’t approve the levy: The strata might consider a loan for the project that could provide the strata with the funds up front but defer the payment schedule over five or 10 years. There is the cost of the borrowing, but the sooner the repairs are conducted, the sooner the costs stop rising. Another option is to adjust the special levy so that payments, with a contractor’s consent, may be spread out over six months or longer. The strata corporation must maintain and repair the common assets. Seek legal counsel if your strata can’t pass the required resolution for repairs. If the strata doesn’t proceed with repairs, the courts will eventually intervene at a much greater cost to all.

Tony Gioventu is executive director of the Condominium Home Owners’ Association

Tony Gioventu
Province

Dear Condo Smarts: At our condo in Victoria we elected seven council members at the AGM in August. In early September, six of the seven council members resigned, leaving only the treasurer. Our strata basically ran with only one council member controlling everything until the owners signed a petition to call for a special general meeting to elect a new council.

The treasurer refused to call the meeting so we had to wait until the time expired and convene the meeting ourselves. This is not the first time this has occurred, involving the same person, who controls our finances with an iron hand. We couldn’t find anything in our bylaws or the Act to solve the problem without an SGM, and we don’t know how to elect a new council without this person.

— GW, Victoria

Dear GW: Electing only the council members that you want is a simple governance decision under the Act and Standard Bylaws. At general meetings, all matters are decided by a majority vote unless a higher voting threshold is required. The election of council is by majority vote.

You don’t have to elect seven council members, but you must elect a minimum of three. When the vote for the nominated council members is called, one person should request that the vote be conducted by secret ballot, regardless of the number of nominations, and then each person is elected based on those who receive a majority of the votes that are cast. Having a firm hand on the finances is not unto itself a problem, However, if the treasurer acts contrary to the decisions of council, or refuses to provide copies of all the treasury information, council needs to replace that person quickly and act to protect the strata’s financial assets.

When the strata fails to elect a council, or the council resigns, there is no provision for a meeting to be called. Even with only one council member there is no provision for that person to call a meeting without a petition of the owners. It may be possible to address this problem with a strata bylaw amendment that requires those council members forming less than a remaining quorum to convene a special general meeting for the election of a new council. I recommend that each strata seek legal counsel to ensure the bylaws comply with the Act and Regulations.

Tony Gioventu is executive director of the Condominium Home Owners’ Association

[email protected]

© The Vancouver Province 2008