Tony Gioventu
Province

Dear Condo Smarts:

Our strata corporation is having a tough time figuring out what we’re supposed to do with our insurance. The insurance agent has told us they can provide us with a co-insurance clause that covers up to a percentage of our full replacement value. The property manager says we must buy insurance for full replacement value, and several council members are saying to just renew the policy and don’t worry about it. In the Strata Act it says we must insure for full replacement value. Is there a definition of what that means ?

— Cyril, Prince George

Dear Cyril:

The reasons that the Strata Property Act requires that you insure for full replacement value is to ensure that in case of a loss or claim, whether partial or total, your owners’ investments are protected 100 per cent. In order for a strata corporation to determine the full replacement value, they will be required to commission an appraisal for full replacement value.

An appraiser will determine what the cost of replacing the common assets and structure of the building at today’s current market costs. This is not real-estate value, but the real cost of construction and materials.

Depending on your insurer, the appraisal may be required annually or over a longer period provided the cost of inflation is adjusted.

Confirm in writing with your insurer what requirements or conditions you have to meet to be fully insured.

But what happens if you are not properly insured?

If your strata is underinsured, the policy may limit the liability of the insurer to not more than 50 per cent of a claim.

If you were to have a fire that cost $200,000 in damages, the insurer may only be obliged to pay $100,000 of that amount, leaving the strata with the balance. This has recently occurred several times in B.C., leaving strata owners with a major special levy for the uninsured amounts. In some cases, the homeowner policies covered the amount, but two owners recently lost their homes because they could not afford to pay the levies.

Don’t leave your strata corporation in this position.

You should also confirm with your insurer if there are any exclusions or exemptions in your policy. Items such as human-rights claims, environmental damage, or earthquake losses may be exempted or limited.

Before you buy the policy, confirm what’s covered and what’s excluded.

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

© The Vancouver Province 2008

 

Tony Gioventu
Province

Dear Condo Smarts: Our strata corporation recently signed up with a gas broker to secure a stable rate for our utilities. In the broker’s review of our files they discovered that the corporation has been charged PST by Terasen and have disputed the charge on our behalf. We have filed an appeal with Terasen and received a refund for four years, which worked out to over $9,000 in our case.

I also own a strata lot in a commercial/residential mixed building with the same problem but Terasen has deemed it a commercial building and cannot refund the PST. The commercial strata lots pay GST on their strata fees but the residential owners do not. So why do we have to pay PST on residential gas supplies?

— TO, Richmond

Dear TO: You are correct. Residential use of electricity, natural gas, coal and fuel oil is exempt from PST. The design of a joint residential/commercial strata has an impact on the exemption. There is a requirement for clear isolation of utilities and separate accounting. This could exist in a commercial/residential strata where two separate sections are created, with their own separate accounting and isolated utility services, specifically identifying the residential strata lots as a separate legal entity with separate metering.

There are two utility charges that strata corporations need to check. The first is hydro. Initially, the hydro account is set up as commercial with the developer. Make sure it has been converted to residential when the strata corporation is created in order to get the best rates and ensure you are not paying PST.

The second is gas. Review your residential accounts and ensure your strata is not paying PST. If you are paying PST, file a claim with Terasen immediately demanding a refund and that the account be corrected. You may also want to go to the government website to file a claim for a refund. Go to www.rev.gov.bc.ca/individual.html and follow the links through Consumer Taxes and PST Exemptions. To file a claim for a refund go to the consumer section on refunds.

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

E-mail: [email protected]

© The Vancouver Province 2008

 

Mary Holowaychuk, 91, fell three times while trying to negotiate three steps

David Hogben
Sun

The B.C. Human Rights Tribunal has ordered a resistant strata council to hire an architect to design a ramp that would allow a 91-year-old New Westminister condominium owner to make it up three steps in the building’s lobby.

The tribunal made the order Thursday after Mary Holowaychuk and her daughter Anne Mahoney were defeated in their attempts to have the council install and pay for the ramp.

The decision by tribunal member Tonie Beharrell states Holowaychuk — who had lived in the building for more than 30 years — fell three times while attempting to negotiate the three steps with her walker.

Holowaychuk required medical attention after her most recent fall on Dec. 18, but that did not persuade some owners to support the installation of a ramp for the senior citizen.

Beharrell said that if the ramp could be built at or below estimate costs already received, it now should be built. (Construction estimates have ranged between $30,000 and $63,000.)

If the ramp costs more, Beharrell said, the parties should engage in “Tribunal-assisted mediation” to resolve the dispute. If mediation fails, Beharrell said, she could make further orders.

Holowaychuk suffers from “a number of conditions, including congestive heart failure, degenerative disc disease, and osteoarthritis,” Beharrell noted in the report.

The building code did not require wheelchair access to residential buildings until 1979.

Holowaychuk said in a telephone interview from her New Westminster condominium that she was proud of her daughter’s work on her behalf.

“I am very happy we won, because we need a ramp,” said Holowaychuk. “My daughter, she beat the lawyer.”

Holowaychuk said people opposing the ramp would have been better off to support it from the beginning, rather than spending $20,000 on a lawyer to oppose the ramp.

“With that money they could have put some money towards a ramp,” she said.

Stephanie Cadieux, with the B.C. Paraplegic Association, said the issue of affordable, accessible housing is huge for people with mobility issues.

“We are going to see a lot more of this [conflict] with the maturing population,” Cadieux said.

Robert Osterman, who testified on behalf of Holowaychuk at the hearing in June, said he attended an annual general meeting where the ramp was discussed. Osterman told the tribunal some of the owners in attendance were against the ramp because they did not want the condominium lobby to look like an “old folks’ home,” Beharrell wrote in the decision.

During the December 2005 annual general meeting a bare majority of the council voted 26 in favor, 25 opposed with three abstentions to put $30,000 towards a ramp.

The vote failed to get the 75 per cent majority required for approval.

Another vote, in December 2007, sought authorization for $3,000 towards drafting of architectural plans for a wheelchair ramp also received majority support, but failed to receive the 75 per cent majority required for approval.

That resolution received 27 votes in favor and 16 opposed.

The strata owners opposed to the ramp argued it would be an “undue hardship to the individual owners of the strata because of the cost involved.”

They said the costs for the ramp — not including architectural costs and permits — could be $63,000.

Beharrell rejected the “undue hardship” argument. She said a special levy would cost, on average, less than $1,000 a unit.

Owners opposing the ramp argued unsuccessfully that if a ramp was ordered that “Ms. Holowaychuk bear the entire entire cost of the installation of the ramp. In addition, the owners submitted that Ms. Holowaychuk should be required to removed the ramp at her own expense at such time as she leaves the building, and be required to return the lobby to its previous condition.”

Beharrell rejected those positions. She noted the ramp would be used by others in the building and that Holowaychuk not be required to pay any more than her share of the costs as a strata owner.

© The Vancouver Sun 2008

Tony Gioventu
Province

Dear Condo Smarts: We live in a 263- unit, 12-floor concrete building that was constructed in the late 1970s. This was a well designed and well finished building that we were once very proud of.

Over the past 30 years our strata has literally done nothing about maintenance and repairs, other than emergency failures like hot-water boilers, and elevators. Now our deferral has come home to haunt us.

Each owner is faced with an average $19,000 assessment just to maintain and upgrade the exterior, not including the roofing.

Our windows have failed, our decks and balconies are in serious failure and the masonry detailing is in need of serious attention.

To put it bluntly, we figured out that if each strata lot had paid an extra $30 per month over the last 34 years, our buildings would have routinely been repaired, the interest would have paid for inflation costs, and we wouldn’t be doing this at a time when construction costs are at a record high. We are encouraging every strata to look at their long-term plans and plan for the future.

— CC, Vancouver

Dear CC: You are absolutely correct. Unfortunately, our legislation does not yet require strata corporations to plan for the future costs other than minimal reserve contributions.

A serious behaviour pattern that many home owners provincewide have developed is “run to failure.”

It is often too easy to defer maintenance issues because they don’t directly affect our daily lifestyle, but once the roof fails, the windows leak, the elevator seizes, pipes burst, the parkade floods, it’s too late. The costs have accelerated 30 to 50 per cent and your community is faced with costly damages. A solution for strata corporations is to consider bylaws that specifically address repair and maintenance of building components.

There are two considerations. The Operations Manual, which itemizes all components that require annual inspection, maintenance and repairs, and the Renewals Manual, which details all building components, analysis of their current condition, remaining life, schedule for replacement and cost estimates for future repairs.

Once a bylaw is ratified, the strata corporation is bound to the annual and future commitments of repairs and funding.

We’ve all heard the line “Pay me now or pay me later.” In strata corporations it needs to be amended to “Pay me much more later.”

A sample Building Maintenance Enclosure checklist is available by e-mailing Deanna Ferguson at [email protected].

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

E-mail: [email protected]

© The Vancouver Province 2008

 

Tony Gioventu
Province

Dear Condo Smarts: Our strata is a 55-and-over retirement community on Vancouver Island. We have an excellent manager and our properties are in great shape. There is one problem: We have an owner who harasses everyone to the point that at our AGM, no one would stand for council. This owner demands reports on everything we do and interrogates every contractor who comes on site. What happens when no one will be on council? Will the government appoint someone to administer our complex? Many of our owners can’t be bothered with the harassment.

— PH

Dear PH: Many strata corporations struggle with people unwilling to be on council. It’s either too much time, too much trouble or too much conflict. There are steps a strata can take to reduce harassment and operate smoothly. When there is a shortage of willing council members, the bylaws can be amended to permit other types of council eligibility. An example of that is a 36-unit building in Vancouver where the strata has amended the bylaws to permit owners’ children or grandchildren, who are not on title, to be eligible to be elected to council.

The other option is to adopt governance bylaws that strictly control how business is conducted. If owners violate the bylaws, the strata then needs to take bylaw-enforcement seriously. Occasionally, the matter results in the strata council fining the offender or proceeding to the courts to enforce the bylaws and end the constant harassment.

The next challenge is attracting people to council. Use professional services to deal with the problem people. While it may be costly, a strata council has much less stress if they can refer a matter of conflict to their legal counsel rather than struggle with it alone.

Strata councils can also be remunerated for their time. A bylaw can be created that compensates council for their time on behalf of the remaining owners. The 360-unit strata in Vancouver pays three strata council members $100 per month each.

The government will not impose someone on your strata. If the corporation fails to elect a council and ceases to function, eventually an owner(s) will commence a Supreme Court application to have an administrator appointed. This can be a positive decision for a dysfunctional corporation incapable of conducting business, but it is costly.

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

© The Vancouver Province 2008

Special levy is the best option since it leaves no debt load

Tony Gioventu
Province

Dear Condo Smarts: Our strata had a bit of a wrestling match at our AGM (annual general meeting) in January. The retiring council proposed a 15-per- cent increase in strata fees, and the owners chopped down the budget and left us with the same as last year.

We’ve just received our insurance renewal, and with the increase in our service contracts and utilities it’s looking like we’re going to be short by about 20 per cent at the end of the year.

In the short term, we’ll borrow the funds from the contingency to pay the bills, but we were wondering if we can amend the budget halfway through the year?

Our property manager says we can, but our accountant advised that we cannot amend the budget half way through the year.

How do we raise additional funds?

— KL, Kelowna

Dear KL: The annual budget proposed at the AGM each year is an estimate of what the strata council and the manager project will be the funding needs for the year.

The Strata Act gives provisions to amend the budget at the annual meeting when it is ratified, but is silent on whether you can amend the budget throughout the year. However, there are other sections of the act that direct us against amending the budget, other than at the AGM.

A strata must prepare a budget for the coming fiscal year, which is passed by majority vote at the AGM. The fiscal year is a 12-month period and there is only one annual general meeting for the corporation.

In addition to those limitations, the strata has to remember that when someone sells a unit, they have likely provided the purchaser with a Form B information certificate that show the monthly strata fees and disclose any amount by which the strata may exceed the expenses in the budgeted year.

There can also be additional costs with changing formulas halfway through the year.

This leaves you with basically two options: You can continue to the end of the year and report the deficit to the owners, which they will have to pay in the following year, or you can call a special general meeting and approve a special levy to offset the additional expenses.

The special levy is the best option. It provides the owners with notice of the funding crisis and at the end of the year you won’t be left with a debt burden.

Look at it this way: If you get to the end of the year and you are 20 per cent short on fees, then automatically next year’s fees are going to be 20 per cent higher, along with the projected increases for the following year, which under the current energy market could be substantial.

At the very least, strata corporations need to budget conservatively and include the cost-of-living in their annual projections. They must also annually assess the financial status of the reserve fund.

If you’ve been paying for emergency costs or insurance deductibles from your reserves, replenish them.

Don’t forget that the carbon tax comes into effect on July 1, 2008. This tax also applies to residential services. It won’t have a significant effect on most budgets in 2008, but will later on.

The tax imposed on each fuel type will be proportional to the greenhouse gas emissions produced by burning the fuel, measured in terms of tonnes of CO2 produced (or the equivalent for other greenhouse gases).

The tax will start on July 1 at a rate of $10 per tonne, and will rise by $5 per year up to $30 by 2012. The current rates per fuel type will be:

– Gasoline: 2.41 cents per litre in 2008, rising to 7.24 cents per litre by 2012.

– Natural gas: 49.88 cents per GJ in 2008, rising to 149.64 cents per GJ by 2012.

– Electricity: There will be no carbon tax on electricity.

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

© The Vancouver Province 2008

Tony Gioventu
Province

Dear Condo Smarts: We live in a 68-unit townhouse complex. All of our units are close to the same size so we have generally paid the same amount in strata fees each month. We’re now faced with major construction and the cost is going to be about $1.1 million.

We have several owners who have advised the strata council they will not pay the same as everyone else as their units are substantially smaller, and that in the future they want a reduction in their strata fees.

Council is aware we have not been using the registered formulas, but it seemed to work OK. In addition, one owner who’s been here 10 years also wants past payments “corrected” and she expects a refund for “overpaying.” This is getting ugly and we’re wondering what to do next.

— CH

Dear CH: All strata corporations must comply with the schedule of unit entitlement filed in the Land Title Registry or any other formulas that they have properly amended and filed in the Land Title Registry.

It is possible for strata corporations to amend their schedule of common expenses but it requires that the amendment be passed by a unanimous vote — which means every strata lot must vote in favour — and the new formula must be filed in the Land Title Registry in the proper form. The change must be disclosed to any potential or new purchasers or mortgage lenders.

A recent court decision regarding unfair application of strata fees and costs is very important for every strata that is not complying with their unit entitlement or filed and ratified amendments. In the decision of BPYA 1163 Holdings vs The Owners, Strata Plan VR2192, the court awarded not only the correction of how fees are calculated in the future, but also ordered the payment of damages dating back to 1996 relating to the overcharging of strata fees, which were identified as user fees. If the decision is not appealed successfully, the strata corporation will be facing the incorrect charge back to 1996 of $78,850, plus court costs.

The counsel for the plaintiff, Elaine McCormack, advises: “This is a wakeup call for strata corporations all over the province who are not allocating strata fees, common expenses and special levies as required by the Strata Property Act. Every strata must have a copy of the registered strata plan, schedule of unit entitlement and any filed amendments,” says McCormack.

“If your strata corporation is not using a registered formula and you have a history of different allocations for different costs, seek legal advice.”

If you’re in a new development, check the registered unit entitlement. It won’t likely be the same as was in your disclosure because the proposed unit entitlements on new developments are based on measured area, which is unknown until the building is complete and surveyed.

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

E-mail: [email protected]

© The Vancouver Province 2008

 

Maintaining doors, windows

Tony Gioventu
Province

Dear Condo Smarts: Our strata council is deeply divided on the opinion of who is responsible for maintaining and repairing doors and windows. Created in 2004, the strata passed a bylaw that declared the windows and the doors on the exterior of the building limited common property.

We did this to make owners responsible for doors and windows on their own units. Several have indicated, however, that they have no intention of maintaining and repairing their windows, especially those on the fourth floor that have no balcony next to them.

They have rightly pointed out that maintaining those windows from the exterior will require a tradesperson to mount a ladder, a lift or scaffold via the common property and landscaping; this work could lead to damage to areas or units in the building and they don’t want to assume liability for such possible damage. So we’re locked in a dispute. The exterior of the building is not being maintained and several owners are threatening court action if we don’t get on with maintenance.

Is there a solution?

— JF, White Rock

Dear JF: Here are the technical basics. To determine how the property is defined in your strata, I reviewed your registered strata plan and common amendments at the Land Title Registry.

In your plan (and warranty documents), the exterior of your apartment-style strata building is clearly common property.

The windows are outside the dividing boundary between the strata lot and the exterior, and the warranty documents clearly identify your windows as part of your common-property warranty for the building envelope.

A very common error made by strata corporations is assuming they can convert common property to limited common property simply by passing a new bylaw. That is incorrect.

The strata must first pass a resolution that creates the limited common property (LCM) and include a sketch plan that satisfies the registrar of Land Titles, defines the areas of LCP and specifies to which lot the LCP is allocated.

Then it all has to be filed with the Land Title Registry. Clearly, your strata corporation has not met those requirements, casting doubt on the enforceability of the bylaw.

From a practical perspective, your strata owners need to rethink their decision. One of the main reasons people live in strata buildings is so they can share the duties of maintenance and thereby benefit from lower costs.

Another important point is that by controlling common- area repairs, a strata corporation can ensure that the entire building exterior is protected.

You should also read your warranty conditions.

The warranty contract includes exterior doors and windows as part of the building-envelope coverage under the first five-year period.

By transferring the responsibility for maintenance from the the corporation to the owners, it is quite possible you may have jeopardized your warranty coverage.

Contact your warranty provider and seek legal advice.

© The Vancouver Province 2008

Conditions do apply

Tony Gioventu
Province

Dear Condo Smarts: Our strata recently passed a number of new bylaws. I wholeheartedly supported them as they will improve our lifestyles here.

We passed a new rental bylaw that limits rentals to five, an age bylaw that limits owners to 55 and over, and a pet bylaw that limits each unit to one dog or one cat.

At our information meeting beforehand, our property manager told us not to worry because anyone underage, with extra pets or tenants would be grandfathered. Only two months have passed since the meeting and we, the strata council, are in some real disagreements over what that meant.

If we’re grandfathered, doesn’t that mean the bylaw doesn’t apply to us, so if we wanted to get an extra dog or cat that would be OK?

What about tenants? Can’t anyone who was a landlord at the time continue to rent the suite until they sell it?

— MW, North Vancouver

Dear Muriel: The term “grandfathered” is used extensively in publications and by strata councils, yet the term does not appear anywhere in either the Strata Property Act, Regulations or Standard Bylaws.

There is a common misunderstanding that grandfathering exempts an owner from the new bylaw for as long as they own their suite.

However, that is not the intent of the Act.

The exemptions granted by the Strata Property Act are conditional. They allow for a period or circumstance of exemption to accommodate persons who would be affected by a new bylaw. Pets, rentals and age are the exact bylaws the exemptions apply to.

Under the act, pets, tenants and owners not in compliance with the new bylaws who are residing in a strata lot at the time the bylaw is passed — not when it’s registered — are exempt from the bylaw until their residency/condition terminates.

For example, if your strata passes a new pet bylaw that limits owners to one cat or one dog, and you have two dogs, then on the moving or passing of one of your dogs, you would be limited to only one dog.

If a resident was 35 at the time, and the strata passed a 55-and-over occupancy bylaw, then the 35-year-old could remain as long as he or she wishes, but any new occupants or tenants would have to be 55 and over.

In the case of a tenant, the current tenant at the time of the bylaw being passed would be permitted to remain for whatever period they and their landlord agreed to.

But if that tenant moves, the landlord would only be able to rent for one more yea; at that time the landlord would either have to occupy the unit, leave it vacant or sell it, but could not rent it out to a new tenant.

For an investor this is important to understand. As long as there are rental vacancies in the bylaw, you could rent again, but if the quota is filled you cannot rent once your exemption expires.

Don’t interpret the term “grandfathering” as perpetual with the exemptions granted by the Act, which are only conditional.

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

E-mail: [email protected]

© The Vancouver Province 2008

Details of contract are where you’ll earn or lose money

Tony Gioventu
Province