Tony Gioventu
Province

Dear Condo Smarts:

Our strata council is having a serious dispute over the scheduling and conduct of meetings. We have six council members and three want a conference call every second month to save time, but the other three refuse.

Another problem is our secretary’s decision to write virtually every word into our minutes. Now our owners are hostile toward council because we are disclosing information they want kept private. So how do we decide? — JP

Dear JP:

If you have not adopted any rules of order into your bylaws, the answer is simple. The Act & Standard Bylaws only require that results of your motions are recorded.

This is frequently the most overlooked part of the minutes. Simply record what the motion was and then the voting result of the motion and whether it passed or failed.

Most rules of order simply require that what is recorded is what was done, not what was said. If there is pertinent information for the owners, you can also include that as special-notice information.

Now the tough part: What can you include and what is omitted? Basically, personal information, unless you have the consent of the person to publish it, is omitted. This is where the application of the Personal Information Protection Act is enforced. It controls everything from how you collect personal information to how it is stored to how it is disclosed. Whether it’s through financial transactions, bylaw enforcement, hearings, correspondence or agreements, the Personal Information Protection Act applies to strata corporations and strata meetings.

One irreconcilable problem with a conference call or online strata meetings is your inability to maintain confidential information and respect privacy laws.

You cannot prevent any of the parties from recording your meeting, including confidential items, nor can you prevent other individuals being present without your knowledge.

Tony Gioventu is executive director of the Condominium Home Owners Association. Contact CHOA at 604-584-2462 or toll-free at 1-877-353-2462, or e-mail [email protected].

© The Vancouver Province 2008

Tony Gioventu
Province

Dear Condo Smarts:

I recently purchased a 12-year-old townhouse in Richmond. My plan was that my parents would live in the complex for their retirement and we would some day move into the home for our retirement.

I hired an agent and found a strata-document-review service online that we thought was credible. The transaction was fairly smooth but before we signed the papers the sales agent recommended that we obtain an independent engineer’s report. She had some concerns over the condition of the balconies.

We contacted the review service and they said current work was completed on the balconies and, according to the strata records, everything was fine, so we completed the sale.

We have unexpectedly received a notice of a special general meeting from the strata corporation advising of a serious problem with the decks and wall assemblies. The notice refers to an engineering report that was just received. The estimated repairs are going to be about $47,000 per unit.

We contacted the review service and they advise they were not provided all of the strata documents so had no way of knowing. So we’re stuck with the bills. Do we have any chances of recourse ?

— JG, Richmond

Dear JG:

Everyone should exercise caution when dealing with services that are available online. There are many online services on line that claim to have the answers, but is there anything behind your screen for your protection?

Online strata document-review services in B.C. must be licensed under the Real Estate Services Act because they fall under the definition of trading services Anyone who contemplates using document-review services needs to first identify that the agent/company are licensed and complying with the Real Estate Services Act.

The next step is to review the contract for the services you are engaging. Look at the terms and conditions of service, liability, reliability of records, responsibility of the service to ensure that all records are reviewed, and ask what happens in the event of a defect or error in the service.

If the party is not licensed, insured or a definably registered company with a real business address, you should probably look elsewhere. Don’t rely 100 per cent on documents that are available online. Unless you see the originals, how can you tell if they are complete or have been altered in any manner ?

Listen to your agent, personally review the documents and reports and, if ever in doubt, request clarification in writing from the vendor, your agent or the strata corporation.

Tony Gioventu is executive director of the Condominium Home Owners Association. Contact CHOA at 604-584-2462 or toll-free at 1-877-353-2462, or e-mail [email protected].

© The Vancouver Province 2008

Tony Gioventu
Province

Dear Condo Smarts: Our strata corporation was built in 2007 and our owners have just held their first AGM. Several questions came up about insurance at the meeting.

The developer has prepaid for insurance for a one-year period and is wanting to be reimbursed for the remaining eight months that he prepaid. The problem we are having is that no one has a copy of the insurance policy and we don’t know what we are insured for. Is it possible that the existing policy is sufficient for the balance of the year?

Can the owners have a copy of the insurance policy ?

— B. Roberts, Coquitlam

Dear B: Buildings under construction, major renovations or major warranty claims may have different insurance than buildings that are occupied. Course-of-construction insurance will cover for damages to the constructed or partially constructed buildings and the assets contained within the buildings, but they will likely not cover the liability of the strata corporation or its owners, as it does not yet exist.

Pat Smith from Cooperators Insurance recommends that strata owners and councils must review the strata insurance policy as soon as they take possession of their new homes.

Confirm there is proper insurance coverage for the major perils set out in the Act, directors and officers liability, occupancy and an appraised value for the common assets. Once the strata plan is filed, the strata corporation comes into existence along with all of its liabilities and obligations. Also confirm that the policy names your strata as the policy holder. Your legal name is: “the owners, strata plan (insert correct number).”

One part of the Act that everyone forgets is that the insured in a strata policy automatically include the strata corporation, owners, tenants and persons who normally occupy strata lots. This means owners, tenants and occupants have a right to access the insurance and the strata corporation must provide them with copies of the insurance information on request.

After all, they are paying the costs through their fees and it is their insurance as well. There are also practical reasons for providing copies of the insurance to owners, tenants and occupants. If they don’t know what the strata is insured for, how can they responsibly purchase homeowner, landlord or tenant insurance that covers items or risks that may be omitted in the strata policy ?

Likewise, how do the owners know if the strata is properly insured and has paid for the insurance if the owners are not provided with an annual copy of the insurance? Items like earthquake, tsunami, directors’ errors and omissions and fixtures built on a strata lot that were not part of the original construction are all options for the strata to consider. If they are not covered under the strata policy, homeowners may want to investigate their home owner insurance options to cover these risks.

It’s no one’s fault but your own if you are not properly insured or fail to insure your personal risks and assets. Consult with an insurance broker in B.C. before you assume everything is covered.

Tony Gioventu is executive director of the Condominium Home Owners Association. Contact CHOA at 604-584-2462 or toll-free at 1-877-353-2462, or e-mail [email protected].

© The Vancouver Province 2008

Tony Gioventu
Province

Dear Condo Smarts:

Our strata council has a unique situation. We recently had a lawsuit that involved owners of a unit who alleged that they were treated unfairly because we prevented them from renting out. We did start the proceedings but after legal consultation decided it was easier to settle rather than take it to court.

The strata council agreed to pay $15,000, then filed a claim with our insurance company for the settlement plus $10,000 in legal bills. We have been informed by our insurance company that our claim has been denied because we had an obligation in our insurance policy to contact them immediately upon identifying that we were being sued.

They claim that as a result of not notifying them, we did not allow them the opportunity to establish a reasonable defence against the suit.

Now council is stuck with the $15,000 settlement and almost $10,000 in legal bills and our owners are expecting us to pay this out of our own pockets. So who pays these bills?

— DF in Metro Vancouver

Dear DF:

This is a perfect example of why every strata corporation should have directors and officers liability insurance coverage if possible.

There are a number of situations where councils have to make decisions that place themselves or the strata at risk or enforce bylaws that may be challenged. The key to your insurance, though, is that you must reasonably comply with the terms and conditions of the policy.

The company reserves the right to not only defend the claim but also subrogate the claim, an action on your behalf to recover the loss. There are other significant reasons to carry D&O insurance.

For example, where the strata corporation provides water and sewer services, or there are public facilities or amenities on the strata property. It’s not only a general liability issue, but your failure to properly maintain or service your common assets may also expose your council to lawsuits. Make sure your property managers are named on your policy as they are your agent, and check for exclusions such as Human Rights Claims, or underinsured clauses.

Before a strata decides on settlements that have both financial and liability implications, get legal advice. Ask yourself this question: Why would our strata council have the authority to settle a lawsuit and authorize legal fees without notifying the owners of the strata about the lawsuit or calling a special general meeting to approve the deal?

Of course you want to defend against the claim but, at some point, the owners of the corporation are paying the bills and they need to decide how much, how they are being paid and the terms of the settlement.

On the day you receive notice of a lawsuit, there are three actions a strata council should immediately undertake: Call an emergency strata council meeting, call your lawyer and call your insurer. Don’t wait till the dust settles to wonder if you’ve done the right thing.

Tony Gioventu is executive director of the Condominium Home Owners Association (CHOA). Contact CHOA at 604-584-2462 or toll-free at 1-877-353-2462, or e-mail [email protected].

© The Vancouver Province 2008

Tony Gioventu
Province

Dear Condo Smarts: Our strata community consists of seven separate strata corporations, with a total of 447 units. Within our gated complex, we have a clubhouse, guest house, pool and a golf course that is owned by the seven strata corporations but as a separate piece of property not included in our strata plan.

Our strata community association is fighting over who has to insure the different common facilities that we all use. Logic would tell me that everyone who uses the facilities pays for the insurance, but because the pool is on one strata plan, the clubhouse is on a second strata plan and the golf course is on a separate piece of land altogether, everyone believes only the relevant owners have to insure the property.

Our strata council in the 58-unit townhouse development is very concerned that through all of these disputes, we are not properly insured.

Our total insurance cost for the common facilities and the golf course is only $12,000. Something has to be wrong here. Can you steer us in the right direction?

— Kootenay Hills Strata Association

Dear Kootenay Hills Owners: There are many developments all over the province exactly like yours. They are designed as excellent master-planned communities that provide secured, gated communities, recreation facilities and a variety of common services, including golf courses, guest houses, air strips, marinas, ski hills, riding stables, exotic gardens and pools. Your concerns about your insurance coverage is well founded. I reviewed your community plan and each of your strata corporations is bound or connected to each other by legal mechanisms filed with your properties.

Doug Correa at Aon Reed Stenhouse Insurance recommends to review your community plans, building and land-use covenants and agreements, and negotiate a master insurance policy to cover all of your common facilities.

When you have something like an independent operator of a golf course, be sure to negotiate the allocation of liabilities associated with the golf course, restaurant, bar, spa facilities, golf cart rentals and other related activities.

Not only does your golf course serve alcohol in the bar, it also serves alcohol on the golf course to golfers and drivers of golf carts that cross municipal roadways. There is a significant amount of liability here for your community and it needs to be addressed immediately.

Ask your insurance agent or broker if you are properly insured for your risks and if there are other types of coverage you should consider.

If you are not properly insured or you are underinsured, coverage can be limited to 50 per cent of a claim or less. We have many sad scenarios around the province each year of under or improperly insured strata corporations with significant claims and the owners end up paying the price. As an owner in a strata corporation, you will be paying your share of the cost if insufficient insurance does not cover the claims.

Don’t forget, confirm everything in writing with all of the parties.

Tony Gioventu is executive director of the Condominium Home Owners Association (CHOA). Contact CHOA at 604-584-2462 or toll-free at 1-877-353-2462, or e-mail [email protected].

© The Vancouver Province 2008

Tony Gioventu
Province

Dear Condo Smarts: We’ve been fighting with our strata council for the past two years about fixing the roofs on our buildings before it’s too late. Well, now it’s too late.

After the last rain storm, we noticed a huge water bulge in our ceiling paint that let go all over our dining room furniture, Persian carpets and family photo albums. The damage to our personal property is more than $10,000. We paid our own deductible of $1,000 and we’re now living under a tarp while the water and cold seep in to every crack.

Our once modest townhouse has become a disaster construction site and there is now extensive water damage to the sub roofing, attic insulation and our drywall and flooring. The strata insurance company have generously agreed to pay the initial claim for restoration but they are not paying for roof repairs and deferred maintenance.

pays when the loss is not our fault and how do we get our strata to move on roof replacement?

— Saturated in North Van

Dear Saturated: Deferred maintenance or replacement is, simply put, a bad decision. No one benefits. The costs are substantially higher — 30 to 50 per cent more when you finally get around to the repair and the collateral damage to owners’ personal property, disruption to their lives, loss of work and general discomfort and loss of property value can never be recovered. Deferred maintenance that results in insurance claims is also a nightmare for strata corporations because you may find your insurer may or may not cover your claims.

Tim Helson at Vancouver Island Insurance Centres advises that claims have to be generally sudden and accidental. Resultant damages may be claimed but the maintenance item may not. In many circumstances, insurance policies refer to claims relating to maintenance, mould resulting from maintenance, or damages resulting from deferred maintenance. Leaking roofs, plugged gutters, damaged balconies and failed window systems are common maintenance culprits that may not be insured.

Insurance is for those events you can’t plan on, whereas you can plan for a responsible maintenance program. If your strata is deferring maintenance, the owners might want to take control. Demand a special general meeting to address the repairs and formulate a repair and payment schedule. Your strata corporation may find themselves facing a lawsuit for damages to personal property or betterments if the strata has failed to meet its obligations.

You might want to consider the following: Spring seminars on strata living start this Wednesday evening at UBC Robson Square More information at choa.bc.ca

Tony Gioventu is the executive director of the Condominium Home Owners Association (CHOA). Contact CHOA at 604-584-2462 or toll-free at 1-877-353-2462, fax 604-515-9643 or e-mail [email protected].

© The Vancouver Province 2008

Tony Gioventu
Province

Dear Condo Smarts: I have been renting out my strata unit since 1975. Over that period, I’ve been fortunate to have only three tenants. However, my recent tenant has been troublesome and caused a great deal of damage in our building.

He decided to undertake some repairs to the unit plumbing and install taps and hook into the drain for a washing machine and dryer. I’m sure your readers can imagine what’s happened. There’s been a major flood and damage to over half of the suites in our eight-floor building.

I had only recently inspected the unit and all was well, but within a day of my last visit, I gather the strata corporation received complaints about noise and construction going on in the unit. Unfortunately, no one ever investigated the complaints and we, as the owners, were never contacted until the damage was done.

The tenant has secretly moved out and we’re advised that we have to pay the $25,000 deductible. We thought the deductible was a common expense of the strata. Can they make us pay for something that we are not responsible for?

— Dave Harris, White Rock

Dear Dave: Whether it is an insurance claim, bylaw violation or some other action required by the strata corporation to enforce its bylaws or rules — and this often includes the recovery of damages associated with insurance claims — landlords need to know they may likely be on the hook for the costs if their tenant is unwilling or unable to pay.

Landlords need insurance coverage, just as the owners who live in their strata lots do. While the amount of contents owned by the landlord might be minimal, they still need coverage for improvements made to the strata lot, to protect themselves should a liability suit be brought against them and, lastly, for coverage if the strata corporation’s deductible is assessed to them.

Russ McMurchie of Coastal Insurance warns that not all policies provide adequate coverage for the strata corporation’s deductible, but that it is available.

When owners rent their units out, they should know what the strata corporation’s deductible is, especially for water damage, and they should make sure that their unit-owner policy has adequate coverage. Exemptions under landlord policies may include home-based businesses, illegal activities such as grow ops or meth labs, human-rights claims or, in some cases, unauthorized alterations to property resulting in damages and claims. Some landlords simply add an extension to their homeowner policy rather than purchase a separate rental-type policy to cover the risks.

Be honest about your intentions when purchasing your insurance and remember, no two policies or conditions are the same. If you’re renting to a long-term tenant or renting for a short term, such as a vacation rental, policy limitations and conditions may vary significantly. Bottom line: Are you properly covered?

Tony Gioventu is executive director of the Condominium Home Owners Association (CHOA). Contact CHOA at 604-584-2462 or toll-free at 1-877-353-2462, fax 604-515-9643 or e-mail [email protected].

© The Vancouver Province 2008

Tony Gioventu
Province

Dear Condo Smarts: I’ve just taken over as treasurer in our strata of 101 units. We have 10 rentals and for the past five years, one of our investors has been the treasurer. We had to threaten court action through our lawyer to get the past treasurer to release our financial records, and the cancelled cheques were still missing. I personally paid the bank charges to have the past five years’ cancelled cheques reproduced. Two other councillors and I sat down over Christmas and reviewed all of the documents. We are now in a state of shock and horror. We have discovered three companies to whom our strata has been paying money that do not exist. There are cheques for building inspections, accounting services and general maintenance that were never approved by council and no invoices. We contacted the bank on one of the cancelled cheques and were told that only the owner of the company (turns out it is our previous treasurer) could access the information in the accounts. We’ve tallied up the five years and our strata appear to have paid more than $40,000 of fraudulent expenses. What do we do? Can we recover the losses?

— K.C. , Surrey

Dear KC: These are hard lessons to learn for anyone in business, in a non-profit association or a strata corporation. Your council needs to immediately have an audit conducted and seek legal advice on the collection of the fraudulent invoices. If the past council member does not restitute the funds, including interest, court action may also be necessary. File a police complaint. The fraud never stops when someone is allowed to get away with it and they will only make a victim of their next strata corporation or association.

There are a few rules of thumb that everyone can follow to prevent fraud or at least address it quickly when it occurs.

n Misuse of bank accounts: Copies of all bank statements of all strata bank accounts must be provided to council members every month and on request of an owner within 14 days. Council, as part of their routine approval of financial statements, must review the bank statements.

n Unauthorized payments: No payments are made without an invoice, and at least two council members not involved in transactions must review invoices each month. Invoices that charge GST without a valid GST number should never be paid until the correct information is provided.

n Interest fraud: This is surprisingly frequent. All strata funds must be held in trust in the name of the strata corporation and all interest must be deposited to the strata account.

n Monthly receivables: Strata council needs to record those owners not paying their strata fees and follow up each month. Not paying your monthly fees is the same as taking $200 a month from the strata accounts. Watch for the signs and don’t delay. Act quickly. Waiting three months before you take action only provides greater opportunities.

Tony Gioventu is executive director of the Condominium Home Owners Association (CHOA). Contact CHOA at 604-584-2462 or toll-free at 1-877-353-2462, fax 604-515-9643 or e-mail [email protected].

© The Vancouver Province 2008

Tony Gioventu
Province

Dear Condo Smarts: In March, one of our fourth-floor units had a common water leak from a broken pipe. Contrary to my encouragement, our council voted not to file an insurance claim and to fix the damage ourselves. The cost for the repairs was about $2,900 and our deductible was $2,500. Seemed like a reasonable way to fix the problem and not increase our insurance risk or costs.

Fast forward to December. A first-floor unit below the flood has been complaining that her unit is extremely cold and musty. She called in a restoration company that removed a section of her living room wall and literally gallons of disgusting ooze poured out. With a water test the culprit was identified as the flood from March. All of the water released into the building had gradually made its way down to the first floor.

The estimate for restoration is now close to $50,000. The owners in the building are furious we didn’t file a claim or report it to them and they’re insisting that council pay the expenses out of their own pockets. What do we do?

— Carol D., Victoria

Dear Carol: Strata corporations have regrets every day for not following up or taking action when they could have acted quickly and economically. In your case, for example, you paid more than the cost of the deductible originally and left yourselves with a latent defect that will place your strata in much greater jeopardy and at great expense.

There is nothing to stop the strata owners from bringing a lawsuit against the council for their neglect.

I frequently hear from owners with claims that the strata corporation wants to prohibit them from filing a claim. If it’s a valid claim an owner can file it in the same manner as the strata council. The Act is clear.

Despite the terms of the insurance policy, those named as insured in a strata insurance policy include the strata, owners and tenants and persons who normally occupy the lots.

Your strata council needs to convene a special general meeting of the owners to report the damage and propose a resolution on how to raise the funds to pay the costs, either through a special levy or contingency approval.

The most important issue now is to fix the building properly. Settle the disputes on fault later.

Here’s a common list of 12 council regrets.

1. Don’t assume there’s no damage from water or fire. Report a claim immediately. Investigate it and restore it properly.

2. If the bylaw says no pets, enforce it when you see a pet move in. Don’t leave it for five years.

3. Even though you had a serious disagreement with an owner, don’t ever include libelist or slanderous information in your minutes.

4. Pay your strata fees. Don’t waive them in exchange for sacrificing your time on council.

5. Before the roof leaks, replace it. Do the math: Why pay 50 per cent or more to get one or two extra years out of your roof?

6. Strata council is not a good place for a romantic affair.

7. It’s not OK to allow a drug dealer to thrive in the building if they provide council with a share of the profits.

8. Buying insurance outside of the country is not worth the paper it’s written on.

9. Don’t make an 80-year-old owner shovel their own driveway.

10. Don’t use strata funds to pay your gambling debts.

11. Respect all cultures, faiths and traditions. Defending yourselves at a human-rights hearing is no fun.

12. Never agree on a verbal quote for anything. If it isn’t in writing, it can’t be true.

May your strata have a conflict- free New Year.

© The Vancouver Province 2008

Who is responsible for what?

Tony Gioventu
The Province

Dear Tony:

We purchased into a new strata in 2015 that is part of several properties with air parcel agreements and I have become actively involved as our strata treasurer. It has been very confusing to try and figure out how costs between the parties are calculated, how they are paid and how a variety of liabilities are shared. We get the impression no one really knows how to apply the cost-sharing formulas and there is a lot of guesswork on the go.

To try and sort out our electrical, we decided to hire a consultant to do a building audit and discovered even with a complete shutdown there was still electrical demand on our system from other parts of the complex and certain sections of our property continued to have electrical service, although no one could identify the source. Clearly the creation of air parcels and the design of the buildings during construction are the source of inconsistencies.

We believe we have solved the basic issues, but how do we solve conflicts under the Strata Property Act if we cannot agree to a solution with the other air parcels?

Wendy C.

Dear Wendy:

When any new property is started, one of the first efforts to protect the interest of the property owners is a building commissioning. There is no formal requirement under the Strata Property Act that relates to operations, or under the Homeowner Protection Act that relates to warranty requirements. However, the only way a property owner like a strata will understand how the buildings operate, how they pay for costs, and whether their building is operating the way it was intended is to enact some level of commissioning.

The building commissioning process is most critical for complex energy systems, and multiple properties sharing joint assets and facilities and air space parcel agreements. Air space parcels are basically separate properties that are stacked on top of and beside each other. They often share parking, storage, access, services and jointuse areas.

Before you do anything, a copy of the complete air space parcel agreement needs to be published and available for all council members and the strata manager. In the commissioning process of a strata in an air space parcel relationship, all contracts and agreements for services and utilities should be identified and reviewed. The mechanical and operations of the buildings should be inspected and tested to determine they are operating correctly and efficiently.

Shared costs and contracts established by air space parcel agreements should be reviewed and the cost formulas and methods of payment confirmed. Contract agreements that establish how each of the properties share liability, costs, obligations for maintenance, repair and inspections, and who has the authority and responsibility to administer those areas of shared property, are a critical part of the business relationships and essential in assisting the strata when you develop your annual budget.

Many strata owners believe the Strata Property Act applies to air space parcel agreements. The act does not apply. The relationship is purely contractual as it defines a relationship between multiple property owners, some of which may be strata corporations or commercial property owners such as hotels and shopping malls.

If your strata corporation has a conflict or problem with an air space parcel property, I strongly recommend your strata seek legal advice on the contractual relationship and your obligations as a strata corporation.

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