Clarity needed on rental bylaws

Tony Gioventu
The Province

Dear Tony:

 Our strata is a 12-unit townhouse complex in Coquitlam built in 2002. We are deeply concerned by the government planning to remove rental restriction bylaws from condos in B.C.

We permit two rentals and the two rentals have been nothing but a source of chronic problems for our volunteer council. Hiring a management company to deal with the ongoing issues is simply too expensive for a small strata corporation and with the elimination of rental bylaws, we will simply be left with more tenants and a smaller group of owners left to self-manage our corporation.

So, because the government has not planned for housing expectations and local governments have allowed developers to run rampant on development with no rental commitments, the government has decided to download the problem to the consumers who form the backbone of our economy.

Even though we are small, we still have the same duties and liabilities as a 200-unit strata council a block away, but we will not have the financial resources to fight the constant tenant battles that arise.

There is nothing in the legislation that compels a landlord to participate in the operation of a strata corporation, and the removal of a tenant or the enforcement of bylaws and tenancy laws is a joke.

We have discovered from the residential tenancy board that as a council, we do not have standing in the landlord and tenant relationship as we are not part of that agreement and therefore cannot evict the tenant. Considering we are, and have always been a 100-per-cent occupied property, how does eliminating rental bylaws solve a housing problem?

Karen M.

Dear Karen: 

The government has not yet made any decision on whether to repeal or amend the legislation that would change rental bylaws for strata corporations.

The task force that was struck by government has recommended the repeal of rental bylaws; however, in spite of the detailed research and opposition provided, chose to proceed on an independent agenda and not acknowledge the impact this will have on strata owners and residents in B.C. 

Under the Strata Property Act and the previous Condominium Act, strata corporations were permitted to adopt bylaws that either prohibited rentals or limited them to a specific number or percentage. In addition, family members who were the children or parents of the owner or the owner’s spouse were exempt, and owners who provided evidence of a reasonable hardship to their strata council were exempted. Prior to Jan. 1, 2010, the first owner was exempted by a developer rental exemption, and since Jan. 1, 2010 any strata lot that was identified as exempt by the owner developer was exempt for the period listed.

With few exceptions, every strata corporation since 2010 has been exempted from rental bylaws. As more than half of the strata corporations in B.C. are less than 50 units and over 90 per cent are self managed, it would be safe to assume that every volunteer strata council in those properties will be responsible to deal with the additional tenancy issues in the event rental restriction bylaws are removed.

In 2017, the CHOA conducted a direct building study of eight buildings that were exempted from rental bylaws since 2010 and eight comparable buildings that were developed prior to 2010. The eight buildings constructed since 2010 have no rental bylaws and have a vacancy rate averaging 30 per cent, with the majority of the unoccupied units being used by investors or for short-term vacation rentals.

Clearly, rental plays no role in the matter of occupancy in these buildings, largely due to the value of these units and the cost to make rentals feasible. In the eight buildings that were constructed prior to 2010, most with rental bylaw limits, not restrictions, the vacancy rate is below two per cent, most of which was accounted for by transitional ownership. This is consistent across the province.

How would removing rental bylaws increase rental inventory in an already extremely low vacancy? Before the government makes a decision on terminating rental bylaws, it is essential it provides assurances to the public how the removal of rental bylaws will affect occupancy, provide more rental housing, and the change in legislation will not create an operational nightmare for smaller strata corporations.

There is no evidence that indicates rental bylaws reduce rental housing availability to the public when the properties with rental bylaws already have the lowest vacancy rates in the province. The changes to the legislation will have a dramatic affect on property use, open all properties to speculators, investors and developers, especially in retirement communities that are also vacation resorts, affecting senior communities contrary to the government policy of keeping seniors in their own housing as long as possible.

The argument that other provinces do not permit rental restrictions is not based on comparable legislation. No other province permits the strata titling of duplexes and small townhouse units, compelling owners to collectively manage all property.

B.C. has over 30,000 strata corporations; over 22,000 of them will be affected by this change in legislation. It is important to voice your opinion as an owner, investor and strata council member. Contact your local MLA and the minister responsible for the Strata Property Act: Selina Robinson, minister of Municipal Affairs and Housing. ([email protected])

© 2019 Postmedia Network Inc.

Strata corporations must maintain and repair common property

Tony Gioventu
The Province

Dear Tony:

Our strata corporation is a mid-rise apartment building of 12 floors constructed in 2002.  I live on the fourth floor and since August have had chronic issues with soap suds in my kitchen sink and slow drainage in my tub.  Recently a backup into my unit caused significant damage — destroying the original carpets and the kitchen cabinets.  The strata council and property manager told me to hire a plumber to snake out my lines and clear the clogs. I was advised this would be my cost to pay as the amount was below the strata insurance deductible.

This seems very unfair. The plumber identified the clog was almost 35 feet from my unit and likely in a main line. He provided me with written detail of the information to provide to my council.

The council are still denying it is their problem. I have also heard from several other owners between the first and eighth floors who have the same concerns and have written letters to the council complaining about drainage problems.

I thought the drainage piping in the building was the responsibility of the strata? Shouldn’t it be the responsibility of the strata council to maintain this system? 

Holly B.  Burnaby

Dear Holly:

You are correct. Here is the definition of common property from the Strata Property Act that every strata council, manager and owner need to understand.

Common property means: a) that part of the land and buildings shown on a strata plan that is not part of a strata lot, and (b) pipes, wires, cables, chutes, ducts and other facilities for the passage or provision of water, sewage, drainage, gas, oil, electricity, telephone, radio, television, garbage, heating and cooling systems, or other similar services, if they are located (i) within a floor, wall or ceiling that forms a boundary (A) between a strata lot and another strata lot, (B) between a strata lot and the common property, or (C) between a strata lot or common property and another parcel of land, or (ii) wholly or partially within a strata lot, if they are capable of being and intended to be used in connection with the enjoyment of another strata lot or the common property. 

In your strata building, as in most apartment style buildings, the drainage systems under the definition are common property. The strata corporation must maintain and repair common property and this includes frequent clean outs and flushing of drainage systems. Drainage systems for roofing systems and internal discharge should be cleaned at least every two to three years or more frequently depending on the nature of use and exposure.

Because strata councils and managers frequently change, it is common to forget about maintenance if the strata corporation does not maintain a written operations plan. If a strata corporation is properly maintaining their building systems, they will have a schedule of annual maintenance services. These schedules are essential for budget planning as well. Owners are entitled to request copies of the correspondence between owners and the council relating to the drainage complaint. This is will help identify if the strata corporation has responded to common property failures.

You may request copies of maintenance or service calls identifying whether the corporation actually maintained the drainage systems of your building.  The maintenance of common property is the responsibility of the strata corporation and not downloaded to an owner. If an owner — as a result of inappropriate use or misuse — is responsible for a claim or damages, the strata corporation may recover those costs from the owner. Owners may commence a claim with the Civil Resolution Tribunal to recover their costs in the event the strata corporation has been negligent in maintaining and repairing common property, or seek an order for the corporation to maintain the common property. 

© 2018 Postmedia Network Inc.

The Strata Property Act permits those with written assignment of the owner

Tony Gioventu
The Province

Dear Tony:

We are a mid-sized condo building in Penticton having a tough time getting people to sit on council. We would like to permit family members to be elected to our council, but our council president said it has to be a resident owner to be eligible for council.

We have several long-term tenants in the building and their landlords who would be willing to help out, but he keeps refusing their nomination or election at our annual meeting. 

We are concerned that fewer owners are willing to be on council and the balance of power is left in the hands of our condo bully. How do we get more people to be on council?

Mary F.

Dear Mary: 

There are several classes of people under the Strata Property Act who are permitted to be elected to council: owners who are those persons registered on the title,  tenants who have been given the written assignment of the owner, family tenants who are granted an assignment under the act and have provided written verification of their family status and assignment, and assigned representatives of a strata lot owned by a corporation. 

In addition, a strata corporation may also adopt bylaws that permit other classes of people eligible for council, such as a spouse of an owner who is not registered on title or a family member who is not a resident of the building.

Any owner, regardless of their residency status, is eligible to be on council. You might find this surprising, but the president of council, when acting as the chair, or any person acting as the chair of a general meeting, has very little authority to make decisions.

The act establishes that matters at general meetings are decided by a majority vote, unless a three-quarters vote, 80-per-cent vote or unanimous vote is specifically required.  This section of the act tells us it is the owners in person or by proxy at the meeting who routinely make decisions on matters such as the approval or amendment of: the previous minutes, the agenda, the annual budget, the nomination of council members and their election, and the termination of the meeting.

The same rule applies to council meetings. At a council meeting, it is a majority of the council quorum that makes decisions, not the president.

Strata owners do not have to be bullied. Stand up and motion for the nominations of other eligible owners and tenants at the meeting. If the chair refuses to accept the nominations, the owners, by majority vote, may challenge the chair and override that decision. Bullies only have power if your community surrenders it.

Consider applying a nominating or invitation process for council before its annual meeting to fill the vacant positions to encourage owners and eligible tenants to volunteer for council. It is a great time to source out people with a variety of experiences to contribute to your operations and management of your community. Landlords and their tenants have just as much interest in a well-run property as a resident owner, and landlords carry all of the liability of the tenants as well as their own. Their contributions to council are just as valuable. 

© 2018 Postmedia Network Inc.

Strata corporations has to maintain decks

Tony Gioventu
The Province

Dear Tony:

Our strata corporation has a bylaw that says the owners must maintain and repair limited common property.

Our balconies are designated as limited common property, and this summer, the strata hired a company that washed our siding and then power washed every balcony, deck and patio area. Now several owners are concerned about the damage caused by the power washing, and several leaks have shown up from torn deck covers to the units below.

The strata council said it’s our problem to get the deck membranes repaired or replaced as the bylaws require owners to maintain and repair common property.

The decision of council to have decks power washed was challenged by several owners who were threatened with a police complaint at the time if they interfered with the contractors. Our strata president and treasurer are both bullies and have virtually no experience.

Because the damage was obviously caused by the carelessness of the contractor and the council, why should owners do these repairs? 

Lynn R.

Dear Lynn:

This is a common misunderstanding of how limited common property bylaws are applied.

Like the Standard Bylaws of the Strata Property Act, your bylaws require owners to maintain and repair limited common property (LCP) that occurs once a year or more frequently. It also requires the strata corporation to maintain and repair all decks and balconies on the building for those items that occur less than once a year. 

Your council obviously tried to take the cheap route and does not understand your bylaws. It was the responsibility of each owner to wash their LCP surface, clear drains and ensure the area is not damaged by their use. The strata corporation is responsible to replace the deck membranes when their life cycle is finished, as well as replacing them if they were damaged by the contractor hired to wash down your building. 

It is possible to amend the bylaws to make owners responsible for the LCP areas, such as the decking. However, every time a strata corporation attempts to download the responsibility and authority to repair and maintain outdoor components is disastrous.

We live in condos so we don’t have to clean the gutters, cut the grass, paint the siding, wash the windows, shovel the snow. Condo owners don’t do exterior repairs, and if they try, the results are generally improper or insufficient.

If your owners are maintaining their decks, provide them with instructions to ensure they are not damaging the property. Power washers, if managed with the correct pressure and proper skills, may be safely used to clean building surfaces. However, soft membranes with waterproof seams,and caulking around doors, windows and deck membrane flashings are extremely vulnerable to damages. The spray from a garden hose is often more than sufficient with soft brushing.

Before you aggressively wash your building surfaces, contact the manufacturer or installer of the deck membranes. They should be able to provide you with maintenance instructions, along with a list of cleaning products or chemicals that may be safe to use on the deck surfaces and safe for the environment. Before exterior maintenance is downloaded to your owners, check your bylaws to determine who is responsible.  

© 2018 Postmedia Network Inc.

Owners may assign a tenant to council

Tony Gioventu
The Province

Dear Tony:

Is a tenant permitted to be elected to strata council? Our strata corporation has struggled to elect the minimum number of council members and at our AGM in October, two tenants came forward and offered to be elected to council. They provided written consent from the owners of their strata lots, but several owners objected, insisting they had to be owners. 

We managed to elect only two council members, so we are having another general meeting in December to elect more.

It would be very helpful if the tenants were permitted on council. 

Cally W., North Vancouver

Dear Cally:

Yes, tenants may be elected to council if the owner of the strata lot has provided a written assignment of their rights for the purpose of being elected. 

A landlord may assign to a tenant some or all of the powers and duties of the landlord that arise under the Strata Property Act, the bylaws or the rules, but may not assign to a tenant the landlord’s responsibility for fines, damages and insurance deductibles or the costs of remedying a contravention of the bylaws or rules.

The assignment is not effective until the landlord gives the strata corporation a written notice stating all of the following: (a) the name of the tenant to whom the assignment is made; (b) the powers and duties that have been assigned; and (c) the time period during which the assignment is effective.  

Family members who are tenants are also eligible for the similar assignment and permitted to be elected to the strata council. When an owner rents their strata lot to a tenant, or family member defined by the act, they are required to provide the strata corporation with a Form K signed by the tenants understanding they have received a copy of the bylaws and rules. The form is essential for a strata corporation to manage the owners and tenants list and report their rental inventory. The form may also include any written assignments for the tenant or family member to be elected to the strata council.

In addition to tenants, a strata corporation is also permitted to amend their bylaws to permit other classes of persons to be elected to council. In strata corporations with aging populations, where owners are unwilling to serve on council, the strata corporation may amend their bylaws to permit the family members of owners elected to the strata council, if the owner provides written consent.  

The bylaws may also consider the appointment of other types of persons such as business professionals to serve a specific purpose. Remember that only the owners at a general meeting may elect additional council members. The number you elect at your annual general meeting may only be increased if the strata corporation holds another general meeting for the purpose of electing additional council members.

© 2018 Postmedia Network Inc.

The Strata Property Act does not permit mail-in ballots

Tony Gioventu
The Province

Dear Tony:

Our strata council has decided to avoid holding a meeting to discuss a major change in the use of our property. We are a gated community and the current council doesn’t want to pay for the gate maintenance any longer and wants to remove the gate. They have sent out a notice with a proxy form and mail-in ballot that requires each owner to vote yes or no. They advise they will inform the owners of the decision by Nov. 15. 

Is this permitted?

Daria B., Vernon

Dear Daria: 

The Strata Property Act does not permit mail-in balloted or proxy vote-only meetings. 

The intention of the legislation is to ensure eligible voters have the opportunity to discuss the proposed resolutions or, at the very least, require every eligible voter to consent to waiving notice of a meeting and any proposed resolutions. 

Any significant change in the use or appearance of common property or a common asset requires a three-quarters vote at an annual or special general meeting. The exact wording of what is being approved or altered must be included in the wording of the resolution to confirm the strata council has the authority to proceed with the changes if the resolution passes. 

If a strata corporation is unable to hold a meeting due to time constraints or in the case of vacation properties, where owners are only present in the summer, the strata corporation may issue a notice of waiver of meeting.  A notice of waiver works well for small strata corporations as it enables expedient decisions, but for large strata corporations such as yours, over 100 units, it is difficult for the waiver to pass. A notice of waiver requires every eligible voter to agree in writing that they are waiving notice of a meeting and that they agree to the resolution.

In addition, if there is more than one person on title, all of them must consent to the waiver of meeting and the resolution. If one strata lot does not agree or simply does not respond, the proposed resolution does not pass. 

I would advise anyone implementing a wavier of notice to confirm your ownership list is up to date or it may be necessary to conduct title searches to confirm the names of all owners on title. When the strata corporation issues a form that indicates this is a waiver of notice of meeting, it requires all eligible voters, including multiple owners, to sign, consent and return the form. The strata corporation must retain copies of the waivers and consents. 

Any owner, tenant or person authorized in writing by the owner or tenant is entitled view or request a copy of the waivers and consents. 

If a Form B Information Certificate is requested during this period, the strata corporation must disclose if a waiver of notice has been issued for a three-quarters vote, and any three-quarters  resolution that has been passed but not yet filed in the Land Title Registry if required. 

A wavier of notice proceeding is much more complicated then simply sending out a notice. Speak to a professional before you send out your waiver. 

© 2018 Postmedia Network Inc.

Common property a responsibility of the strata

Tony Gioventu
The Province

Dear Tony:

Our council hired a contractor to clean our gutters and roof areas, as we have several large maple trees around our property. The contractor removed the debris from the upper areas and simply dumped it on our balconies and patios. The council has informed owners that patios and balconies are the responsibility of each owner and we are required to remove the debris.

Many of our owners are seniors and not capable of clearing the materials from their balconies. 

As a result of the debris being dumped and blocking drains, several patio areas flooded in the heavy rains, causing damage to three units on the ground level.

Can our strata council make owners responsible for maintaining and repairing decks and patios? 

Judith M., North Vancouver

Dear Judith:

There are two considerations when answering your question: what the legislation and your bylaws require and what is common sense. 

First, the legislative side. Most decks, patios and balconies are either common property or limited common property. Any areas that are common property must be maintained and repaired by the strata corporation.

On your strata plan, the balconies and patios are shown as common property. Your strata corporation must maintain and repair the common property; this includes the removal of the debris and washing of the decks and balconies. Strata corporations are not permitted to adopt bylaws that require owners to maintain and repair common property.  

If an area is limited common property, the duties are defined in the bylaws of the strata corporation. Under the Standard Bylaws of the Strata Property Act, owners are responsible to conduct maintenance on their allocated area of limited common property for duties that would occur once a year or more often, and the strata corporation is responsible to maintain and repair the area for items that occur less than once a year. 

As for common sense, one of the benefits of living in a strata corporation is the ability to share the service costs for routine maintenance. Hiring a service provider to clear the gutters, debris, decks and balconies is a lower cost and ensures your strata can hire a reliable, insured contractor with resources to effectively maintain your property without placing your residents at risk. 

Throwing the debris on lower levels not only causes increased maintenance; it is also a safety hazard.

As winter approaches, apply the same consideration to snow removal and de-icing.  It is much more economical and to everyone’s benefit to plan for snow removal and maintenance of roads, sidewalks and driveways. 

Check your strata plan and bylaws before you try to download maintenance on your owners. In most townhouses and apartment-style strata corporations, driveways, sidewalks and roadways are common property and must be maintained and repaired by the strata corporation. 

© 2018 Postmedia Network Inc.

Easing of cannabis laws creates questions for strata corporations

Tony Gioventu
The Province

Dear Tony:

Our strata council is very confused about the new marijuana legislation and all the hype that has been published in the media. With seven volunteers cruising through the Internet, we have naturally developed seven different opinions on what we can do or what we have to do to protect out strata.

Our strata is a simple 16-unit townhouse complex, but I also own a rental unit in a 171-unit highrise and have concerns about activities that could affect the comfort of my tenants and our investment.

Please explain what we need to do if we want to stop the consumption of marijuana in our properties.

Sylvia M., Port Moody

Dear Sylvia:

Yes, the current legalization of cannabis permits limited possession and consumption of products and a limited growth of plants per occupant. However, strata corporations are permitted to adopt bylaws that prohibit cultivation of plants and prohibit forms of consumption or behaviour that may result in nuisance, harm or risk of endangerment to other occupants or property. 

The Schedule of Standard Bylaws of the Strata Property Act already contains a bylaw that addresses issues of nuisance. If I am conducting an activity in my strata lot or on common property that causes a nuisance to an owner, tenant or occupant, the strata corporation may apply the current standard nuisance bylaw. 

Many strata corporations where the homes are attached and share walls, floors and ceilings or ventilation systems have already adopted bylaws that strictly limit or prohibit smoking of any types of products on common property, limited common property and within strata lots.

Remember: when you live in a strata, your home is not your castle. If your activities are likely to cause or are causing a nuisance to a neighbour, your strata council will enforce nuisance bylaws. This applies not only to smoking or vaping, but it may also apply to other activities, such as the use of barbecues.

A strata corporation may adopt a defined bylaw that restricts or prohibits smoking of any type of substance and may prohibit the cultivation of plants, with the exception of those persons with medical licence exemptions. 

If your strata corporation is not restricting cultivation of plants, there may be unforeseen consequences and damages if someone exceeds their limits or reasonable growing conditions. In order for plants to reach successful maturity, they require significant growing/daylight hours, fertilizers, increased watering or hydroponic conditions and ventilation.

With five to 10 plants in a strata lot, compounded conditions may result in high levels of humidity in the unit and adjacent areas, unsafe demands on electrical loads, fire hazards, odors and the increased risk of mould. If your building is not limiting or restricting cultivation, it would be valuable to monitor building interior conditions on a routine schedule to ensure no one has exceeded the permitted limits, resulting in a full-blown grow op. 

You cannot restrict or prohibit the types of substances that people consume. What people consume is their business, how they consume a product within your residential strata corporation may be controlled in your bylaws. Edible cannabis products are legal and no different than someone coming home with a bottle of liquor. 

© 2018 Postmedia Network Inc.

Condo Smarts: New finishes at odds with building appearance

Tony Gioventu
The Province

Dear Tony:

In October 2017, our strata corporation held a SGM and approved a special levy of over $1.2 million to replace the membrane over our parking garage.

At that time, the owners approved specific design plans that stated “all finishing materials had to match the existing structure”.  During discussion at the SGM, the owners made it clear they would not approve the project if this stipulation was not met. 

In June 2018, our strata council president and another member of council signed a change order. This order approved a significant change to the existing slump block finish and instead agreed to a smooth poured concrete finish.

These finishes look very different. The smooth walls have significantly altered the original, iconic appearance of our building. Council reluctantly notified the owners of this critical change in their strata council meeting minutes of July, 2018. 

Is a council allowed to do this? What recourse do we owners have? Who pays to remedy the situation? 

Patricia, Victoria 

Dear Patricia:

While the Strata Property Act sets out the condition “significant change in use or appearance of common property or common assets”, it does not establish a definition.

The principle reason: each strata corporation is unique and the circumstances that may result in a significant change in use or appearance that could affect one property may vary greatly from another property depending on the reasons for the change, the location and the result. 

If your strata community agreed to the renovation based on an assurance that finishes would not be changed, and the strata council subsequently acted contrary to those limitations, any owner could dispute the decision and file a court application, commence an arbitration or start a claim with the Civil Resolution Tribunal.

The decisions of the courts or the tribunal are specific to each strata corporation, however, most decisions have been a result of in a loss or change in conditions that affect the of use and enjoyment, of either common property, a common asset or limited common property, loss of value of property or altered access.

Here are some helpful examples of obvious significant changes that have occurred over the years: a change in landscaping or removal of trees without the approval of the owners, which resulted in a loss of privacy; diminished access or a dramatic change to the exterior appearance, such as a balcony enclosure that resulted in the blocking of ocean views for three adjacent strata lots; the change of colour of a paint scheme from green to burgundy; the construction of a pergola in front of two strata lots, blocking their yard access; moving a rooftop ventilation system from the area over a hallway to an area over a strata lot, resulting in a dramatic noise increase; owners changing their windows to an entirely different design and colour; or the strata council removing designated special needs parking.

Many of these types of changes can be reversed; however, major construction is extremely difficult to undo without significant cost. 

Legal assistance is essential when writing resolutions for special levies and major repairs. If the resolutions had been worded sufficiently, the conditions or authority to approve changes in use or appearance could have been defined in the resolutions and the council may have likely been granted authority to make decisions under certain conditions, such as product availability, design problems or building code issues. For an effective claim, it will be necessary to identify how the change affected use, enjoyment, access or current or future value of your property. 

© 2018 Postmedia Network Inc.

Undisclosed fees a growing problem

Tony Gioventu
The Province

Dear Tony:

I am a commercial broker concerned about a problem occurring for strata owners considering a windup and liquidation of their corporation.

Our office was recently approached by a strata manager who indicated a strata client was looking for an opportunity to wind up their corporation. We were requested to submit a proposal to the manager, with a specific deadline and copy of the terms of our representation agreement.

A week before the deadline, we were contacted by the strata manager, who indicated we could be on the short list if we were prepared to confidentially split our commission 50/50 with the management company in the event the windup was successful. Up to this point, we were never informed of the identity of the strata corporation, other than the number of units.

Our concern relates to two problems. The first is every location is different and requires a unique level of assessment in detail and marketing. As a result, rates may vary, depending on the projected work or site studies that may be required.

The second is a greater concern. If the strata management company is demanding a split commission in exchange for a short-list result, it is obvious this is not condoned by the strata corporation; otherwise, we would have been told the name and location of the strata and the contact information for the council members.

Clearly, the company is withholding critical information to leverage an undisclosed commission or fee on behalf of its client, which is both unethical and in violation of the Real Estate Services Act. At this time, we informed them we would not pay any commissions or submit a proposal without the explicit consent and details and their client.

CB

Dear CB:

Thank you for coming forward. A serious flaw in our real estate legislation is that there is no whistle-blower protection, so many violations in the industry go unreported for fear of recrimination. I urge you to file a complaint with the Real Estate Council of B.C. on behalf of consumer interest and the reputation of the industry.

Strata managers are not contracted as brokers or as the liquidator for the purpose of winding up a strata corporation. They are contracted to provide services for operations, maintenance, financial management and general administration. They are contracted under an “agency” agreement, which conveys the authority of the strata corporation to enable your manager to act on your behalf for the purposes of operations.

Unless otherwise agreed in your agency agreement, they act solely for your strata corporation, and any fees, commissions or benefits they receive that are not directly from the strata corporation must be disclosed to the corporation. Undisclosed fees and commissions are a growing problem within the strata-management industry and strata councils have a right to demand their strata-management companies inform them of any fees or commissions they have received.

A simple disclosure in the service agreement that a company “may” receive fees from time to time does not meet the requirements of disclosure. The company must disclose the amount of the fees, percentage of a gross fee or other interests where it receives a benefit. While it is acting as your agent, it is not acting as an agent for other parties unless you agree.    

When an agent of one party pressures a third-party service provider to provide a fee in exchange for the undisclosed privilege of an awarded contract, it is a form of racketeering. Unlawful on many levels and certainly not in anyone’s interest but the agent.

In all of the windup proceedings I have been involved with, the strata managers play the least role. The lawyer acting solely for the strata corporation will provide the greatest level of service and continuity as they will review the commercial-agency contract, notices and resolutions for meetings that will authorize the strata council to engage a broker and proceed with a marketing or negotiation process, attend information meetings and meetings with council to negotiate the terms of any of the offers, and finally the preparation of the notice package, including the resolutions for the 80-percent vote, the court application to approve the windup and the appointment of the liquidator. 

Your commercial broker plays a significant role and negotiates the sale of your property. It is their contracted responsibility to assess, evaluate and market your property to the broadest audience in the effort of obtaining you the best price for your property.

Your strata manager will have additional work ahead of them as the strata corporation moves through the windup process and should be compensated as set out in the schedule of fees for the cost of additional meetings and an hourly service.

A strata-management agreement signed by a strata council that pays a commission to a strata-management company in the event of a windup still requires the approval of the owners at a general meeting. If you want to pay an additional fee or commission to your strata manager, it must be disclosed and approved by the owners, as you will be paying out part of their proceeds of sale.

Finally, if anyone advises a strata council against a lawyer experienced with strata windups, they are likely protecting their own interests. Consumers deserve the best price and terms of sale for their property. Keep your strata corporation in control of the windup process where your strata council works directly with your lawyer and the commercial broker, and all stages of progress are reported to the owners. 

© 2018 Postmedia Network Inc.