My first Condo Smarts column was published in November of 2002, at the height of a spate of leaky condo repairs in B.C. That was 499 columns ago.
It started when the Homes section editor at Vancouver's The Province, Jeani Read, approached me with a problem in her Kitsilano triplex. As with many small strata corporations, everything was fairly informal, and everyone agreed that it ran smoothly until, of course, there was a misunderstanding over money, a result of not complying with the legislation. Sadly, Read died a few years ago, but her vision of a weekly column that would respond to questions from readers has sparked an important movement in B.C., for expanded education about strata living.
More than half of B.C. residents live in or own some form of strata-titled property more than 600,000 units represented by in excess of 26,000 strata corporations. That means, at least 26,000 annual general meetings, operating and reserve bank accounts, records and documents, more than 200,000 regular strata council meetings and billions of dollars in strata cash assets.
It's not surprising that there are conflicts. Yet, at the same time, when we look at the total number of owners, residents, strata corporations and buildings, there are relatively few.
British Columbians have embraced strata living and discovered the many advantages, including housing affordability, shared access to greater facilities, better personal security, community growth and a significant reduction in the obligations of detached-home ownership.
However, all this comes at a price. Like many family models, strata corporations often fall into disputes over money, or more precisely, lack of money. Many of the disputes in strata corporations are symptoms of neglected administration and noncompliance with legislation and strata bylaws.
So how far have we come over the past 10 years?
The success of the Homeowner Protection Act, mandatory warranty requirements and changing building codes in B.C. have all contributed to higher construction standards and consumer protection.
There have been two other major changes in the industry that affect the protection of strata assets and consumers' interests. The Strata Property Amendment Act in 2009 was a significant change in the culture of how strata corporations view their property administration, and how buyers and mortgage providers look at the value and risks of strata property.
The legislation introduced mandatory depreciation reports for all strata corporations in B.C., unless they have fewer than five strata lots, or they vote annually by three-quarters vote to be exempt, with a compliance date of Dec. 13, 2013. The depreciation plan requires a 30-year assessment and projection of all the property that the strata corporation is required to maintain and repair under the act.
For the first time, strata corporations that complete the reports have a viable planning tool for annual budgets and long-term financial needs.
The greatest hardship that any strata owner can experience is a sudden, unanticipated special levy for major projects, creating a risk of bankruptcy or an order-for-sale proceeding where they lose their home. All of this can be avoided if the strata corporation implements a financial, maintenance and renewal plan.
Everyone has read the stories about deferred repairs. We all understand that if we wait until the 10-year hot-water tank is 22 years old and it fails while you are at work or on vacation, the losses and emergency repairs that result are simply time, property and money wasted.
Depreciation reports aren't the only solution to our community disputes, but a plan that includes schedules for maintenance, renewal and financial planning and investment can certainly help strata corporations avoid major special levies that create so much hardship.
I attend more than 100 strata meetings every year, most of which relate to major projects that go off the rails. In almost every case, the root cause of the problem is the absence of sufficient reserve funds, resulting in major special levies that are frequently defeated.
Because a sufficient number of owners do not have the funds for the levies, defeating the resolution and politicizing the project is often their only option. Rather than a prudent decision based on the business interests of the strata, owners resort to tactics that delay projects, resulting in even greater costs once the resolutions eventually pass.
The second significant change was the introduction of the Real Estate Services Act, which included the mandatory licensing of strata managers. While there has been a significant change in the level of accountability, reporting, investigation and professionalization of strata managers and their brokerages, we need effective consequences for offenders who abuse consumers' trust, resources and assets. The Real Estate Council is a self-regulating body that licenses strata managers and brokers, giving strata councils a governing body for compliance.
Beyond the scope of the legislation, strata corporations must still be vigilant in contract negotiations, management of financial resources and supervision of the strata manager. Too many strata corporations assume that the strata manager will simply handle things, tell them what they should do or take the load off the council. Strata councils always retain their authority and liability for the duties of the strata corporation.
Hiring a strata manager does not change those obligations, and strata councils need to ensure the contracts meet each strata corporation's needs and are enforced.
What's important for the next 10 years of strata living?
Loading consumers and the industry with gratuitous regulations that leave us with the appearance of increased consumer protection is of little value unless there are real consequences to the parties who breach legislation. We need legislative reform with substance. In a nutshell, what happens when your strata council refuses to comply with the legislation? Where do you go?
The government is currently developing a framework to enable an expedited and economic
solution to resolve strata disputes, under the Civil Resolution Tribunal Act. The next stage is the funding and appointment of a chair of the tribunal.
Once the chair is appointed, the rules and operation of the tribunal will be set.
If all goes well, condo owners and corporations will be able to access an effective resolution process for the day-to-day disputes that arise in strata corporations without bankrupting the corporations or the owners.
Disputes in provincial court can easily take up to three years, and arbitration or going to B.C. Supreme Court is too costly for the average consumer.
As I review the last 499 columns, it's obvious that a tribunal system that serves the public interest would be a lasting legacy for consumer protection.
Tony Gioventu is executive director of the Condominium Home Owners' Association. Send questions to him by email at firstname.lastname@example.org or by post c/o At Home, Times Colonist, 2621 Douglas St., Victoria, B.C. V8W 2N4. The association's website is www.choa.bc.ca.
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