Dear Tony: We are about to sell our townhouse and decided to gather all of the documentation in advance to make the process easier for our agent. We requested copies of all meeting minutes, annual financial reports for the last five years and a Form B and a Form F.
When we received the Form F, we noticed that the strata is claiming we owe $500 in fines, which is something we were not aware of nor had been notified about.
We requested a copy of the details of the information about the fines from the strata council.
The council claims members knew nothing about the fines.
The management company says it was money owing from previous years when another company was managing the strata.
After months of requesting information, we have finally requested that the strata remove the claim. The strata council responded that council could not remove the amount because the current council didn’t impose the fine and members knew nothing about it.
The management company insists we have to pay the amount to have the account cleared.
Now here is the interesting part. We double-checked last year’s financial statements and at year’s end there were no receivables on the balance sheet.
Everyone is now pointing fingers at the other party, claiming it was the other’s decision.
Who has the authority to make the decision about this bogus fine? Can the strata council reverse the fine?
Elaine M.
North Vancouver
Dear Elaine: Strata corporations have a duty to ensure that they have complied with Section 135 of the Strata Property Act when they are enforcing bylaws and applying fines.
Notice of a complaint and the opportunity for the owner or tenant to request a hearing or to respond in writing is required before a strata is permitted to apply fines or penalties. This allows for an owner or tenant to respond to the complaint and dispute the claims.
Because the enforcement of bylaws and application of fines is solely a decision of the strata council, there should also be a record in the minutes of the strata council meetings of the date the decision was made by the strata council to impose the fine.
Strata councils and managers are also required to maintain an active monthly or quarterly receivables list to ensure they keep track of any amounts owing and enforce the collection of bylaw fines, insurance deductibles, damages or other claims owed by a strata lot.
Part of the council obligations is reviewing financial statements and the amounts owing to the strata.
There are two types of debts owed to the strata corporation and those should be separately and clearly accounted for.
Debts such as strata fees and special levies may result in the strata filing a lien against that strata lot securing the debt in priority against other charges.
Debts such as fines, damages and insurance deductibles, however, might require the strata to commence a court action to collect the debt.
A Form F payment certificate is required for the purpose of conveyance of a strata lot when a unit is sold. Certain types of debts, such as strata fees, special levies, interest and fines may be collected as a condition of providing the form, but damages may not be collected on a Form F.
The most recent changes to the Limitation Act in B.C. now generally reduces the window for collections down to two years, requiring a strata to take direct action on the collection of debts before the time runs out.
A strata with aging debts (including fines, damages and insurance deductibles that have gone uncollected) seriously needs to review the status of those receivables and, if the strata cannot prove the origin, application or accuracy of the debt, the strata council needs to make a decision.
When uncollected debts for fines and penalties become a write off, they eventually show up in the annual budget as an expense, and are reconciled on the balance sheet.
The Province of B.C. launched a new website this week that provides helpful general information about strata living. Check it out at gov.bc.ca/strata.
Tony Gioventu is executive director of the Condominium Home Owners’ Association. Send questions to him by email. The association’s website is www.choa.bc.ca. [email protected].
