Archive for the ‘Strata Information’ Category

Subdividing common property can affect value of each lot

Thursday, November 23rd, 2017

Tony Gioventu
The Province

Dear Tony:

Our strata corporation negotiated a section of our common property with the Ministry of Highways for a highway-improvement project. They approached us with an offer for the unused common land that was reasonable.

The owners voted by three-quarters vote to accept the offer, but we are having complications with the Land Title Registry. There appears to be confusion over whether this is a liquidation of the strata or a simple subdivision of common property.

While not all owners agree, 88 per cent did note in favour of the proposal. Can you help clarify this and possibly provide some direction? 

SDL

Dear SDL:

I doubt I have ever come across a “simple” subdivision of common property. The strata corporation is certainly permitted to do this, but the requirements are very high because the subdivision may have an impact on the value of each strata lot, affecting each homeowner and each interest holder, specifically, the banks and lenders who hold mortgages. 

The resolution is actually irrelevant in this case as the form for the subdivision must be filed by the strata corporation and must be signed by every owner registered on title and any interest/charge holder, the mortgage provider.

The other part of your scenario is determining what is a reasonable value. Depending on the commercial use, future intended use of the property and the affect on other properties, the proposed subdivided property may have a much higher value.

Unlike the sale of a strata corporation, where there is an 80-per-cent vote to wind up the strata corporation, you are negotiating with only one potential buyer, the province of B.C.

In this circumstance, there are two conditions the strata may impose as part of the contract: that the strata retain an independent commercial property appraiser and legal representation to assist the strata. The strata agrees only on the condition that the ministry will pay for these costs and any costs relating to the subdivision and the filing of the required documents in the Land Title Registry.

If a strata corporation is considering winding up, you want to ensure your property is marketed showing its greatest potential and bring the best price to your owners for consideration. The strata corporation, under the instruction of independent of legal advice, engages an independent commercial broker to act as its exclusive agent and to market the property as widely as possible.

Once the offers come in, the lawyer and council review the proposals, terms and conditions and consider when it is time for an info meeting so the owners can ask questions and determine if this is a direction they are interested in. There may still be room to negotiate and counter offer if the notice for wind up has been set up properly. 

This is a good way to manage legal costs and services and does not require any commitment by the strata owners up to this point.    

© 2017 Postmedia Network Inc.

Be sure to review depreciation reports every year

Thursday, November 16th, 2017

Check depreciation reports every year

Tony Gioventu
The Province

Dear Tony:

Our council recently put two items on our agenda at our annual general meeting to approve contingency funds for repairs and upgrades. One was the roofing on our eight townhouses and the other was a scheduled upgrade to our fire safety systems in our highrise.

The roofing was for $135,000 and the fire safety upgrade was for $22,000. Both these items were in our depreciation report and recommended for 2018, so were passed by majority vote. However, an owner raised a very good question at the meeting: The report was last updated in 2015, so how do we know these amounts are accurate?

This raised a number of other questions and proposed amendments at the meeting that related to the process for purchasing these products and services and, of course, what happens if there isn’t enough money approved? 

Our council wants to proceed with these projects, but the owners have raised some valid questions and amendments. Our property manager told us we could only approve the amount in the depreciation report. How do we proceed? 

Karen Featherstone

Dear Karen:

One of the significant benefits of depreciation reports and funding the contingency reserve fund is the strata corporation will only require a majority vote to approve the funds when the renewal or maintenance is recommended.

With the changes in the Strata Property Act, the intention was to provide strata corporations with the ability to plan funding, spend funds and authorize major projects, all by a majority vote. The majority vote also means the owners have the authority to make amendments to the majority vote resolutions at a general meeting. The result is the eligible voters have more authority on process, procedures and the expenses.

Major projects, regardless of the type of vote that is required, should all be treated with a high level of fiduciary responsibility. The depreciation report is an excellent planning tool for scheduling and financial planning, but time periods affect the projections due to product and material changes and availability, building code changes, contractor availability, inaccurate calculations of project and cost implications, and the delays in implementing the reports.

Review the depreciation report annually and identify those projects scheduled within the next five years. Your roof identified for renewal in 2018 is a project that should have been started in early 2017. The first funding approval, which could have been approved under consulting services in the annual budget, is for a roofing consultant/inspector to inspect the roofing condition and provide recommendations on maintenance or deficiencies and set the specifications for the planned renewal.

The consultant will provide you with current market costs and an overview of the complete scope of the project. One other aspect of the consultant’s work will be to advise you on the complete scope of work to avoid any duplication of future cost and work. This will form the framework on the amount you will proposed to the owners for the project.

The best example of this is your eight townhouse roofs, which have 16 skylights. At 21 years old, replacing skylights with the roofing will be the most economical choice for your strata and ensure the removal and installation will not affect your future maintenance and warranties. Also a good opportunity to consider an energy upgrade to the types of windows and ventilation. 

The only condition that is imposed by the act is that the report recommends the repair, renewal or maintenance. There is no such limitation in the act that limits your strata to the cost estimates established in the depreciation report. Other than estimates of when projects are due and possible costs, the depreciation report has no regulating authority over the business of the strata corporation.    

© 2017 Postmedia Network Inc.

Be clear on the difference between rules and bylaws

Thursday, November 9th, 2017

Rules and bylaws require different approaches

Tony Gioventu
The Province

Dear Tony:

Last September was my strata corporation’s AGM. At the AGM, the strata corporation adopted a pet rule that prohibits more than one dog per strata lot.

My mother recently passed away, and in addition to dealing with the stress and sadness of that situation, I have inherited her two small dogs. My strata council has advised me that I must get rid of one of the dogs. Surely the strata council has the ability to exempt me from the rule due to these  extenuating circumstances?  

Wendy G., Qualicum Beach

Dear Wendy:

A good place to start is with understanding the difference between a rule and a bylaw. As per the Strata Property Act: “The strata corporation may make rules governing the use, safety and condition of the common property and common assets.” 

To adopt a rule is a two-step process that starts with strata council. First, the rule is proposed and passed by a majority vote of strata council. Once passed, the strata council must inform owners of the new rule and the rule takes effect once owners are notified.

Second, the rule must then be ratified by a majority vote of the owners at the next general meeting, either the AGM or a special general meeting, whichever meeting comes first. Once ratified, it is in effect until repealed, replaced or altered. If the rule is not ratified at the general meeting, it becomes null and void.

The SPA indicates a bylaw “may provide for the control, management, maintenance, use and enjoyment of the strata lots, common property and common assets of the strata corporation and for the administration of the strata corporation.”

To amend or propose a new bylaw, a three-quarters vote resolution of the owners must be passed at a duly convened general meeting (either the AGM or an SGM). It is important that the exact wording of the proposed bylaw amendment be included in the general meeting notice package that is distributed to owners in accordance with the SPA prior to the meeting.

 As you can see, there is a difference between a rule and a bylaw. Specifically, if a strata corporation wishes to prohibit or limit the number of pets living in a strata lot, a bylaw is required; a rule would not suffice.

Take a look at the minutes from your AGM. Did the strata ratify a new rule or adopt a bylaw to restricts the number of dogs per strata lot? If the strata did indeed pass a rule, request a hearing with your strata council. A hearing is the opportunity to be heard in person at a strata council meeting.

Once you request a hearing, the council must convene the hearing within four weeks and if the purpose of the hearing is to seek a decision of the council, the council must give the applicant a written decision within one week after the hearing. If, after the hearing, the strata council proceeds with enforcing the rule, and is demanding you get rid of one of the dogs, you may have to make a Civil Resolution Tribunal application. For more information go to: https://civilresolutionbc.ca

© 2017 Postmedia Network Inc.

Holidays can present potential conflicts for stratas

Thursday, November 2nd, 2017

When it comes to decorations, make sure to include everyone

Tony Gioventu
The Province

Dear Tony:

What types of decorations are a strata allowed to put up during the holiday seasons? Our condo has traditionally decorated our lobby and club rooms for Halloween, Christmas and Easter, but this year our strata council has told us that due to too many conflicts with the owners, we will not be able to host any events and put up decorations.

Our bylaws clearly permit the hanging of decorations for festival periods and they must be removed within seven days of the festival. Is council entitled to override the private bylaws of the strata corporation? Our owners are expecting a Christmas dinner along with the usual decorations and festivities, so do we just cancel the plans?

Margo W.  

Dear Margo:

The strata council must comply with the bylaws of the Strata Property Act in the same manner as every other owner, while at the same time it is responsible for the use and enjoyment, and maintenance and repair of common property.

The challenge it is facing is the awkward situation around holidays that recognize some religious traditions while excluding other religious traditions. This is where there is potential conflict for your strata corporation.

Whether it is events, decorations or other observances that recognize a religious or cultural tradition while excluding or discriminating against others, strata corporations are still subject to complaints under the B.C. Human Rights Tribunal. As a result, strata corporations and their members are not private to the exemption of other legislation. They are essentially their own public. As we are in the midst of year end approaching for many strata corporations, it is the ideal time to have a look at your bylaws and consider amendments that may still permit celebrations for all owners and all faiths and traditions; however, when your strata starts balancing celebrations of a variety of traditions in your common/public areas, the easiest solution may indeed be no celebration of traditions either by culture or faith, anywhere other than individual strata lots to avoid conflict. 

Bylaws must comply with the Strata Property Act, the B.C. Human Rights Code and all other enactments of law. These are not bylaws for the armchair strata council member to write.

At the very least, allocate some legal funds in your annual budgets and direct your strata council to review the bylaws under the supervision of an experienced lawyer. If you are going to permit festival decorations, at the very least, be inclusive of all requests.

© 2017 Postmedia Network Inc.

Strata council should review all decisions

Thursday, October 26th, 2017

Manager, council at odds over contracts

Tony Gioventu
The Province

Dear Tony: 

 Our strata council is having a power struggle with our strata manager.  We have had the same manager for six years and have been pleased with her service, but we have discovered a number of contracts that the manager has signed where the terms and conditions of the contracts were different than what we approved. The council approved elevator service contracts and waste removal contracts at fixed prices for no longer than three years. Our strata decided to change waste removal contractors and find we are locked into a seven-year contract and we are spending money on legal advice to terminate the agreement. The manager told us it is normal for them to sign contracts on behalf of their clients, but if we don’t sign and approve our own contracts, how can we guarantee we are getting what we approve? 

Ryan A. Surrey

Dear Ryan: 

The strata manager/management company are the agents of the strata corporation. In an agency agreement, the manager/management company has the authority to act on behalf of the strata corporation under the terms of the agency agreement which is your written contract, and the instructions that are given to the strata manager by the strata council. 

There is no such condition as  “normal” in relationship to the strata manager signing contracts. That varies in every strata agreement. The instructions that your council give should constitute decisions that are recorded in your minutes in the same manner as any other decision of council. While a single council member, such as the president, may give directions to the manager, even those decisions are often not what the strata council had agreed to. The best solution is for your strata council to review all decisions, ratify them by majority vote at a council meeting, and record the decisions and the instructions in the minutes. 

Your strata council may also instruct your manager that all agreements and contracts must be reviewed and signed by the strata council.  It is very easy to overlook a change in a contract, and depending on the nature of the contract, a small amount of funds spent on legal advice before the contract is signed is in your strata corporation’s best interest. 

If your strata corporation has given an instruction to the strata manager, and they have acted contrary to that instruction that is a possible breach of their agency agreement and of the Real Estate Services Act, the Regulations and Rules of the Real Estate council.  Your strata council should start with a discussion with the strata manager and the broker of the company and if you have not reached a satisfactory solution contact the real estate council to file a complaint. For more information go to www.recbc.ca.    

© 2017 Postmedia Network Inc.

Keep proxy votes in check

Thursday, October 19th, 2017

Make sure to take steps to prevent abuse

Tony Gioventu
The Province

Dear Tony: Thank you for your column about fraudulent proxies and voting results. Unfortunately, the column did not get to the point of what we do with proxies that don’t meet the requirements of the act.

Our strata had similar problems in the past and our solution was to make a copy of each of the proxies as they were registered and retain them as part of our records in the event there was a dispute. This resulted in several owners coming forward and requesting to see copies of the proxies and their claims they never issued a proxy for their meetings.

If that occurs, what happens to the vote that was taken? Is it void or do we have to call another meeting?

Jas S.

Dear Jas: A proxy is a written document signed by an owner appointing an eligible person to act in their place at the meeting. Proxies are not absentee ballots and the proxy is the person who has registered in the proper form.

There are pros and cons to proxies and how they are managed or permitted, but the alternative would only mean far fewer owners would have a voice in their strata business. For the vast number of strata corporations, proxies are well managed and honestly represented.

A simple solution to identifying who represents proxies is to include the registration roster in the annual minutes. The names of the persons who registered in person or by proxy and who represented the proxies may be included in the minutes of the meeting. In this method, you avoid including any personal information that may disclose directions for a secret ballot or other instructions.

By attending the meeting, owners and proxy holders consent to their names being included in the minutes. This provides disclosure to owners who have issued proxies and allows them to challenge the proceedings, the voting results and the individuals who have fraudulently represented their lots.

An error in registration does not automatically result in the reversal of the decisions at the meeting; however, if there are reasons to believe the meeting did result in a number of voting irregularities, the best solution may be another meeting called to ratify the resolutions and take steps to prevent future abuses.

If there are voting irregularities at meetings, any owner may make an application to the Civil Resolution Tribunal or court to challenge the results and seek an order to reconvene the meeting or nullify the resolutions.

One of the common misunderstandings about the registration process is how votes are issued and who certifies proxies. Any person may act as a clerk at the registration desk. They may register owners and proxy holders and issue voting cards; however, there is no provision within the Strata Property Act or the standard bylaws that delegates authority for the clerk to certify the proxies as valid.

© 2017 Postmedia Network Inc.

Determinations of negligence can be complicated

Thursday, October 12th, 2017

Plumber may prevent leaks

Tony Gioventu
The Province

Dear Tony:

Our highrise has had a number of waters leaks over the past year relating to toilets, showers, shower enclosures and fridge water lines. 

Our strata council has issued notice to owners that a plumber will be on site in two weeks to inspect our strata lots and will be making recommendations for maintenance to strata lots to ensure we don’t have any future problems. 

As a result of the leaks, our insurance deductible has increased to $50,000 and several owners are disputing the strata claims to pay the insurance deductible. We have a bylaw that requires an owner to pay for the deductible if they have been negligent or contributed in any way to the claim. 

I am concerned about our bylaw after the plumbing inspections. Will the strata be able to hold us to a higher level of liability because of the report? 

Kyle D., Burnaby

Dear Kyle:

The Strata Property Act sets a reasonable condition of liability as responsibility. If the owner is responsible for the claim, the strata corporation may commence a claim in the courts, arbitration or through the Civil Resolution Tribunal to obtain a decision for the amount of the claim. 

The term “responsibility” has been interpreted by the courts as a basic test of those conditions within the strata lot that are the obligation of the strata lot owner to maintain, repair or within their direct control.

If my dishwasher fails and the pump causes a flood, or my shower enclosure is not maintained, causing a leak into other units, or I plug my toilet and neglected to respond and left the unit while it was running, or my newly installed fridge with water lines and an ice maker fails and floods, you can rely on the general rule of thumb that I am responsible and the strata has a reasonable likelihood of recovering deductible cost. 

The real complication arises when a strata corporation adopts a standard of negligence. If your strata has adopted this bylaw, it will require the strata corporation prove the owner was negligent, not simply responsible.

While the inspections may identify risks or deficiencies, what happens to those risks that are not identified? Negligence is a much higher test that imposes a much higher standard of failure or action by the owner. 

Your email is perfect timing as a decision from the Civil Resolution Tribunal posted last week goes directly to the issue of negligence. In the decision the Owners, Strata Plan BCS 1589 v. Nacht et al, 2017 BCCRT 88, the adjudicator found as a result of the strata bylaws, that “proof of negligence on the part of the owners is required for the strata to recover its insurance deductible from the owners.”

 If an owner does not act with a reasonable standard of care for the maintenance and repair of their strata lot and the components within their strata lot, the standard set by the act is more than sufficient for the strata corporation to recover a deductible. A bylaw that imposes a higher standard will only result in all of the owners incurring the cost of the deductible amount for claims. 

© 2017 Postmedia Network Inc.

Owners in limbo after proxies used in levy vote

Wednesday, October 4th, 2017

Proxies put tenants in a pickle

Tony Gioventu
Times Colonist

Dear Tony:

Our strata council has put owners in a serious conflict. The council proposed a special levy of $100,000 to remodel our lobby and the owners passed it at a special general meeting last week.

No one is objecting to the price. A good specification was written and we had four bids for the work, which includes new marble flooring, new elevator cabs, new entry doors, lighting and new windows.

The problem that has arisen stems from procedures at the meeting. A council member was holding proxies for 35 units. The vote only passed by three. The next day, at least five owners came forward advising they did not authorize proxies held by this person.

Our council deemed that the vote was still valid and proceeded to sign the contract and issue a deposit to the successful company. Because it was a three-quarters vote, more than 50 per cent of the owners petitioned to reconsider the vote.

Martin D.

Dear Martin:

The Strata Property Act sets out specific conditions to reconsider three-quarters votes. If a three-quarters vote is passed at a special general meeting by individuals holding less than 50 per cent of the strata corporation’s votes, the strata corporation must not take any action to implement the resolution for one week following the vote, unless there are reasonable grounds to believe that immediate action is necessary to ensure safety or prevent significant loss or damage.

Within one week following the vote, individuals holding at least 25 per cent of the strata corporation’s votes can, by written demand, require that the strata corporation hold a special general meeting to reconsider the resolution. The demand must be signed by each person making it.

After receiving a demand for a special general meeting, the strata corporation must not take any action to implement the resolution unless there are reasonable grounds to believe that immediate action is necessary to ensure safety or prevent significant loss or damage.

The strata corporation must hold the meeting within four weeks after the demand is given to the strata corporation. The president of the council can call the special general meeting without holding a council meeting.

At the meeting, the resolution being reconsidered is the first item on the agenda and must be dealt with before any other matter about which notice has been given. If a quorum is not present within a half hour of the start of the meeting, the meeting must not proceed and the resolution stands and can be implemented only if one of the following conditions is met: a) a demand for reconsideration is not made b) the resolution is approved by a three-quarters vote at the special general meeting held c) the meeting held does not proceed for lack of a quorum.

Even without the proxy errors, your strata council did not have the authority to proceed and deem the resolution passed and deny the petition.

Out of 178 votes in your strata, there were only 82 votes represented in person and by proxy. Your strata corporation must hold the petitioned meeting to reconsider this vote.

This problem occurs frequently in strata corporations that are eager to get on with the work and assume they have the authority to proceed.

Your strata council should consult with an experienced strata lawyer to look at its options. Holding the meeting is the first step. Depending on the outcome of the decision, your strata might be required to negotiate with the contractors.

The process certifying the proxies should be closely reviewed. Registration and issuing of voting cards can be done by your manager, a council member or volunteer, but only the chairperson of the meeting has the elected or appointed authority to determine whether a proxy is valid.

There is an ironic twist to this situation. Your strata corporation has more than $1.4 million in its contingency fund and these repairs are recommended in your depreciation report. It only required a majority vote to approve the $100,000 expense from the contingency fund and all of this could have been avoided.

© Copyright Times Colonist

Residents tired of getting soaked for pool expenses

Thursday, September 28th, 2017

Unfair to make owners pay for hotel pool

Tony Gioventu
Times Colonist

Dear Tony:

We have an issue of fairness in our strata that is dividing our community. Our strata is divided into two basic types of units. The first 10 floors are hotel use, and floors 11 to 16 are residential condos.

The hotel has a pool that has always been included in the common expenses of the strata corporation, even though the strata corporation only has access to the hotel if we pay a club membership fee.

No one in our strata feels we should pay the membership fees, and the pool is identified on the strata plan as limited common property for the exclusive use of the hotel. We challenged the payment schedule, but were told by the property manager that we are required to either have a bylaw that allocates expenses by type, or a bylaw where we create sections to segregate our common expenses.

How is it possible to create an exclusive use where one owner benefits but everyone pays for it?

 Charlie Mc.

Dear Charlie:

The Strata Property Act and Regulations have specifically addressed this issue. Regulation 6.4 identifies a formula that allocates operating expenses for limited common property to only those strata lots that benefit from the expense.

In your strata, this requires that the operating expenses of the pool, hot tubs and saunas be allocated to only those strata lots that have been identified as limited common property designates.

The key qualifying condition in this formula is that the expense must solely benefit the limited common property. The pool servicing and maintenance are obviously exclusive expenses, as your residential owners do not have a pool, sauna or hot tubs. The gas and electric bills may also be expenses of the hotel if they are metered separately. You do not require a types or sections bylaw for these allocations.

If the owner of the hotel wishes to set up a membership for the pool services, that is at their discretion. However, your strata should also seek legal advice on the imposition of user fees if they are charged by the strata corporation, and whether the fee structure is valid, as it is neither a rule nor a bylaw in your strata.

The same types of expense allocations can be found in a variety of strata corporations across the province — for example, strata corporations with marinas where only the waterfront units have access to the marina facility, which is limited common property, and those designated areas are an expense that can be solely attributable to the waterfront strata lots.

Unfortunately, the act does not make reference to the limited common property expense allocation; it is only a part of the regulations. It helps to read the whole book.

© Copyright Times Colonist

It’s better to find solutions before a costly crisis occurs

Thursday, September 21st, 2017

Condo Smarts: Better to find solutions before a crisis occurs

Tony Gioventu
The Province

Dear Tony

Our strata discovered that a pipe in a wall between my unit and a neighbour’ s unit had developed a leak.

They hired a plumber who came out and had to cut a three-by-three-foot hole in both of our walls to replace the pipe. The cause was obvious: the pipe had been angled around a cable and stressed to the point of failure. 

When the plumber was gone, he gave us a card to call to have our walls repaired. We both arranged for a drywall company to come in and fix our walls.

At no time did the strata or anyone else indicate we would have to pay for the repairs. Each of us had to pay $1,500, which is horrendous.

The strata argued it was a repair to our strata lot and the strata was not responsible, but it was not a claim under the insurance deductible and it was damage caused by the strata corporation’s contractor to actually repair common property. Is this common? 

Agnes W., White Rock

Dear Agnes:

Under the Strata Property Act in B.C., strata corporations must maintain and repair common property.

Under the definitions of the act, pipes, wires, ducts and cables that are in walls, ceilings and floors that are between two strata lots, or between a strata lot and common property, are deemed to be common property.

The strata corporation was correct that it had to repair the pipe as it was common property; however,  in order to repair the common property, the strata corporation was required to enter your strata lot and remove a section of wall to repair the common property.  

While we have no definitive court decisions on this process, it is logical to assume that a party who causes the damages will be responsible for the repairs in the same manner as an owner who hammers a nail into a wall to hang a picture and causes a leak would be responsible for the cost of the repairs. 

Allyson Baker, a lawyer at Clark Wilson LLP in Vancouver, advises strata corporations to also consider bylaws that address these types of issues. According to Allyson: “Strata corporations are frequently required to access strata lots and conduct repairs. It may be a simple repair, or a complete re-piping of the building due to age, but the strata corporation would generally maintain the responsibility to replace the existing standard finishing with the same repairs.

“Where it gets complicated is when the strata corporation finds they have a repair behind a wall of custom marble or granite that was not original, and there is now a major cost associated with reinstating the alteration. A bylaw that clearly defines the limits of the repairs undertaken by the strata corporation to original finishes and construction only informs owners they are obliged to insure their improvements for any losses and provides a great deal of clarity for the strata corporation. It is always easier to find solutions before they become a crisis.”  

Bylaws are not only about solving problems; they can provide great clarity on liability and operations before an incident occurs. Well-written bylaws that comply with the act will often resolve many problems before your strata corporation is embroiled in a conflict, and are well worth the investment.   

© 2017 Postmedia Network Inc.