Review bank service agreement for consent to pay fees

Tony Gioventu
The Province

Dear Tony:

Several years ago, our strata corporation adopted a bylaw requiring owners to provide payments by automatic bank withdrawal. At the time, several owners raised concerns about the strata corporation having access to their banks accounts, but were assured it was only for strata fees and nothing else.

To make this simple, I opened an account just for my strata fees and deposit the money on the 15^th of each month for the following strata fee payment.

I just received a notice from my strata property manager that there are insufficient funds for the strata fees and I am now in arrears. The notice also demanded payment and notified me that a lien would be filed against my unit if I don’t pay.

I contacted the manager and she informed me I was fined $200 for parking in the wrong space and that amount was applied to my strata fee account. Of course, I am outraged. 

She sent me a copy of my bank payment service agreement to authorize payments. It says on the form the strata corporation may apply and withdraw any fines or penalties from the account.  

Is this legal? By signing this form, have we waived our rights and authorized the payment? The irony here is I don’t have a car and don’t use parking, so the violation claim is bogus. 

Colleen P., Victoria

Dear Colleen:

While automatic bank payments for strata fees are practical for monthly fees, inexpensive to manage and reduce the risk of lost cheques or unreported cash payments, they can be abused by councils and managers who do not follow the enforcement conditions of the Strata Property Act.

When an owner provides consent for direct withdrawal, it is important to read the document. You do not have to consent to any fees other than monthly strata fees, and even if you do, the application of fines, damages or insurance deductibles under your bylaws still requires the strata corporation to first apply section 135 of the act before any action is possible. Bylaws and user agreements do not override the act.

Before a strata corporation imposes a fine or penalty, it must first give the owner or tenant the notice of complaint with the particulars in writing, entitle the owner or tenant the opportunity to respond in writing or request a hearing, and then the strata council is  required to render a decision regarding the outcome of the fine or penalty. Fines are never automatically imposed.

This also applies to the late payment of strata fees. As the payment of strata fees is a bylaw, the late payment may result in a fine; however, this is still a bylaw penalty and the same enforcement conditions apply. The corporation/manager cannot apply other charges to your account without your consent.

Once again, it is important to review your bank service agreement to determine if you have consented to any fees such as bylaw penalties, damages or insurance deductibles being first applied to your account before strata fees are paid. 

To resolve this formally, request a hearing with council, provide it with the documentation to refute the claim and if this is a credible bylaw complaint, demand the particulars in writing, and request a formal decision in writing. 

There are many misunderstandings with strata corporations and managers often relating to poor communication between the parties. A formal written decision of the council will be the evidence you may need to rely on if you need to apply to the Civil Resolution Tribunal to order a remedy. 

It is important for owners to monitor their accounts monthly as late payments may result in a rate of interest being imposed under the bylaws and added to the fees. Interest bylaws on strata fees and special levies, if they do not exceed 10 per cent compounded annually and calculated monthly, form part of the fee. It’s the same advice banking and credit institutions give all clients.

Check your statements and accounts at least monthly. If a penalty has been imposed without complying with the act, immediately notify your manager and council of the error and request a correction.  If you are in doubt about what you signed for, request a copy of the agreement provided to the strata council or manager.

© 2019 Postmedia Network Inc.

Stratas obliged to ensure safe access for all

Tony Gioventu
The Province

Dear Tony:

I live in a condo apartment building that was completed in 1995. We have 48 units over eight floors.

Our family has lived in the building since day one, but our community is rapidly aging and we find ourselves facing some new challenges.

Our underground parking is easily accessible off the main street and anyone with a walker or wheelchair uses the main gate to our parking garage, but we do not have an isolated walkway area or separate door for access. Owners are growing more concerned each day that the age and physical limitations of the owners, and the lack of lighting and shelter over the garage entry present safety risks and it is only a matter of time before a resident is injured. 

Several owners have requested a modification to our front entry to ensure owners have safe, well-lit access in a covered area that also has a security camera.  This would require a minor modification to our front area to level the walk to eliminate one small step and the installation of an automatic front entry door system. 

We took this to a meeting of the owners with a total estimate for the cost of $18,500, including the door activator to our front lobby and the parking garage lobby, security FOBS and the concrete grading of our walk to eliminate the step to meet the building code. 

One owner insisted that people who can’t make the step or open the door shouldn’t be living in our building and convinced enough owners to vote against the alterations. 

How do we resolve this issue before a resident suffers the consequences? 

Elizabeth Millar

Dear Elizabeth:

Every strata corporation in B.C. must comply with the provisions of the B.C. Human Rights Code. Part of that code has the requirement, up to the point of undue hardship on the owners, to accommodate access to facilities and common property of the strata corporation. 

Undue hardship is measured as an extreme financial imposition or condition that would not be reasonable or possible for the owners to meet. An example of that may be the installation of an elevator in a building where no such elevator existed and the cost would be excessive and cause a hardship to the owners.

There are many examples of access or accommodation for special needs that have been ordered by the Human Rights Tribunal and your building would be no exception. Conversions of doors handles to levers, installation of FOB-activated door entries, alterations to strata lots exempt from bylaws, modifications for access of common areas and main entries of buildings, and continuous operation of the remote door activation system are all decisions where strata corporations have been ordered to permit an alteration or pay for the alteration to ensure access. 

Whether an owner or occupant knew about the limitations before they moved in or their physical conditions have changed is irrelevant. It is the obligation of the strata corporation to accommodate wherever possible to ensure safe access.

Like all conflicts, whether they relate to maintenance and repair of buildings, fair treatment of owners, tenants and occupants or access to common property and strata lots, the most prudent and inexpensive course of action is for your strata corporation to make this decision before an owner or tenant files a complaint.

Every time a strata corporation fails to meet a lawful obligation, with the result of a tribunal or court intervention, the costs simply balloon. Take control of the matter and make the decision. 

Your building is not unusual. There are many strata corporations that refuse to upgrade their entry systems and force the occupants to use the parking garage driveway and underground for direct access. They are essentially treating persons with limited accessibility as different classes of persons. No one should be intimidated into feeling guilty because they are requesting their strata upgrade access to their homes.

© 2019 Postmedia Network Inc.

Owners have right to information

Tony Gioventu
The Province

Dear Tony:  Our strata council has been engaging in some bizarre activities lately in how it holds council meetings and reports decisions to the owners. 

Our bylaws have an unusual condition that relates to in-camera minutes. The bylaw stipulates that in-camera minutes are recorded and kept in a secret place unless there is a court order for their release. Doesn’t this set our strata corporation up for a significant amount of conflict or expose it to the potential for lawsuits?

Our owners are beginning to question whether our strata council is holding secrets files on each owner as some recent information has been disclosed about past owners that was not included in the minutes.

Martin C., Victoria

Dear Martin: Your strata corporation and owners have two separate issues. The first is whether in-camera meetings result in minutes and how those minutes would be stored or accessed. The second is the collection of personal information and how that is managed and whether a person is entitled to their personal information. 

Under the Strata Property Act Schedule of Standard Bylaws, there are several references to the minutes of council meetings, but no direct acknowledgement of in-camera proceedings or how they are conducted. Remember, these are the standard bylaws that apply to every strata corporation, unless they have been amended.

Council meetings are convened in person or by electronic means, provided everyone is capable of communicating. A common example is a conference call or Skype meeting.

Owners are entitled to attend as observers unless the meeting is a hearing or matter relating to a bylaw contravention or other matters that may unreasonably interfere with an individual’s privacy, and the results of votes at a council meeting must be recorded in the minutes. 

The absence of observers is an indication a strata council may have an “in-camera” session to protect personal information. In-camera implies there is a session that is off the record, no observers and limited to the attendees decided by council.

When a strata council determines it is time to move in-camera, the minutes of the meeting show the time and possibly the reason. The in-camera session is convened, council discusses the matter, then exits the in-camera session. 

For example: council moved in-camera at 8:45 p.m. to address a bylaw complaint hearing requested by an owner. At 9:15 p.m., the in-camera meeting was terminated. The council has determined that strata lot 18 was in breach of the bylaws and has imposed a fine of $200. 

The risk with bylaws that attempt to protect minutes of in-camera meetings is they may not comply with the provisions requiring disclosure of information under section 35 of the act, and a bylaw cannot limit access to those minutes with the requirement of a court order, as compliance with the act may also be ordered by an arbitrator or the Civil Resolution Tribunal.

In addition, the bylaw has now indicated that council is recording minutes and gathering information about owners, tenants or occupants, which they are holding in secret and preventing access to. Under the Personal Information Protection Act, if an organization collects information about a person, that person is entitled to access their personal information.

If your strata council has collected or retained information relating to an owner, tenant or occupant, regardless of your bylaws, you must provide the collected information to that person on their request. This would include information relating to that person in any minutes of the strata corporation. 

This is one of the reasons why strata corporations are required to establish a privacy policy and appoint a privacy officer.

Strata corporations often confuse minutes and decisions with information provided by owners to assist the council with decision making. Your strata corporation may be required to collect information from an owner regarding a financial hardship or medical condition requiring accommodation. Discussing the content of this information at an in-camera meeting does not require minutes; however, the documents may provide council with the information necessary to defend it decisions if challenged.

Don’t be the council that abuses in-camera minutes to hide business from your owners. Protect privacy, discuss matters in-camera, and record your decisions in the council minutes accessible to everyone. 

© 2019 Postmedia Network Inc.

Walk strata to determine accuracy of plans

Tony Gioventu
The Province

Dear Tony:

We have an unusual problem in our strata corporation. We have several buildings and we are 308 units.

Several owners have approached council with a complaint that their strata fees are not correct and want to know how to change them. We have reviewed our schedule and the registered strata plan, and the comparisons show the fees and calculations are comparable, but the units do not appear to coincide with the size of the strata lots.

If we wish to have our building resurveyed and the measured areas and allocations changed, is that possible under the Strata Property Act? 

Daniella K., Tri-Cities

Dear Daniella:

There is an unusual omission on registered strata plans that I have found results in the strata lot numbers and the actual corresponding unit numbers frequently being incorrect.

When a strata plan is filed in the Land Title Registry, the schedule of unit entitlement, which is the formula used to calculate common expenses and special levies, includes only the strata lot number, the reference sheet number the strata lot is shown on and the schedule of unit entitlement. 

If it is an older plan, it may also show the schedule of interest upon destruction or the schedule of voting rights, if these apply, or that are filed separately. For example, the schedule may show strata lot No. 1, the sheet the unit is shown, which sets the boundaries of the lot, and that sheet often shows only the strata lot number.

Herein lies the problem: frequently, none of these documents lists the unit number on the schedule, such as “suite 101”.  

To ensure the proper fees are charged to the correct units, someone in the early days of the strata corporation had to create a master list showing the strata lot number, the unit number and the schedule of unit entitlement. There may have been a sample of the proposed plan in the disclosure statement by the owner developer, but these are projections only and not the actual registered plan. 

To confirm the corresponding strata lot number, unit number and unit entitlement are being applied, a person needs to physically walk the building with the registered strata plan and floor plans and verify that each of the corresponding units has been identified correctly. Before you assume there was an error with the strata plan, I suggest your council, manager or a consultant walk your floor plans with the documents and verify these corresponding units are correct.

We recently conducted a review with a large strata corporation, where 21 units were mixed up on the schedule. While the differences were small, they were incorrect and over a period of 20 years of operations and special levies, the amounts are significant. At this time, the strata council has corrected the schedule and issued a notice to all owners.

Rely only on documents filed in the Land Title Registry when referring to the registered strata plan, registered bylaws and other amendments filed by your corporation.

If there are errors on a strata plan, it is possible under the Strata Property Act to amend the plan and correct the unit entitlement. It requires a unanimous vote approved at a general meeting and a new survey that is approved by the superintendent of real estate and the registrar of land titles. The approvals are easy; the unanimous vote in your strata corporation would require that all 308 strata lots vote in favour of the change. A daunting task, to say the least, as only 43 owners in person and by proxy showed up at your last annual meeting.

© 2019 Postmedia Network Inc.

Aging receivables should be routinely reviewed

Tony Gioventu
The Province

Dear Tony:

We are a mid-sized condo building of 55 units. Our units are mostly retired owner-occupied as we have a very desirable location.

At our annual meeting, we routinely have at least 50 per cent or more of the owners in attendance.

This year at our meeting, our new property manager advised five owners when they registered that they owed fees for unpaid fines and interest and were not eligible to vote at the meeting. The five owners, who are long-time residents, were upset as this was the first time they had ever heard of any debts on their accounts. They asked the manager for details of the accounts and all he could advise is these have been on the books from the previous management company and they had no record of activities, only a receivable list showing the amounts owing. 

Our strata council claimed it knew of no outstanding accounts and was just as surprised. No one knew what to do and the five owners stayed at the meeting without a vote.

There must be procedures to prevent this type of situation. Could you advise how we should manage this situation? 

BWJ, Vancouver Island

Dear BWJ:

The Strata Property Act permits a strata corporation to adopt a bylaw that deems an owner is ineligible to vote for three-quarters and majority vote resolutions if the strata corporation is entitled to file a lien against a strata lot. If an enforceable bylaw exists, the strata corporation must also send a notice at least 14 days in advance advising the amounts that are due and that if the owner does not pay, the strata corporation is entitled to file a lien. This sequence must be completed to deem an owner ineligible to vote.

A strata corporation may only file a lien for unpaid strata fees, special levies, interest accrued on strata fees and special levies, reimbursement of the cost of work that is ordered by an authority under the act, or a strata lot’s share of a judgement against the strata corporation. 

A common error and unenforceable bylaw that is applied by strata corporations and strata managers is a generic statement that deems “if any money is owing”, the strata lot is not eligible to vote. Strata corporations and managers frequently place this statement on the notice package for general meetings and if applied incorrectly, without proper advanced notice advising if a lien amount is not paid within 14 days, you may jeopardize the outcome of your general meeting and seriously prejudice an owner’s voting rights. 

Fees such as bylaw fines, parking user fees, damages or insurance deductibles owed by a single owner who is responsible for a claim, do not qualify as lien-able actions and cannot be used to prevent an owner from voting. 

Every strata council and manager should routinely review all aging receivables and determine what actions should be taken to protect the owner’s interests and also to ensure there is a chain of evidence to support the claims.

A receivables list should also coincide with decisions of councils that relate to council meetings. For example, if an owner has been fined, that is a decision only of council at a council meeting and the decision is recorded in the minutes. Enforcing a receivables list without supporting evidence is simply a bad idea. At the time the meeting was called to order, the authority rest with the chair to determine if the parties are eligible voters. If there is any doubt, it is always best to protect the the voting rights of the owners.

I double checked your bylaws filed with the Land Title Registry and your strata corporation has no bylaws that relate to voting eligibility. Every owner, regardless of the amounts owing, is eligible to vote. Before you impose any such restrictions, check your bylaws and confirm the types of debts.   

© 2019 Postmedia Network Inc.

Ensure strata lots have adequate insurance

Tony Gioventu
The Province

Dear Tony:

You mention in your Sept. 5 article that discusses the $75,000 water damage incident to three units where the deductible is $100,000 that “each strata-lot owner will be responsible for the repairs to their own units.”

Are you saying that the three impacted owners alone must pay for the repair of their own units? In our strata, the building envelope is the responsibility of the strata, so I fail to see how the affected owner gets stuck with the deductible on their unit.

All owners should have to pick up their entitlement share of the deductible despite the damage only applying to three units. 

Vic

Dear Vic:

Since last week’s column, I have received over 100 emails demonstrating confusion or disagreement over the situation where the three strata lot owners are each left with their own losses, because the amount of a claim is below the deductible. 

This is a significantly misunderstood problem and exposure of liability in strata corporations. Almost every strata corporation has adopted or maintained the standard bylaw that defines how an owner must maintain and repair their strata lot.

Except for a claim where the amount exceeds the deductible and a claim is processed, it is the responsibility of each strata lot owner to repair the damages to their own strata lot. This is a grim prospect for many strata lot owners, especially those who have not sufficiently insured their units for these types of losses, or where the deductible is now so high they cannot obtain insurance coverage.

If you apply the standard bylaws, the corporation does not have the authority to enter the strata lot to pay for the repairs. A strata corporation may adopt a bylaw where it will take responsibility for the repairs to a strata lot for damages in the event the amount is below a deductible, but that also assumes a number of risks for claims under different circumstances that may not be desirable or fair to the remaining owners.

When a strata corporation is faced with a high deductible, the cause must be identified. If the causes are manageable, deal with them. If a building is experiencing continual claims for water escape because the piping is failing, move quickly to have a project for re-piping approved or if your strata corporation is not willing to approve a special levy or repairs, file a claim with the Civil Resolution Tribunal to order the strata corporation to proceed with repairs, or in extreme case, an application to the Supreme Court of B.C. for repairs or the appointment of an administrator.

If the strata corporation has not met its obligations and neglected the building systems, resulting in uninsurable claims and repairs, the affected owners may have a claim against the corporation for their losses.  

I strongly recommend every owner, whether you are a resident or landlord, obtain homeowner insurance to cover your personal liabilities, living out expenses, coverage for personal contents that includes appliances, betterments, and most important, sufficient insurance to cover your personal exposure. Try to cover the risk of a high deductible in the event you are responsible for a claim, or if the deductible is high and your strata lot is affected by an uninsurable claim.

© 2019 Postmedia Network Inc.

Delinquent repairs could lead to high insurance deductibles

Tony Gioventu
The Province

Dear Tony:

Our strata corporation is an older wood-frame condo. In the past three years we have experienced a number of water claims on our insurance. Two claims this year were failures of pipes, and last year leaks were owner caused as a result of home repairs to a sink, overflowing bath tub and a self-installed dishwasher. When our insurance renewed in July our premium increased by 55 per cent and our deductible which was $10,000 has increased to $100,000! While we managed to recover the deductible cost from the owner caused claims, the accumulated effect has depleted our contingency funds. We have no idea how we will pay for another claim should one arise or if we could ever collect the deductible from an owner if they caused a claim.

Our broker has been incredibly helpful in advising us, but the risk of another claim has everyone terrified and an owner recently lost a sale when the buyers discovered the amount of the deductible.

Is it possible to demand owners obtain home owner insurance that covers a $100,000 claim?

Trudy W. Fraser Valley

Dear Trudy:

Dramatic increases in insurance cost and increased deductibles are common in our current insurance market. There are a limited number of insurance companies who insure strata corporations and they are only prepared to assume a certain level of risk before the insurance product is no longer profitable and places everyone at an unmanageable risk.

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When your broker goes to the market, they act on your behalf and place your profile and risks with the insurance companies. The cost of the policy, deductibles and exemptions are imposed by the insurer. As buildings age, an insurance deductible of $100,000 is much more likely if your community has frequent claims, has not been renewing aging building systems or permitting activities that increase the risk. While it is not an overnight solution, communicate with your broker and determine what steps can be taken to reduce risk.

Major building upgrades such as roofing replacement, building envelope upgrades and mechanical upgrades such as new piping will greatly reduce your risks. Likewise, permitted activities may also contribute to higher risks — such as barbeques on balconies and gas patio heaters. In addition to the increase of deductibles and costs of policies you may also see an increase in the number of exemptions or exclusions in your policy. Buildings with a reported envelope failure may still obtain insurance; however, it is unlikely any envelope failure water claims will be covered.

Under the Strata Property Act, the strata corporation must insure for the assets of the strata corporation and fixtures built by the owner developer. Other than a bare land strata where the homes on each lot are the insurance responsibility of each owner, the strata corporation must insure for the building structure and systems including the attached finishing (fixtures) when the building is complete.

There is no requirement for owners to insure their personal property, improvements to a strata lot or personal risks. Even if an owner does purchase home owner or landlord insurance, there are limits to the amount of a deductible that may be paid on homeowner policies. These often limit out at $25,000. While higher amounts may be available, the cost increases comparatively and most owners refuse to pay the cost.

Whenever there is a claim on a strata corporation policy, the deductible amount is a common expense of the strata corporation. When this occurs, it is up to the council to determine how they will pay for or recover that amount on behalf of the strata.

If an owner is responsible for the claim, and the owner or their insurer voluntary agrees to pay for the deductible amount, the claim and repairs proceed.

If the amount is a result of a common claim where no owner is responsible the strata corporation has two options to pay for the deductible. They may pay the amount from the contingency or operating funds if available, or the strata council, without requiring a special general meeting, may approve a special levy for the amount where every owner pays their share based on unit entitlement — the same formula used to calculate strata fees. In your strata corporation of 55 units, a $100,000 deductible will end up costing everyone between $1,820 and $2,300 based on unit size. This is at least manageable for owners without depleting the reserves and it permits each owner the opportunity to file a claim for their share of the deductible on their home owner insurance to pay the smaller amount. If an owner is responsible for the claim and they do not have insurance, cannot afford to pay the amount, or refuse to pay the amount, the strata corporation may file a claim with the Civil Resolution Tribunal to obtain a judgment for the amount. Remember the deductible on a strata policy is a common expense first and must be paid by the corporation. If your corporation does not have sufficient funds to pay the deductible, even though an owner may be responsible, you may have to impose a levy on the owners until the amount is collected, otherwise, the repairs and restoration may not commence.

There is one other negative impact of high deductibles. The strata insurance only covers damages to a strata lot if a claim is filed and the amount is above the deductible. For example, if several units are damaged and the claim total is only $75,000 against a $100,000 deductible, each strata lot owner will be responsible for the repairs to their owner units. I highly recommend all owner, landlords and tenants purchase insurance for their strata lot/condo. Bring a copy of your current strata policy to your broker to determine your risks such as deductible amounts, exemptions, and what insurance is available.

The strata corporation does not insure your personal property, your personal liability, your betterments or personal appliances that are not attached to the strata lot. If you are required to move out of your unit while repairs are underway, confirm that you have allowances for living expenses. During construction you still pay for your strata fees, your mortgage and taxes.

© 2019 Postmedia Network Inc.

Collective purchasing a perk to strata living

Tony Gioventu
The Province

Dear Tony: We live in a townhouse complex in Langley. There are 38 units in our development and we are oriented in duplexes, so 19 buildings. Each of our units was constructed with a heat pump that is located in between each of the duplexes beside the garages.

Our building is now at the age where our heat pumps are due for maintenance or replacement and there is a significant division over who pays. The council has insisted each unit is responsible for its own heat pump as it only serves their unit. The strata corporation has obtained an opinion that advises each owner is responsible for their heat pump because it is located on limited common property for the sole use of each unit, and many elderly owners, with the support of our property manager, insist the strata was responsible for the heat pumps as they were on the outside of the units.

Who’s correct? 

Dorothy G.

Dear Dorothy: When it comes to air conditioners, where they are located, how the location is designated, who has the use of the component, how they were installed, who installed them, when they were installed and the bylaws of the strata corporation, there is a potential for any possible answer.

In your situation, gather all the documents that will help determine the outcome. You will require a copy of the Strata Property Act, your registered strata plan and any registered bylaw amendments your strata corporation has adopted and filed in the Land Title Registry. 

On your registered strata plan, the heat pump locations are shown on land that is limited common property assigned to each strata lot. It is important to understand that this designation does not necessarily make the air conditioners the responsibility of each owner as the air conditioner itself is not defined on the plan, only the parcel of land it is sitting on.

Our next step is to look at your bylaws. Your bylaws, similar to the Standard Bylaws of the Act only require owners to maintain and repair limited common property for events that occur once a year or more frequently — in simple terms, cleaning the site and snow removal. 

Your bylaws require the strata corporation to maintain and repair limited common property for all those items that occur less than once a year. This would include the repair and replacement of the heat pumps.

Your strata manager and owners were essentially correct. Because they are outside of the strata lot is partly correct,because of the property designation.

One of the major benefits of living in multi-family developments is the savings of collective purchasing. If each owner is required to call in a service technician for maintenance or repair, they pay the cost of the call and individual servicing for each call. It is much more economical for the strata corporation to negotiate a single-service agreement with a local heating company to routinely inspect and maintain the heat pumps and negotiate renewals. It will ensure the systems operate dependably, they operate quieter and ultimately consume less energy to function. The bulk savings is a cost benefit to all strata lot owners and the asset of the strata corporation is well maintained.

In a situation where the air conditioners were installed by an owner with the permission of the strata corporation as an alteration to a strata lot, the strata corporation would also want copies of any alteration agreements and a history of how the air conditioners may have been installed and maintained. 

Incorrectly installed air conditioners into window or wall openings are often the source of water ingress and pest infestations. These installations also become a focus on future disputes when owners sell their strata lots as there is often confusion over the responsibility of subsequent owners. Whenever a strata community is addressing these types of disputes, start with the information. No one knows the answer until you know all the facts.

© 2019 Postmedia Network Inc.

Plan ahead to avoid special levies

Tony Gioventu
The Province

Dear Tony:

We sold our condo in Burnaby in February. At the time of the sale, we were instructed to pay for a special levy that was due over the next three years as a special levy to increase the contingency reserve fund. As part of our sale, the strata manager and council advised we would be required to pay for the next three years payments as a condition of the resolution.

Each strata lot is paying its share of $300,000 every six months starting Jan. 1, 2019.

While the resolution did not recognize any specific project, it did indicate the levy was to increase the reserve fund to plan for upcoming major projects.

There was a low turnout at the meeting last December to approve the special levy. As a result, owners petitioned for a special general meeting in July and cancelled the special levy by a three-quarters vote.

As an owner and seller who was forced to pay the levy in advance, how do we get the funds returned? The remaining owners are not paying the full levy as we were forced to pay it, yet the strata council is refusing to respond to an inquiry or pay the refund. Is any of this legal? 

Dave and Beth R.

Dear Dave and Beth:

Your circumstances are a perfect example why special levies that raise funds for the contingency reserve fund are fraught with problems and pose a questionable ability to comply with the requirements of the Strata Property Act. Special levies must to be treated separately from contingency reserve funds and for specific projects.

Section 108 of the act is clear on what is required and permitted for special levies. Special levies often cover an extended period of time for projects; however, the levy resolution must include the purpose of the levy, the total amount of the levy, the method used to determine each strata lot’s share, the date by which the levy is to be paid, or if the levy is payable in instalments, the dates by which the instalments are to be paid. 

A resolution that sets a schedule of payments and then imposes a payout on sale of a strata lot does not comply with the act. If there is a remaining schedule of payments after the sale, the subsequent owner is responsible for those payments and as a condition of the sale, may reduce the offer. 

Talk to your lawyer as you have a may have a valid claim due to a questionable resolution or unfair payment procedures imposed on a vendor. 

The strata must account for the funds collected for a levy separately from other money of the strata corporation, use the money collected for the purpose set out in the resolution, may invest the money, and must inform the owners about the expenditure of the money collected. Any interest collected from late payment penalties on the levy must become part of that levy and, of course, refund the balance of the levy to the owners if any owner is entitled to $100 or more of a refund. 

In addition, in the event the strata corporation is required to pay a common expense insurance deductible, the deductible may only be expended from the operating fund, the contingency reserve fund or by a separate special levy on the owners. A special levy fund for another purpose may not be used for insurance deductibles.

How do you segregate contingency funds and special levy funds that are pooled? Impossible. All these conditions combined create a number of complications for strata corporations that try to increase their contingency funds by special levy when there are problems. It is also unnecessary for strata corporations to raise contingency funds by special levy, which requires a three-quarters vote, as the contingency contribution as part of the annual general meeting is determined by a simple majority vote.

The argument has been presented that owners may not approve the same contingency contribution next year. There is nothing that prevents a strata corporation from adopting a bylaw that sets higher minimum limits or requires the strata corporation to reach a certain funding level each year based on their depreciation report. 

I encourage everyone to plan their contributions to avoid special levies. Always have a 10-year plan to know what major expense are on the horizon. It is much easier to pass a majority vote at an AGM to approve a budget for long-term contributions than a special levy you may have challenged in the Civil Resolution Tribunal or the courts. 

The argument that lower strata fees make it easier to sell strata lots is simply not true. Some of the best managed strata corporations in the Lower Mainland have strata fees 25-per-cent higher than their neighbouring properties and are fully funded for future repairs.

Because of the focus on funding, operations and maintenance, units sell quickly for full price or more, and sellers and buyers alike benefit from the investment in the future. If your strata corporation is proposing a special levy for contingency contributions, speak to an experienced strata lawyer first.

© 2019 Postmedia Network Inc.

Rules on surplus funds designed to protect owners

Tony Gioventu
The Province

Dear Tony:

I sold my strata lot on June 3 and as a condition of the sale, the buyer agreed if there were any refunds from the $3.5 million special levy we paid in 2017, they would authorize the payment to be directed to the seller. 

I have been informed by an owner in the building there was $235,000 remaining in the levy, which would have left me with a refund of $2,905 from my original contribution. The buyer informed me they never received the refund because the strata corporation approved a new resolution that reallocated the special levy surplus to another decorating project. They decided to apply the remaining funds to new carpeting and painting throughout the building.

She did attend the meeting, voted against the resolution and advised the council she had an obligation to refund the surplus back to the buyer. Both the property manager and the president of council advised the strata corporation could do whatever it wanted, provided it passed a three-quarters vote and the refund was my problem, not theirs.

Is this permitted? 

Carol W., Surrey

Dear Carol:

A resolution that reallocates a special levy surplus does not meet the requirements of the act and your strata corporation is exposing the owners to dispute through the courts or the tribunal.

The Strata Property Act is very specific on the matter of a special levy surplus and what must occur. If any owner is entitled to a refund of $100 or more, all the funds must be refunded to the owners based on the same formula of entitlement as they were collected. If no one is entitled to a refund of $100 or more, the strata corporation may deposit that amount in the contingency reserve fund.

The legislation was specifically crafted to protect strata owners from councils misusing funds as the funds must be used for the purpose set out in the resolution and could not use a surplus for other expenses.

An option that strata corporations are trying to apply when there is a surplus available and the strata corporation still has outstanding projects is to convene a meeting to approve another special levy for the same surplus amount where each owner is required to authorize the use of their refund for the new special levy. The complication of this solution is what happens when an owner does not authorize their refund to be applied to the special levy? It will consume an extensive amount of administrative time to process the refund and approvals.

The complication that arises for sellers is they are longer owners; therefore, any refunds are returned to the owner on title at the time the refund is payable. The dispute is now between the seller and the buyer.

Because the refund was reallocated, the seller could seek a claim against the buyer as there was a refund identified, and the buyer could file a claim against the strata corporation for not complying with the act.

One of the overriding problems with this scenario is the cause of the problem. The resolutions for this meeting were written by the property manager or someone within their company. Writing resolutions for corporations or associations while being compensated, is a practice of law. Strata councils constantly pressure managers, who are paid and contracted by the strata corporation, to write resolutions to avoid legal costs, placing the manager or their company at risk of discipline from the Law Society or a complaint with the Real Estate Council of B.C.

If your strata corporation is proposing a resolution that requires a three-quarters, 80-per-cent or unanimous vote, always seek legal advice first. Even a majority vote resolution that approves a significant depreciation report repair cost from your contingency reserve fund would be worth a legal opinion.

As a strata council, confirm you are proposing resolutions and bylaws that comply with the act, clearly define your objective and ensure you have the full scope of authority you require to act on behalf of the corporation.   

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