A need for full, current disclosure
STRATA: That Form B can be outdated within just one day
How does a strata corporation or a buyer know if strata funds and accounts are being reported properly?
This question became critical for a Richmond strata when a sale was completed recently. The purchaser had asked to see a Form B information certificate before the sale, setting out the basic financial information about the strata and the financial obligations for the strata lot being purchased. The contingency amount on the form showed there was $125,000 in the fund. But within weeks of moving in, the new owner received a levy notice for an insurance deductible, citing the lack of funds in the account.
It turned out that the actual amount in the fund was only $3,700, not $125,000, a drastic difference. How could this be? It turned out that the strata had been simply reissuing the form without ever updating its information. The new purchaser is obviously unhappy and may need to seek legal advice to determine his options. However, as a result of the questions raised over this whole issue, the strata has hired an accountant to update the financial statements and records.
Strata law: Whoever is providing the Form B information certificate must ensure that the information is accurate and current. This is a serious matter. If there is a dispute, the Supreme Court will need to determine who is responsible and whether penalties need to be paid and by whom. Purchasers rely on information provided in the Form B. If the information is inaccurate, the strata could be held responsible. A question such as this may need to be resolved by the courts
Tips: To make the form process efficient, strata corporations and management companies should create homeowner and homebuyer packages that disclose the general information, bylaws and rules of a strata. These should be issued with a Form B to ensure the purchaser is fully aware of the strata governance. Don’t forget strata information can become outdated within one day. It’s important for stratas to keep their records current so that they provide accurate information when requested.
Tony Gioventu is the executive director of the Condominium Home Owners Association (CHOA). Contact CHOA at 604-584-2462 or toll-free 1-877-353-2462, fax 604-515-9643 or e-mail [email protected]