By Tony Gioventu

Question:

We are in an 86-unit townhouse development that was built around 1985. Our buildings and clubhouse are almost 30 years old, and we are preparing to do a number of upgrades to our property.

We finished a complete roofing project in 2008, and the decking membranes in 2010. Overall, our property is in great shape, but we have one matter that is causing us great trouble.

The copper piping has been showing signs of leaks in almost every unit since 2006, and owners were advised to upgrade their plumbing systems. So far, about half the owners have replaced their water lines.

The problem is those owners who have not, or refuse to upgrade their water lines. As a result, we have had four major leaks in these units, causing serious damages, and now our insurance deductible on renewals has climbed to $50,000. The vigilant owners are now paying the price for the neglectful owners. How can we force these people to upgrade their water lines before we lose our insurance?

Answer:

There are substantial differences in the obligations for maintenance and repair of building components and strata lots between mid/highrise buildings, townhouses and bare land strata corporations.

Before a strata corporation can identify who is responsible for maintaining or repairing part of a strata lot or common property, it needs to first identify where the boundaries lie, and what parts of the strata lots are common property.

Start with the registered strata plan, the definitions of common property in the Strata Property Act and the bylaws of the strata corporation. The strata plan shows where the boundaries are located and the difference between common property, limited common property and the strata lot.

The next step is to identify the component, such as the water lines. Then look at the corporation bylaws and the act to establish responsibility.

Definitions vary greatly from strata to strata, so don't rely on someone else's experience.

Here is an example: Step 1: The strata plan is reviewed and we identify they are townhouses, and where the boundaries of the strata lots are located.

Step 2: The water lines are identified. We identify they are exclusive to each townhouse, and not in connection with or capable of being used with another strata lot, so they are part of the strata lot and not the common property; therefore, the strata lot owner's obligation begins at the property boundary. This is likely where the pressure valve and shut off are located, where the line comes into the strata lot.

Step 3: We review the bylaws, which do not indicate any other obligations of the strata corporation for maintenance and repair to the strata lot. From this, we can summarize that the townhouse owner is responsible for their own plumbing/water line upgrades within the strata lot.

But take a step back and ask, "What is in the best interest of all the owners?"

The optimum solution is that qualified contractors renew all the water lines for the best price. Some strata townhouses and bare land corporations - as permitted by Section 72 of the act - have adopted a bylaw where the strata has taken responsibility for the maintenance of specified portions of a strata lot.

Replacing the piping in 86 units at once under a single contract will be substantially cheaper than all 86 owners contracting separately. The strata corporation can plan a contingency expense or have a special levy that ensures the work is completed.

Another option for townhouse owners is to enforce the bylaws with respect to an owner's duty to maintain and repair their strata lot, but if the strata corporation does not control the piping replacement, it has no control over the quality of construction or the competency of the contractor. Everyone will pay for the increased risks and costs, especially when inexperienced owners replace their own plumbing or refuse to complete the work.

If your townhouse complex is in this situation, it would be valuable to get some legal advice on a bylaw that solves the problem and protects the investment of the owners.

Even if your owners do not agree on a bylaw, agreeing on a single contractor for the community will result in better construction standards, costs and accessibility for all owners to complete their repairs.

Question:

Our strata corporation was built in September 2010.

At the time, we were told that we had a warranty covering two years on operational items, five years on the building envelope and 10 years on the structure of the building.

We were told by the warranty provider and the developer that the developer was responsible for all those items that were covered under the first two years.

We have been contacting the developer every month to address a number of deficiencies, in addition to two items that are really warranty claims to address a deck issue for one of the units.

The developer is ignoring us, and we are concerned that the warranty will run out before we get these claims addressed.

Is there some way of forcing this issue?

Answer:

 Many strata corporations often ignore their warranties on new developments, products, or renovations until a claim arises.

Contacting the developer and the warranty provider regularly when you have a claim is important to protect the strata's interests.

The warranty provider for your project is the insurance company which has underwritten the warranty contract with your strata corporation. The developer provides assurances to the warranty provider that that firm will undertake certain obligations on behalf of the warranty provider.

The common area warranty has very specific terms and conditions in the contract which a strata corporation needs to understand.

You have an obligation to maintain and inspect the warranted product or construction as prescribed by the operations manual provided to your strata corporation.

Contract a qualified professional to perform routine inspections of the building components before each of the expiry dates of the warranty passes.

Any defects that result in warranty claims need to be filed with the warranty provider prior to those expiry dates, and in the proper form.

The warranty contract will identify how you contact the warranty provider and the location for notice.

Always communicate with the parties in writing, and even if you have a conversation with the developer or warranty provider, immediately follow up with a letter confirming your understanding of the conversation.

Your warranty is a valuable asset for your strata corporation and has a value of $100,000 per unit to a maximum of $2.5 million per building.

Keeping good maintenance and inspection records is critical to maintain the value of your warranty. It is also important for every strata corporation to closely review their warranty documents so they are aware of the actual dates.

The warranty starts when the first strata lot is sold or on the first occupancy, whichever is first. Compare your warranty schedule to those occurrences.

If your strata corporation has no success in getting your warranty provider or developer to remediate the defect, then there is a provision for Mandatory Mediation under the Homeowner Protection Act.

Contact the Homeowner Protection Office, a division of BC Housing, at 1-800-407-7757 and request to speak to the registrar, or go to www.hpo.bc.ca There are a number of helpful guides under dispute resolution to get you started.

Question:

Our 112-unit apartment has received our depreciation report and we are pleased with information and the result. We requested that the report include an annual maintenance schedule as well as the 30-year report for all the common property renewal items.

The maintenance plan has already encouraged us to review how our annual budget is structured and to add those items into the annual budget that need routine inspection and maintenance.

Even though the changes seem significant, between our budget amendments and increase in contributions to our reserve fund, we can meet all of the expectations for our future needs if we increase our monthly strata fees by 13.5 per cent at the end of this year.

Our owners voiced their support at last week's information meeting, and we would encourage every strata corporation to seriously consider the positive impact of the reports.

There are two terms in the report that we could not explain and did not fully understand in their context. We understand the basic term "risk tolerance" but were confused when the report indicated that estimates were based on "run to failure" life cycle based on our risk tolerance.

We have two professionals on our strata council, and even they could not agree on the implications.

G.W. Morrow, Burnaby

Answer:

The terms "risk tolerance" and "run to failure" are connected terms generally found in depreciation reports and maintenance manuals.

Risk tolerance generally applies to you, the consumers, and what your willingness is to accept the risk of when and how an identified component will fail.

For example, a roofing system might have a 25year life span. The strata's age is eight years, implying that there may be 17 years remaining in the performance life of the roof. The life cycle (the 25 years) is based on estimates that consider the age, current condition, installation and the materials. There could also be other factors, such as environmental conditions that could extend or limit the life of the roof.

When you consider the risk tolerance of your strata community, you are essentially making a decision about when it's time to replace the roof. Do we plan for it at 25 years regardless of condition, or do we wait until there are obvious indicators that the roof has finally come to the end of its life - "run to failure" - when the leaks start, or do you decide somewhere in between?

Some building components will not result in an emergency repair or possible secondary damage when they fail, so the strata may wait until they literally stop working. A pump in an ornamental fountain is an example.

What the strata corporation needs to consider is how they will plan for and retain control over their major construction projects to avoid damages, disruptions and emergencies, which affect use and value of property, safety and costs. This is your "risk tolerance."

Consider the major components in your building. In the event they fail, what are your options? Good examples are roofing systems, elevators, hot water boilers and heating systems, sump pumps, balcony membranes, exterior doors, windows and cladding, gutter cleaning and repairs, drainage and water delivery lines.

No one wants to spend the money until they have to, but if you wait until the damages occur, or you need the component replaced today, you may spend 25 to 40 per cent more than you should have. Between an annual maintenance program, routine inspections and renewed depreciation reports every three years, you will at least have some of the necessary tools to make the prudent decisions.

Question:

We were wondering if you would write a column about selling a strata lot and what sellers should know.

As an owner living in a strata corporation, I have found your columns to be a great asset. We have certainly improved the business practices in our strata corporation, with fewer disputes as a result, but beyond a real estate agent's advice, there is little information for sellers in strata buildings in B.C.

Our strata has completed its depreciation report, and because we have been aggressively maintaining our 27-year-old building and replacing major components, our report has become one of our best-selling assets.

It may seem strange, but we have not had a single bylaw dispute in more than eight years. We have discovered that a well-maintained and well-administered property attracts residents, both owners and tenants, who have a greater respect for the lifestyle of condo living.

We are selling our condo and moving to Ontario to be near our grandchildren, so any tips would be helpful.

Marion Spencer Vancouver Island

Answer:

There are certainly some issues that every seller needs to know before they enter into a deal or come to the transaction date. One of the greatest points of confusion for buyers, sellers and strata councils is the allocation of parking spaces and storage lockers.

On Jan. 1, 2014, the Form B information certificate is changing, requiring strata corporations to disclose the designation of parking and storage lockers and the allocations, if any.

At this time, when an owner lists specific parking-stall numbers on an agreement for sale, it is difficult to determine if that information is accurate without reliable documentation.

The parking might be limited common property, a strata lot, common property allocated by the corporation or common property that has licence or lease agreements created by the developer.

It will be essential for strata corporations to create accurate parking plans and inventories for sellers.

The most important issue for a seller is the knowledge that their strata account is clear of any claims or debts.

When you sell your strata lot, a Form F payment certificate is required to convey the title. A common complaint from sellers is that when their transaction was completed, an amount was deducted from the proceeds of sale of their unit that was owing for past fines, claims, fees or costs that the seller was unaware existed.

As an owner/seller, you may request a Form F payment certificate from the strata corporation at any time. Sadly, many sellers do not request the certificate in advance of the transaction and are left with little or no time to investigate claims of money owing to the strata corporation on the form.

Sellers should request their forms well in advance of the conveyance. A Form F is valid for 60 days, and cannot include the claim of damages or insurance deductible costs. The only way to avoid surprise claims and costs at the time of transaction is for the seller to request the form as early as possible.

Many strata corporations also insist that owners retain copies of minutes of council meetings and general meetings for potential buyers. It's the duty of the strata corporation to provide copies of minutes, financial information and rules of the strata corporation, if requested by the vendor or agents of the vendor.

The last item concerns bylaws. While an owner may have a copy of the bylaws, they may be incomplete or outdated.

Remember that you, the seller, may incur liability for providing information or documents that are not accurate. Bylaws are in a public document filed in the Land Title Registry and accessible to everyone.

Bylaws passed and not yet filed must be included with a Form B information certificate. Sellers should always exercise care in providing any documentation to a purchaser that may be incomplete or outdated.

By Tony Gioventu, Tony@choa.bc.ca

Question:

Our strata corporation over the years has adopted rules and regulations that we use for almost everything. The owners agreed that with rules, it would be easier to change them each year and we wouldn't have to pay for filing costs.

An owner has recently moved in with two dogs, and our rules specifically prohibit pets in our strata corporation. The owner requested a hearing and informed us that the rules we have adopted are unenforceable, and that only bylaws can apply to strata lots and the business of the strata corporation.

We have had our rules for almost 20 years without any conflict and our owners have insisted that we continue with rules. Could you please explain the difference between rules, regulations and bylaws?

Jerome F. Richmond

Answer:

Strata corporations are permitted to adopt bylaw amendments that apply to all property and all operations of the strata corporation. Rules can only be adopted to govern the use, safety and condition of the common property and common assets.

We frequently see rules that attempt to limit the number of pets, set out conditions for payment of fees, regulate tenants or set rules of order for general meetings.

However, they are unenforceable in that they do not comply with the provisions set out in the Strata Property Act.

A rule is not enforceable to the extent that it contravenes the Strata Property Act, the regulations of the act, the Human Rights Code or any other enactment of law.

A common error that strata corporations make is assuming that if the rule applies to the strata corporation and not the strata lot, the rule will not contravene the act.

Stick with the basics for rules. Rules apply to common property.

For example: the pool hours are 7 a.m.-7 p.m., bikes must be stored in common storage lockers and cannot be wheeled through the building or visitor parking is permitted for a maximum of eight hours.

Rules can be created by a strata council, which must immediately notify the owners and tenants of the new rules, and the new rule must be ratified at the next general meeting of the strata corporation by majority vote to continue to be enforceable.

Rules can also include user fees that apply to common property. A common example is where residents can rent additional parking at a monthly fee set out in the rule. User fees or changes in user fees can only be collected once the rule has been ratified at the next general meeting. A copy of the rules must also be attached to a Form B Information Certificate when requested.

Rules have a limit of $50 per violation if the fine schedule has been amended in the bylaws, and they are enforced in exactly the same manner as bylaws.

Anything that deals with a strata lot or the governance and operation of the strata corporation must be a bylaw. Bylaws also apply to the use, enjoyment and safety of all common and limited common property, and often replace the need for rules. Bylaws are passed by a three-quarters vote at general meetings and must be filed in the land title registry before they are enforceable.

There is no provision in the Strata Property Act for a strata corporation to create "regulations."

Simple solution: Bylaws apply to everything, rules can only apply to common property.