VANCOUVER — The biggest flaw in the act that governs the lives of close to a million British Columbians is that it assumes people will always act in the best interest of the group.
Little in human history supports that notion. But that’s the foundation upon which the 14-year-old Strata Property Act sets the rules for the operation and management of the estimated 700,000 condominium units in the province.
Add money to the mix and toxic situations can and do arise.
It often starts when buildings are new. Even though expenses are at their lowest, it’s often difficult to get the majority of owners to agree to the appropriate monthly fees to cover ongoing maintenance, operation and replacement.
It’s difficult because so many owners — especially in the Lower Mainland — have spent all but their last dime buying the place.
But it only gets worse as buildings age and expensive repairs become inevitable. The Condominium Home Owners Association of B.C. estimates that 10 per cent of the province’s condos are now between 30 and 45 years old and in need of major renewal.
Some are in such disrepair that owners are openly discussing how to liquidate the strata corporation so they can sell the property for redevelopment.
“It’s going to be painful,” says Tony Gioventu, CHOA’s executive director. “Nobody is to blame, but everybody is at fault, from the Strata Property Act to property managers to strata corporations to the owners.”
Things might have been different, he says, had the government made some key amendments to the act a decade ago. But it didn’t and that was partly because the crisis at that point was the epidemic of leaky condos.
The act was amended in 2009 after closed-door consultations that excluded groups such as the Vancouver Island Strata Owners Association even though it had done its own public consultation and made 30 recommendations — most of which were ignored.
But there were some good, albeit belated, amendments. The government finally lifted the cap on how much money could be put into Contingency Reserve Funds.
With a majority vote, owners can now build up their rainy day funds for emergencies and big repairs.
Until 2009, big-ticket repairs such as replacing plumbing, decks, windows, elevators, roofs and renovating common areas had to be financed through special levies, which require approval by three-quarters of the owners at a general meeting.
They’re difficult to get passed.
Some owners are tapped out, with some already spending half or more of their income on mortgage payments and strata fees.
There’s also a cultural gap, Gioventu says.
“It’s a foreign concept for some ethnic groups to repair and maintain buildings … There are some specific ethnic groups who will run a building to failure rather than maintain them to longevity.”
He declined to name the ethnic groups.
There is also an increasing number of owners on limited pensions.
Gioventu cited a recent case where the mainly retired owners in one North Vancouver condo all agreed that balconies and decks in the aging building had to be fixed. But the special assessment was defeated because more than half said they couldn’t afford it.
The threshold of 75-per-cent approval for special assessments means that in a building with 20 owners, it takes five (assuming every owner votes at the general meeting) to halt the replacement of a broken elevator or torpedo replacement of a leaking roof, deck or balcony.
And once a special assessment is voted down, breaking the deadlock often means lengthy and costly litigation and years of owners living in a hostile environment of bullying, threats and intimidation.
In the dying minutes of the legislative session in June 2012, the government approved establishment of a Civil Resolution Tribunal.
It will hear complaints such as nonpayment of strata fees or fines, who pays for what repairs, which contractors are hired, irregularities over council’s conduct, interpretations of regulations and bylaws, and issues related to common property.
But the tribunal won’t be up and running until the end of 2013 or early 2014.
And, unlike small claims court where one party can’t be required to pay the other’s legal fees, Norton says the tribunal will be able to do that and it will have a chilling effect.
Aside from owners who don’t act in their own interests, they’ve also not had all the information they’ve needed.
By Dec. 14, 2013, strata corporations must have 30-year depreciation plans that indicate when major infrastructure will need to be replaced, what the maintenance schedules are and the expected cost of each item. The plans must be updated every three years so that owners and potential buyers will have a realistic glimpse of what lies ahead.
Although property managers are hired to provide good advice, there are many examples of them doing the opposite, according to both Gioventu and Deryk Norton, who runs the website strataadvocate.ca and is a director of the Vancouver Island Strata Owners Association.
Up until 2006, Gioventu says, “They didn’t have to have any qualifications, not even a driver’s license.”
Now, there are minimal requirements and licenses are granted by the Real Estate Council. It’s better than nothing. But Norton argues that the bar needs to be set higher and the licensing and enforcement ought to be done not by the Real Estate Council, but by a group that has owner/consumer representatives.
Beyond that, both he and Gioventu also say that the government must raise the penalties and fines because they fall so far short of the damage that bad managers inflict on condo owners that it amounts to almost no consequence at all.
And they urge the government to include fines and penalties for anyone else who breaches the act including real estate agents, developers and even strata council members.
For Norton, there’s still so much lacking in the legislation to protect owners that he and his association would like a full-scale, public review.
Gioventu doesn’t think that’s necessary.
Yet with so many holes in the act, so many people’s lives disrupted because their homes are at risk and many more whose lives and financial security depends on their housing security, it seems more than a piecemeal approach is needed.
And it’s needed now, not another decade from now.
Source: The Vancouver Sun