Managing Major Repairs
A Condominium Owner’s Manual
Chapter 2
The Participants
In this Chapter
The previous chapter explained the concept of the building envelope and signs of failure. When there is a problem with the building envelope it may lead to major repairs. When undergoing major repairs, there are a variety of participants that may be involved. This chapter explains their role.
The strata corporation is all of the strata unit owners. The legal obligations of the strata corporation are set out in the Condominium Act of BC. In the latter part of 1999, this statute will be replaced by the new Strata Property Act. Rely on the current Act. One way to verify which statute is current is to call:
Condominium Officer
Financial Institutions Commission (FICOM)
604-660-1983.
Obligations of the Strata Corporation
To maintain and repair
Basically, the obligations of the strata corporation remain the same in both the Condominium Act and the new Strata Property Act. The strata corporation has an obligation to repair and maintain the common property, common facilities and assets of the strata corporation.
The building envelope is common property. Even if the building envelope failure does not impact your own unit, you will still be required to help pay for these problems. If the problems with the building envelope lead to damage inside a strata unit, the strata corporation will also have to cover these items.
To have funds available
The strata corporation is required to have funds available to meet the obligations of the corporation. An expense that was not anticipated in the budget or cannot be funded from the contingency reserve fund must be paid by the owners. When faced with a large repair expense, some owners may oppose or may be reluctant to follow through with the work. Legally, they must.
The strata council is a group of owners elected to carry out the duties required of the strata corporation.
Obligations of the Council
To keep proper minutes and accounting
This includes keeping minutes of all meetings and proceedings, and preparing proper accounting records of all money received and spent. This also includes making available to owners, documents such as the Condominium Act, special resolutions, legal agreements, a register of all the owners, the meeting minutes and the annual budget.
To act in good faith
The Condominium Act requires the strata council to perform their duties in "good faith". This means that they undertake their duties with an honest and sincere intention to fulfill their obligations to the other owners.
Some strata councils fail to properly record information in the minutes of their meetings, or even fail to keep minutes. In some cases, the strata council has not been forthcoming with information about the condition of the building - perhaps withholding an expert's report. Actions considered to be "not in good faith" could result in council members being held personally responsible for inaccurate representation.
Copies of the Act can be obtained from:
On the Internet: www.qp.gov.bc.ca/bcstats/96064_01.htm
Queen's Printer
849 Hornby Street
Vancouver, BC V6Z 1T9
604-660-0981
Crown Publications Inc.
521 Fort Street
Victoria BC V8W 1E7
250-386-4636
On the Internet: www.crownpub.bc.ca
The Condominium Act authorizes, but does not require, the strata corporation to contract a property manager to handle certain affairs of the strata corporation. If your strata corporation has a property manager, they should be able to:
Depending on the skills and qualifications of your property manager, there are numerous ways they may be able to assist throughout a major repair. They can:
When the potential for a major repair is imminent, the strata council should carefully review the property management contract. Some contracts contain a clause that states: "in the event of a major repair, an additional fee which is a percentage of the major repair, is payable." Some contracts are silent regarding remuneration for extra services provided during a major repair. However, upon renewal of the contract, the property management company may want to include fees in the forthcoming year for extra services.
The strata council should determine if the property manager has appropriate experience, what services they are able to provide and what the services are worth, then negotiate accordingly.
The developer is the company that built and sold the strata units.
When building envelope problems become apparent, the strata corporation will likely communicate with the developer. If the problem is covered by the warranty and occurred within the warranty period, the strata corporation can expect the developer to:
If the warranty has expired, the strata corporation can still receive assistance from the developer, who may:
To assist, the developer needs the following information from the strata corporation:
Developers stress the importance of proper maintenance programs in the early life of the building, along with adequate funding in the maintenance budget.
A home warranty provides that certain defects in workmanship and materials will be re-done to bring them up to standard. The written warranty will be very specific about the items covered, time limitations for the coverage, and procedures to be followed to seek fulfillment of the warranty. There are two warranties on a strata complex: one on the common property and one on the strata unit.
Prior to 1999, if a warranty existed on your strata complex it was most likely provided by:
*If this is your warranty provider, contact the Homeowner Protection Office for current information on the status of this company.
What the Strata Corporation Needs to Do
As an owner, if it appears to you that the strata corporation is not carrying out the warranty obligations with respect to maintenance, state your concerns in writing to the strata council.
If there is a problem that appears to be covered by the strata corporation common property warranty, the strata corporation:
When a serious problem is being remedied by the developer or warrantor:
The difference between warranty coverage and insurance coverage is that the warranty provider will do the repairs, whereas insurance pays for damage resulting from a specific incident.
The strata unit should be covered by two types of insurance:
Generally, both types of policies:
What You Need to Do
Get out your insurance policy and read it. If you don=t understand the terminology, get your insurance broker to help you.
As the strata corporation goes through a major repair project, the following legal assistance may be required:
When a strata corporation is faced with the prospect of a major repair, they require a lawyer who is:
See Appendix 1 - Finding a Lawyer for information on locating and interviewing a lawyer.
Building Envelope Professionals
The term "building envelope specialist" has become a common marketing device, adorning trucks and business cards in the lower mainland of BC. There is one designation recognized by the City of Vancouver, the Architectural Institute of BC (AIBC) and the Association of Professional Engineers and Geoscientists of BC (APEGBC):
Building Envelope Professional
This designation is available only to architects and engineers who have been accredited by their professional body.
Suggestion: The Building Envelope Education Program offered by the AIBC is open to anyone who wishes to attend. A strata corporation commencing a major repair project may consider reimbursing a designated owner who is willing to take this course. This would provide the strata corporation with up-to-date knowledge from a person who has a vested interest in the outcome of the major repair. It is not suggested that this person would act as a consultant for the strata corporation.
Role of the Building Envelope Professional
While the professional associations have narrowly defined the role of the building envelope professional, the range of services required in a major repair include the following:
The building envelope professional may provide only a portion of these services and assist with identifying qualified professionals for other required services. Initially the scope of services required may not be apparent. It is suggested that interviews be conducted as if the full range of services will be required. This will assist in identifying a professional that will potentially engage in a long-term working relationship with the strata corporation.
See Appendix 2 - Finding a Building Envelope Professional for suggestions on interviewing potential building envelope professionals.
When more than one professional is required, the first consultant retained by the strata corporation may be also be designated as the:
Coordinating Registered Professional (CRP)
In the BC Building Code, the Coordinating Registered Professional (CRP) must be a member of the Architectural Institute of BC or the Association of Professional Engineers and Geoscientists of BC. The Coordinating Registered Professional (CRP) is responsible for determining which other registered professionals are required and for coordinating their work. The Coordinating Registered Professional (CRP) does not coordinate the trades.
Where cities/municipalities require a building envelope professional to be involved, they usually required the building envelope professional to provide additional field review. Field review, as explained in the Building Code, provides assurance that the building as finally constructed is in substantial conformance with the Code.
"Constructor" is a collective term that includes general contractors, construction managers, project managers and construction consultants. You will be assisted by your building envelope professional, your lawyer and possibly your property manager in identifying the best constructors for your particular major repair project.
Constructor's Responsibility
In 1998, the Homeowner Protection Office was established. One of the stated priorities for the Homeowner Protection Office for 1999 is creating regulations for the licensing of renovators and establishing mandatory warranties for renovations. Check with the Homeowner Protection Office for the status of this initiative.
Homeowner Protection Office
Phone: 604-646-7050 or 1-800-407-7757
On the Internet: www.hpo.bc.ca
The City of Vancouver and Municipalities
When performing major repairs, it is critical that the strata corporation know the city or municipal building standards and permit requirements.
Municipalities utilize the building code standards set by the Province in the BC Building Code. The City of Vancouver has the authority to create and enforce its own building code.
Role in a Major Repair
The role of the city/municipality is to audit compliance with the building code:
The building code sets minimum standards of construction for public safety. It doesn't deal with:
The city/municipality cannot ask for more than what is in the code. The owner, i.e., the strata corporation, can ask for standards higher than the code.
Before You Begin a Major Repair
The BC Assessment Authority provides current actual value assessments for tax purposes on properties throughout BC.
During a major repair project, the market value of a condominium may be adversely affected. An owner may be concerned about the value of their strata unit for a number of reasons:
Generally, assessments are used for tax calculation, and appraisals are used to establish the value for lending purposes. In some cases, lenders will use assessed value as an indicator of the value for lending purposes.
Finance or Re-finance
An owner may use the title to their condominium as collateral for a loan. Naturally, the lender will want to know the value of the property. The lender may require an appraisal, or they may rely on the assessed value.
Taxes
Property taxes are based on assessed value, which in turn is based on an estimate of market value. Each year, the local government will decide on a mill rate (a rate per thousand dollars), and that rate is multiplied by the assessed value to determine annual property taxes.
Example: Calculation of Taxes
For an assessed value of $200,000 and a mill rate of 6.25:
Mill Rate x Assessed Value = Tax
6.25/per thousand x $200,000 = $1,250
Some owners want their assessed value to be reduced resulting in reduced property taxes. Conversely, some owners do not want their assessed value reduced because it may be the basis for their financing or re-financing. A reduced assessed value may reduce the amount they are able to borrow.
How Assessed Value Affects Taxes
The impact of a major repair program on assessed value will not be realized unless the physical problem:
1. is known to buyers and sellers; and
2. remains unrepaired on October 31st of the year before the current assessed value.
For more information on assessment, call the BC Assessment Authority and ask for the person who "values condominiums." Check your phone book for the closest BC Assessment Office.
In the event of a sale, an appraiser may be hired to establish the value of the property. The appraiser will discount the value of the property to account for major repairs. The objective of the appraisal is to estimate what a buyer would pay for the strata unit at that point in time. It is important that the buyer is given complete information - everything the owner knows - about the situation to avoid a claim of misrepresentation after the sale. There are specific clauses for use on the Contract of Purchase and Sale regarding the issue of who will pay for special assessments, i.e., the buyer or the seller.
