Emergency 24/7

FAQ: Strata Property

This area contains articles from the perspective of strata property management on issues faced by our staff, owners, and the public regarding the operation of strata.

August 16th, 2013

Form J and the Fear of Urban Decay

Disclaimer:  This is not a legal opinion and should not be relied upon as such.  Although we are experts in strata property management in British Columbia, members of the public are encouraged to seek legal opinions on their specific circumstances before acting.

In October of 2009 the provincial government passed many changes to the Strata Property Act of BC that all had different implementation periods.  Some have been highly advertised, such as Depreciation Reports.  However, an important change has received little news, and it has a big impact on strata corporations’ ability to pass and enforce their rental restriction bylaws.

Since the strata act was implemented in 2000; there has been many debates, and some court cases, surrounding the issue of who benefits from the Form J (the Rental Disclosure Statement) the developer files during construction.  To remove any ambiguity the legislature established some clear language in the amendments passed October 2009.  The application of the Form J is now based on when it was filed.

If it was filed prior to January 1st, 2010 only the original developer and the first purchaser may rely on the form J until it expires.

If it was filed after December 31st, 2009 it can be relied upon by the developer and any subsequent purchaser until it expires.

The form J, known as the Rental Disclosure Statement, is a document filed by the developer to prevent the strata corporation from passing a rental restriction bylaw.  I believe the intent was to protect the developer and pre-construction purchasers, to rent their units should they be unable to sell them in a timely manner after construction.  However, this latest change does more.  This restriction prevents the strata’s control of how many investor owned units and tenants reside in the strata, until the form J expires.  Many Form Js have a 100 year expiry date.  Plus, many realtors in this “soft” market are using this as a feature to encourage investor purchasers.

The fear that most owners have that drives them to enact a rental restriction bylaw can be summed up in the concept of “Urban Decay”.  To synopsise Urban Decay: If a community experiences an influx of people with less invested interest, and possibly less financial means, the area experiences a noticeable degradation of its visual appeal and value.  Property owners fear Urban Decay.  It also ties in with the “Broken Glass” theory:  If you don’t repair vandalized property quickly, people are more likely to vandalize the property further.  Both theories have been proven and continue to stand true within our society.  So it is a valid fear that owners experience.  To further aggravate the situation the Strata Property Act specifically prohibits the Strata Corporation from becoming involved in the screening process for tenants.  Further, until changes are made to the Residential Tenancy Act, Strata’s cannot evict tenants through the Residential Tenancy Office.

So how do you control this to prevent Urban Decay and Broken Glass theory.  Same way you control anything in strata.  The only two ways to control anything in strata:

  1. Just and consistent application of your bylaws (damage to property, noise, etc…)
  2. Strata Fees

If you stay on top of every resident educating them on the bylaws and enforcement process.  Building a community watch program to monitor the building.  Educate council on the process of judicious review of complaints and application of penalties.  Build a strong community by holding social events like: barbeques, game days, dinners, or wellness clubs.  This should discourage delinquents from residing in the building.  However, I strongly caution against over-enforcement, this can seriously detract from the community.

If the rise in rentals is creating higher maintenance costs, then raise the fees to compensate and ensure the property is kept up to avoid the “broken glass” effect.  If the fees start rising investor owners reduction of profit will probably encourage them to sell.  This is about maintaining the asset and worth of the property, not an ecouragment to deliberately attack other owenrs through fee hikes. This should happen naturally and as required, until the issue reaches a natural balance.  Be prepared for the arguments about: “why do we have to pay, for someone else causing a problem?”  The answer is simply “because we live in a strata community and benefit and lose together.”  It may not be fair but it is one reality of strata living.

I also want to state that not all tenants are a problem.  I was a tenant once in my life: paid my rent, was respectful of my neighbors, and helped maintain the property.  I think like any group they get a bad reputation from the small percentage that cause problems.

Owners shouldn’t fear the effects of the new form J rules.  Simply approach the issues in a different way.

As always if you have questions regarding this blog post or general strata questions feel free to contact us.

August 2nd, 2013

Disclaimer:  This is not a legal opinion and should not be relied upon as such.  Although we are experts in strata property management in British Columbia, members of the public are encouraged to seek legal opinions on their specific circumstances before acting.

I was asked this week for my opinion on how important a depreciation report is for a strata.  Thus, here it is, in brief, in my blog:

  1. Stratas and Strata Councils need to comply with the law, especially the Strata Property Act of BC.:
    As of December 13, 2013 all stratas, with more than 4 units, have to prepare a depreciation report as per section 94 of the strata property act.  However, the law grants stratas the ability to waive the requirement for eighteen months by ¾ vote at a general meeting.  The waiving vote will have to be passed every eighteen months or the strata will have to comply with the new requirement.
  2. The law was created for a reason:
    Historically, and despite the delusion of most well intentioned strata councils, strata owners (in general) are awful at properly maintaining the complex systems within the strata.  They are prone to rationalizing, pushing off projects, prescribing to reactive maintenance, agreeing to “band-aid” solutions to save a dime, and are not trained to know what and when building components need maintenance and replacement.  A few lucky stratas are fortunate to have qualified professionals living/owning in the community, but very few.  Having a plan created by a professional is a giant leap forward for any community to help prioritize repairs and provide a consistent direction towards improvement.
  3. Strata Managers are not Building Technicians or Engineers:
    We have many talents and wear many "hats" as Strata Property Managers, but we cannot claim to be an expert in building construction, maintenance, or life span of building components.  Those claims lie with Engineers, Building Technicians, Certified Home Inspectors, and so on.  We may be able to advise on these matters, but a good Strata Manager knows when to call in a professional specialized in that specific area.  What this means is: relying on your Strata Manager to help you prioritize maintenance, repair, and replacement of building systems is an unreasonable expectation.  However, relying on them to help implement a formulated plan in the depreciation report is completely within our realm of talents and expertise.
  4. Outsiders are now looking for these reports:
    Realtors, Mortgage Brokers, Lenders, Insurance Brokers, etc. are just a few of the professionals that may be looking for these depreciation reports.  Not having the report may impact your ability to sell your home for full value, refinance your mortgage, buyers to get a mortgage, and possibly affect your insurance premiums or eligibility. Seeing as every unit in the community may see a reduction in market value… Do I have to ask: how important is this report?

TIP:  If you haven’t already signed on with a qualified professional to produce your Depreciation Report, I recommend considering the following:  At your General Meeting waive the requirement, and pass a second resolution to approve expending funds to get a Depreciation Report done.  This will give you an additional eighteen months to acquire a report at this point.

In short, my opinion is that getting a Depreciation Report done is extremely important.  I would highly recommend seeking out an engineering services firm immediately, and start preparing to have one done.

June 21st, 2013

Disclaimer:  This is not a legal opinion and should not be relied upon as such.  Members of the public are encouraged to seek legal opinions on their specific circumstances before acting.

An acquaintance of mine brought up an issue that I think is quite serious.  In BC many developers are stratifying Duplexes and other small stratas.  Although this is easier for the developer when filing the plans and titles in the land titles registry, it creates a potential nightmare for the owners.

There are a few logistical problems with these small stratas:

From my acquaintance’s perspective it is insuring the building. You cannot insure something you don’t own, and you don’t own common property, nor can you.  What is the strata’s common property and duty to insure? Essentially, it is everything that was part of the original construction and fixtures when the developer built the building.  This Includes but not limited to:  the siding, windows, doors, roof, carpets, cabinetry, tubs, sinks, electrical, etc., etc., etc… What if your neighbor refuses to help pay for the required strata insurance?  How can you force this issue?  Until they do, the only insurance you are able to purchase is condo owner insurance, which is limited in what it covers and maximum payout limits.

From an administrative perspective, how does a strata council operate if neither party gets along? How do you get ¾ votes at an Annual or Special General Meeting?  You only have two owners in a duplex, or three in a triplex.  One owner can essentially quash every ¾ vote… and in the duplex case even the majority votes as you require more than 50% to pass.

How do you enforce bylaws?  By the way, every strata has bylaws.  If you haven’t filed any amended bylaws, then by default you have the Schedule of Standard Bylaws that are appended to the Strata Property Act of BC.  If you’re the complainant, you are in a conflict of interest to deliberate and issue the bylaw punishment.  So your neighbour plays loud music at 2:00AM every morning, and refuses to stop.  What do you do?

So the only solution granted to owners under the act is to take your neighbour to court to force them and the strata corporation to comply with the act…. STOP!

What you need to do is hire a licensed strata manager to advise you on the appropriate procedures and help mediate the situation, BEFORE escalating the issue.  If you are looking for a strata manager in Surrey, Langley, White Rock, Delta or New Westminster BC Obsidian Property Management would be happy to assist.  You don’t think you can afford a management contract?  Well you can afford to hire us on an hourly basis to assist with the issues at hand, setup some systems, provide intermittent guidance as you require, and attempt to mediate the situation, because we are a third of the cost of a lawyer.

The idea here is to get people communicating and involving a somewhat neutral third party.  Somewhat, only because whomever is paying us is our client and by law we must act in their best interest.  However, I’ve encountered situations where there best interest is not what the client necessarily wants… and that creates a whole other problem as an agent that I’ll discuss in the future.

To compound the problem, many Realtors and Lawyers don’t advise their clients that what they are buying is a strata.  They either don’t bother to check or fail to disclose. “Caveate Emptor” buyer beware!  The administrative burden and costs associated with running a small strata are significant and should be considered.  If the Realtor (either yours or the sellers) or lawyers failed to advise you of this material fact there could be grounds for a lawsuit and a complaint to the Real Estate Council of BC and BC Law Society.  We highly recommend in these situations you talk to a lawyer (probably not the ones involved in the transaction).

When you are buying a home that is attached to another home or even if it isn’t (don’t forget about bare land stratas) – again STOP and ask a few questions.  If you don’t know what to ask call us for some assistance.

As usual please feel free to contact me regarding this or any other strata matter.