Competitive Bidding

Our strata corporation has just approved $125,000 from our contingency fund for roofing replacement. We received estimates from only 1 company and several owners are concerned we have not detailed the project correctly and did not get at least 3 bids before proceeding. As independent corporations, are we required to obtain multiple bids or for any specific values? It would be a good consumer practice but there are not always more than 1 or two companies available on the Sunshine Coast. If 3 bids minimum were imposed, we would never likely be able to comply? JDR

Dear JDR: When it comes to how a strata corporation spends their money, the purchasing and financial practices of strata corporations are determined through the bylaws of a strata corporation and the wording of the resolutions the owners approve at general meetings. The Strata Property Act does not require or set a minimum number of bids or special procurements conditions. For an expense on a major project or an operating contract, the owners at a general meeting may direct or restrict the council by majority and give specific instructions on the methods or limitations for purchasing. In a normal sequence the strata council will establish the proposed resolution for the project, including the details of the project and the how the funds will be approved, either by approving reserve funds or a special levy. A meeting is then held where owners debate the resolutions and either approve or defeat the proposed projects. Many resolutions often fail due to lack of information or unknown purchasing procedures that are challenged by owners. This results in mistrust between strata councils and owners, and delays in projects that inevitably cost more for everyone. While the Act does not require any minimum purchasing requirements, it is everyone’s best interest to set specifications for projects and develop a bidding process on the specifications.
Multiple quotes for projects are helpful to set budgeting plans and targets for scheduling, but they are not comparable as they are established from the perspective of each of the companies providing the quotes. Major construction and renewals have many variables that affect pricing and contracting relationship. Consultants, technical writers and project managers routinely set the specifications for the scope of work and assist with the processing of tendering projects so ensure the client is provided with comparable bids that meet the minimum conditions of product and materials, methods and details of construction, insurance requirements, site conditions, warranties, access to the property, environmental conditions, and any other contractual conditions a strata council negotiates. Depending on the value of construction or the risks associated with the project, a legal review of the bidding process and the contract conditions and terms is highly recommended. For a small investment, usually below $2,500 you can avoid a number of disputes that originate from a lack of a written agreement or failure to detail the conditions of the contract. Remember your objective as the client and owners. The best pricing for the best products, terms and conditions. The solution is competition and detailed written agreements. Even if you can only obtain a single quote, it is in your best interest to have the terms and conditions in a detailed written agreement. A contractor that is unwilling to enter into a written agreement is unlikely to act with integrity. Whether it is a $5,000 contract to replace gutters or $125,000 roofing project, a written agreement is essential to protect your interests. With or without consulting or legal services, confirm all details in writing before you proceed with your projects.
Tony Gioventu, Executive Director CHOA

A Note from the President of Terra Nova Landscaping ” a handshake or gentleman’s agreement, isn’t worth the paper it isn’t written on. Always use a detailed written agreement.”

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Energy Upgrades

Our strata council entered into a contract to change all of our lighting in common areas to LED’s to increase light levels and reduce the cost of electricity. They did not obtain the authorization of the owners at a general meeting for this expense and have declared there is no additional expense as the contractor has agreed to be paid through the savings until the contract balance is paid out over the projected 2 years. Council claim they can simply allocate this expense under the operating budgeted for Hydro and it did not require the approval of the owners. Is this correct? Our council has a bad history of expensing building upgrades or material purchases through the budget without informing the owners, while at the expense of reduced maintenance and servicing that our building highly needs at this time. How do we force this into a meeting before this contract proceeds? Many owners are questioning the logic of this decision to spend $79,000 on an upgrade which includes $4,500 in new outdoor light fixtures, at a time when our insurance costs are continuing to increase, and strata fees this year will go up by 35%. Ingrid F.

Dear Ingrid: The annual operating budget is for the purpose of those expenses that occur once a year or more frequently, while the contingency reserve fund is for expenses that occur less than once a year. When a strata corporation approves their annual budget, they are authorizing and instructing the strata council to proceed with these expenses based on the designations that have been created. Under your budget Hydro is listed as a utility and there is no indication in either the budget or minutes the owners agreed to or authorized the expenditure of any reductions to a contractor for any new components or lighting upgrades. While the annual budget may have a reduced cost, those calculated savings are still an amount that is paid by the strata corporation to the contractor which requires the authorization of the owners. In addition, the Strata Property Act requires a 3/4 vote approval for the acquisition of assets over $1,000, such as the new exterior light fixtures. A strata corporation may amend their bylaws to authorize a strata corporation to spend on higher amounts without the approval of owners, which in essence still requires the approval of owners at a general meeting. To address this issue, 20% of your owners may sign a petition demanding a special general meeting be called and propose a resolution to either approve the upgrade to enable this work to be done or to stop the work. The strata corporation must hold the meeting within 4 weeks of receipt of the demand, which is extend by 60 days under the emergency orders, and the resolution on the petition must be the first order of business.
Strata corporations can anticipate several energy upgrade requirements to become mandatory by their local governments and the province in the next 3-5 years. Major construction that requires building permits will trigger upgrades as well as changes to the building code for existing structures across the province. LED upgrades are certainly one of the best returns on upgrades, and the savings in many medium to larger buildings with extensive common areas and underground parking garages, easily reach full cost recovery of the upgrade within 18-24 months, as well as the long-term savings in the annual operating budget. A short-term approval of contingency funds to drastically reduce operating costs is well worth the investigation. The process is simple and usually requires little alteration on site, depending on the age of your fixtures, however, the project does require the approval of your owners at a general meeting. LED upgrades also increase light levels for public areas such as parking garages and lockers where security is a higher priority, reduce heating loading in hallways and reduce long term maintenance cost as lamp life is much longer. The development of a variety of lamp levels for light and colour also makes the transition of hallways and common rooms a welcome improvement. CHOA in partnership with BC Housing developed a helpful guide on Lighting Energy Upgrades to assist property owners in evaluating their feasibility of considering an LED conversion. Send me an email tony@choa.bc.ca for an easy download link.
Tony Gioventu, Executive Director CHOA

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Electronic Meetings

I have appreciated your column in The Province for a long time. Very informative and straightforward. As President of our building, last year we successfully used ZOOM for our AGM, with roughly 100 people attending by computer, tablet, and also by phone. We used the “Raise Hand” for voting, and the meeting went quite smoothly (but with a LOT of preparation). Last year the AGM was relatively simple in regards to issues and new board members (which was by acclimation). I am concerned that there may be more issues at this year’s AGM, and wondering if you will be doing a column on “AGM software” that is better prepared to handle “Advance Registration”, Voting, and AGM other tasks. I attended a couple of large company ZOOM AGMs and admired the way a dedicated software platform helped the meeting to run smoothly and report in real time. Curious if you have heard of any software vendors targeting the smaller, residential building market AGM? Stephen W.

Dear Stephen: There are several platforms and services available to the public such as Skype, Microsoft Teams, Google Meetings and Zoom. To date CHOA has test run several platforms that claim to have the solutions, but they are either too costly or do not provide any better services. The challenges for most platforms are the same. How do we integrate the use of the format with the requirements of registration, proxies and voting of the Strata Property Act and the Bylaws of each strata corporation? For this reason, many strata corporations and management companies have attempted to impose a “restricted proxy only” meeting format on their owners, but this does not comply with the provisions of the Act or the bylaws of each corporation and your meeting will be nullified if challenged in the Civil Resolution Tribunal. A proxy can only be restricted or limited by an owner which imposes an obligation on the proxy holder to follow those instructions or restrictions. If there is a general meeting convened, the notice requirements must still be issued in the same format, written notice to each strata lot, and may be by method of email if the owner has consented to receiving notices by email, and the agenda, methods of registration and certification of proxies, how voting cards are issued or recognized either physically or virtually, and how you will conduct each vote must be contemplated. I have chaired electronic zoom meetings in 2020 with over 300 strata owners and proxy participants with great success; however, as you indicate, it is a result of sound planning, but also a good partnership with the strata council and property manager to ensure everyone is playing a vital role. The method of registration is quick if the registration list is crossed referenced by strata lot/owner name/unit number, and as each person registers their strata lot or unit number replaces their name on the identity. This also enables the chairperson to allocate the correct number of votes per unit if there are non-residential units or individuals representing several proxies. Polling for resolutions is functional but it does not identify a person with multiple votes, fractional votes, or multiple proxies. The Pro Version of most platforms provides advanced features such as polling shown to the chairperson or scrutineers who is voting and their voting results. Depending on the size of your strata corporation and complexity of your bylaws this may be necessary. Using a participant recognized response with a thumbs up or down is also an easy method of dispensing with procedural items and is also identifies who is voting on each resolution, which enables the chairperson to calculate voting results. Generally, for majority votes these methods are easy to manage. The complications arise when an eligible voter requests a precise count, or you are approving a ¾ vote, 80% vote or unanimous vote (100% of all owners). For accuracy, and to be able to defend the voting method and results, a ballot that can be emailed at the time the vote is taken or an electronic audit where a copy of the results is maintained is your best solution. Don’t forget, when you send out your notice you must include the electronic address in the notice package. You cannot send it out the week before or post the notice and meeting to an electronic bulletin board. Each owner must receive direct notice of the meeting. Hopefully at some point this year we may see the end of emergency orders. Once this happens there will be a short window afterwards when electronic meetings are still permitted. When the period expires, it will be up to each strata corporation to adopt a bylaw that permits electronic meetings. As you plan meetings this year, a bylaw that permits electronic meetings and addresses the voting and registry procedures would be prudent if your strata corporation wants to continue with the option of electronic general meetings.
Tony Gioventu, Executive Director CHOA

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Adjusting Strata Fees for the Fiscal Year

Our strata corporation normally has its Annual Meeting 60 days after our fiscal year end at the end of February. This gives us time to review our financials in advance of the next year and provide an accurate report to the owners with our notice. Whenever we have an increase in fees, we have included an adjustment over the next 10 months to pay for the increases that would have occurred in January and February. This reduces the impact on owners and with the dramatic insurance cost increases this year it has been the best financial option for everyone. Our manager has instructed us that we must make the entire adjustment in March and cannot make this over the next 10 months, and we have a new owner who is refusing to pay the adjustment claiming they did not own the unit in January and February so why should they pay? How is a strata corporation expected to balance a budget if we cannot address the adjustments and where in the Act does it require us to collect the fees in the next month. G. R. M.

Dear GR: This matter has recently been before the Supreme Court of BC under strata plan LMS4385, who were challenged on retroactive fees. Strata corporation budgets are commonly approved after the fiscal year to provide owners with the most current financial statements, and the court deemed these are not retroactive fees. In the decision, The Honourable Justice G.C. Weatherill established: “a subsequent “adjustment” to the fees paid in the period between the end of a fiscal year and the passing of the budget for the next fiscal year, is not a retroactive charge. There is no requirement in the Strata Property Act that strata fees be paid in equal installments. Plainly, the schedule of strata fee payments can require equal monthly installments, or installments that include adjustments to make up a deficit between what was paid and what would have been paid had the budget for the current fiscal year been in place at the commencement of the current fiscal year. Fees for one month may be different than for other months.” A common practice and requirement for strata corporations under the notice of general meeting is to include the schedule of fees and how they are calculated for the year on the proposed budget. This is the opportunity to inform the owners how an adjustment would be calculated for the remainder of the year, either a single payment on the next month or scheduled over the remainder of the year. With the significant increases in insurance many strata corporations are seeing their fees increase 10-30% and proposing the fee increase be spread out over the remainder of the year. Sat Harwood, a Vancouver Lawyer pointed out the decision also included addressing the issue of purchasers. “While the Civil Resolution Tribunal had earlier deemed retroactive fees were not enforceable, the decision was overturned. An owner’s strata fee obligation does not arise until it is approved at the AGM. The Form F payment certificate and the Form B information certificates were accurate when issued, and any purchaser is entitled to request copies of the Annual Budget to determine the fiscal year period and if there may be an adjustment to fees if the current year’s budget had not yet been approved.” The cautionary message for both strata owners and purchasers is fees for the current fiscal year and how they are collected are never known until the annual budget is approved. The longer the corporation waits to convene their annual meeting the greater likely hood there will be significant adjustments if the budget increases significantly.
Tony Gioventu, Executive Director CHOA

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Best Pricing Insurance Terms

Will the recent changes to the insurance industry mean we will be paying less for insurance in coming years, or the dramatic increases will slow down? Our 78-unit townhouse complex in the interior renewed its policy in November with no claims for the last 5 years and our deductible went to $100,000 and our policy has gone from $55,000 a year to $129,000. Our broker told us in October with the hard market and the best pricing policies this was beyond their control. So how does best pricing apply to strata corporation policies? Janet W.

Dear Janet: Due to the high replacement cost values and the earthquake exposure that exist in BC most strata corporations are written on what is called a subscription property policy. A subscription policy can have anywhere from two to twenty different insurance companies involved. Each different insurance company takes a percentage of the property risk, a percentage of the property premium and in turn each of those insurers pays their same percentage of any insured loss that occurs. An example of a subscription property policy might be as follows: Insurance Company A insures 45%, Insurance Company B insures 25%, Insurance Company C insures 20%, Insurance Company D insurers 10%. So how does this get negotiated with a best terms clause? Traditionally when insurers quote to subscribe on a property policy for a percentage less than 100%, their quote has always been subject to a best terms clause. The best terms clause typically states that if their capacity is used that they must get at minimum the same rates and deductible as any of the other subscribing insurers. If insurance company D comes in at a rate 50% higher than the other insurers, that rate applies to all the insurers. Best terms clauses are mandated by insurance companies not insurance brokers. According to Steve Storrey at BFL Insurance, “the insurance broker first started trying to negotiate best terms clauses out of insurance contracts for strata corporations back in September 2019 when rates between subscribing insurers started to vary drastically. Several companies have been successful in getting the majority of insurers subscribing to their strata / condo and apartment protect programs to agree to remove the best term clauses from their quotes.” For the BFL program this took effect on June 1, 2020 and it applies to all quotes moving forward. As of January 1, 2021, the insurers authorized to provide insurance in BC, have reached an agreement with Financial Service to cease applying best pricing practices. While the alternative and impact of how pricing will be applied is not yet known, the agreement is a good start to a competitive process for consumers. The other side of insurance that still has many strata corporations and owners struggling to manage, is the dramatic increase in deductible rates for water and fire. At $100,000 to $250,000 per claim and higher, these amounts have the potential to bankrupt many owners if they are responsible for a claim. Brent Pavan from Hub International, a BC Insurance Broker, has provided an alternative for high deductibles and strata corporations may want to consider the option to reduce the liability. Their office has developed a water and sewer buy-down product that is applicable to the entire strata, not just the individual unit owner. It is possible to buy-down a deductible up to $125,000. The strata corporation absorbs the first $25,000 of any claim and the insurer will pay the rest. For example: $200,000 insured water damage claim with a $150,000 water deductible. The strata corporation will pay the first $25,000 and the insurer pays the remaining $125,000. There is a cost for this product but for many strata corporations, regardless of who you are insured with, this may be affordable method of managing the higher deductible risks.
Tony Gioventu, Executive Director CHOA

Covid-19 Notice: As a precautionary measure to prevent the spread of COVID-19 CHOA staff are working remotely and our offices are temporarily closed. We understand these are challenging times for strata corporations and we are here to help. Even though CHOA advisors are working remotely we are only a phone call or email away and able to assist you with hosting meetings and notice preparation.

Tuesday Lunch & Learn Live with CHOA: CHOA is hosting a series of webinars once a week, for the next few months. Join us each Tuesday as we bring together industry experts to discuss the many issues affecting BC’s strata community. For more information visit our website at: https://www.choa.bc.ca/seminars/

Hi MOM.

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Fraud Prevention

I am the acting treasurer for our strata corporation in the Fraser Valley, and took over a year ago. In the process and setting up a series of maintenance contracts that we use to approve monthly expenses, I discovered a payable over the previous 5 years from 2013-2018 for a company that does not exist. The amounts appear to be routine and nominal; however, when totalled over the 5 years, the amount is over $100,000. The previous treasurer sold her unit and left BC in 2019, but it appears from the records and cancelled cheques, she had set up a phoney company under her husband’s name to pay these services amounts. There is no GST number, no PST was ever collected or charged, and no one else in the strata corporation was aware of this company or any services they provided. The annual budgets did not identify this company as it was simply applied to routine maintenance and repairs. I am writing to warn every strata council whether you are managed or self managed to closely scrutinize and compare all your monthly expenses and payables. Everyone in our strata corporation was content to leave 3 council members manage our affairs without questioning any actions or expenses and we have dearly paid the price for this. CRJ

Dear CRJ: A strata corporation is responsible for managing and maintaining the common property and common assets of the strata corporation for the benefit of the owners. The powers and duties of the strata corporation must be exercised and performed by a council, unless the Act, the regulations or the bylaws provide otherwise. In exercising the powers and performing the duties of the strata corporation, each council member must (a) act honestly and in good faith with a view to the best interests of the strata corporation, and (b)exercise the care, diligence and skill of a reasonably prudent person in comparable circumstances.

Strata councils have duty to manage the business of the strata corporation, act in a prudent fiduciary manner and approve and provide financial reports for a fiscal year. This includes a review of the monthly financial statements, payments, collections, and reporting. Fraud occurs in most situations when there is little or no oversight or review of the financial operations. Whether your strata corporation is self managed or contracts management through a strata management company, the responsibility falls on the strata council to review the financial transactions, reconciliations and bank statements to verify expenses approved have been authorized and they relate to your strata corporation. While operations in smaller, self managed strata corporations may be less formal, council members are advised to jointly review the monthly bank statements and transactions. Here are 10 principles to reduce the risk of fraud. 1) The treasurer who is producing cheques/payments/financial statements is not a signing officer 2) at least two other council members must always sign for transactions and cheques 3) recipients of payments never sign their own cheque 4) invoices are never paid unless they are accompanied with the original invoice approved by signing officers 5) cash transactions are prohibited 6) bank cards for strata accounts are deposit only 7) the strata council receives and reviews a copy of the monthly reconciliation from the treasurer/strata manager 8) all investments and accounts of the strata corporation must be in the name of the strata corporation in trust and cannot be pooled with any other corporation or interests 9) no credit card accounts 10) approve a list of authorized service providers and contracts for easy reference of payment cycles.

When a fraud is suspected, do not cover it up. Contact the authorities and file a complaint. If it is an entry error, it should be simple to correct the problem. If there is evidence of fraud, address the problem. Unfortunately, many organizations believe their reputations will be harmed if they pursue actions and the perpetrators are off the hook.
Tony Gioventu, Executive Director CHOA

Post script from the President of Terra Nova Landscaping…..There was a large bare land strata out in the Fraser Valley years ago, that had the same council members for years and years and years. Status Quo? They’d rigged it so that none of the “old boys” on council ever paid strata fees. I’m glad they were found out.

Another management company in Vancouver was always late paying us….eventually they stopped entirely……the company accountant/co-owner stole a million dollars of strata corporation money and moved to Mexico. True story.

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Managing your Property During Covid 19 Restrictions

What is the best method a strata corporation can manage for our common facilities during the recent restrictions and increased risks of transmissions? Our strata is a high rise in the Okanagan with a number of Air BnB’s that are still being used and we have several common areas such as a gym, library, indoor pool. Do the new health orders apply to strata corporations for common areas and gatherings as well as public spaces? We have several owners who are refusing to wear masks and continuing to host dinners and parties that are a serious concern to our retired residents. Will the orders apply to strata corporations and multi family buildings in the same manner as public spaces? JCR

Dear JCR: At this time, masks are required in common areas in apartment buildings and condos. Also, all strata corporations who share common property access and facilities or engages the services of employees and contractors, must provide the required protection and facilities required under WorkSafe BC for site safety.

Effective as of November 19, 2020 at midnight to December 7, 2020 at midnight social gatherings of any size are prohibited in British Columbia and masks are required in all indoor public settings. These new health orders will impact the administration and operations of your strata corporation if you operate any commercial enterprises, are a shared use facility with commercial space or an Air Space Parcel shared space.

If you have common/public areas in the buildings such as hallways, exercise rooms, pools, meeting rooms, mail rooms, foyers, garbage rooms, or other interior facilities, the risk of transmission is higher in enclosed spaces and masks are mandatory, and essential in reducing the risk. Residents, guests, service providers and employees, emergency responders and delivery persons will all use your common areas for access. Maintain social distancing wherever possible, limit the number of persons in elevators to 2 people or 1 family, install sanitization stations, post signage requiring masks be worn in common areas at all times and encourage hand washing and all other health safety methods for all residents.

Advise all residents and visitors of their isolation requirements if they have travelled outside of Canada, have come in contact with a person that has tested positive for COVID-19 or has any of the symptoms. If you have scheduled an in-person general meeting or council meeting, gatherings are now prohibited under most circumstances. Reschedule your meetings to a later date or convert your meeting to an electronic location as permitted by the emergency provincial orders and ensure all owners have been given proper notice and the opportunity to attend the meeting or submit a proxy representing their interests. CHOA has provided a number of operational guides for electronic meetings and emergency orders. Go to choa.bc.ca and select COVID-19 updates.
Tony Gioventu, Executive Director CHOA

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Counting Ballots & Reporting Results at a General Meeting is Essential

What happens when a strata council and manager adjourn a general meeting, count the ballots over the next week and then send the results out to the owners 3 weeks later? The strata corporation sent out a notice of meeting electronic special general meeting, with 2 special levies that totalled 1.1 million dollars in our 104-unit strata. The levies ranged from $6,894 to $14,050 and are due January 15th, 2021. There were 71 owners, 35 by proxy and 46 in person. The results were: 51 in favour 16 opposed, and 4 abstained. We have spoken to 20 people who all claim they voted against the levy, mostly because there are no specs set up by an engineer and no plans for a bidding process. This leaves us in an awkward position as to whether we challenge the meeting results through the Tribunal, and whether the council, who were also re-elected by 7 of 11 nominations, could withhold the voting results for so long? We also have the problem that no one is admitting who counted the ballots. Rafael B.

Dear DD: The Strata Property Act does not make any specific requirements to announce the votes. Those governance requirements are in the Standard Bylaws and any amended bylaws of a strata corporation. There are provisions within the Act & Bylaws that do require the announcement or publication of the result of the votes, or they cannot be enacted upon by the owners. The most critical is the reconsideration of a 3/4 vote and the election of council. Section 51 of the Act, permits 25% of the owners to sign a petition to demand a special general meeting to reconsider the vote if less than 50% of the strata corporation’s votes were in favour of the resolution. For many strata corporations, there are frequently fewer than 50% of the owners who attend in person or by proxy and the 3/4 vote results are always less than 50% in favour. Based on your minutes, your owners would have been eligible to sign a petition demanding a special general meeting to reconsider the vote. While it did pass by 3/4 vote only 51 of 104 voted in favour. Less than 50% of the strata corporation’s votes. Had the owners been aware of the voting results they could have petitioned for a meeting.

Under the Standard Bylaws as well as most strata corporation bylaws including yours, the term of office of council members ends at the end of the annual general meeting at which the new council are elected. That language indicates the council are elected at the meeting. If the results were not counted and reported, you have a potential problem over a period of time where there was no council elected until the minutes were reported, and more important the council were not elected at the meeting. There is also the provision in the bylaws that requires the chairperson of the meeting to respond to a precise count if requested. The outcome of each vote, including the number of votes for and against the resolution if a precise count is requested, must be announced by the chair and recorded in the minutes of the meeting. Electronic meetings do provide some challenges for voting, but appointing scrutineers to count ballots, planning in advance of how voting will be conducted, and announcing the results of the votes during the meeting is essential for accuracy in minutes and to enable owners to respond to the results.

When a strata corporation convenes an annual or special general meeting, they have an obligation to comply with the Act, Standard Bylaws and any Bylaw amendments of the corporation. This includes registration of voters, certification of proxies, consideration of the agenda items such as reports, budgets, proposed resolutions, and election of council, the counting of the voting, the results. If a strata corporation informs owners they can only issue a proxy and cannot attend a meeting, they are either in violation of the Act and their bylaws by not permitting owners to attend either in person if permitted, or electronically, if they convene the meeting. If the strata corporation does not convene the meeting, none of the votes or proxies could be valid as the meeting was not called to order to establish the registration of eligible voters and eligible proxies. Everyone wants convenient meetings with few complications. Electronic meetings are an easy solution to ensure everyone’s voting rights are enabled and the business of the strata corporation can be safely conducted.
Tony Gioventu, Executive Director CHOA

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Commercial vs Residential

We own a commercial strata lot on Kingsway in Vancouver. It’s a typical development where the residential units are upstairs, and the ground floor units are commercial retail. Our building is over 10 years old and to date has been very well run. The residential owners pay their expenses, and the commercial owners operate separately and pay their expenses. We rarely have a common interest, but recently, the strata owners of the residential units included us in the notice of Annual General Meeting to approve a number of new bylaws around rentals and pets, and to make us pay for common expenses for items we have no access to. We are also concerned that our units may now be subject to several bylaws that could limit our business operations. All of this has thrown our strata into quite a lot of conflict. We have been told that we cannot operate separately, and we are part of the strata for all the shared expenses. This will have a significant change on our operating costs and fees. Please explain how this works and what options we might have. DD C.

Dear DD: When there are strata corporations with different uses such as commercial and resident, or different types of buildings such as a high rise and separate townhouses, a strata corporation is permitted to create sections for those different types of uses or buildings called sections. The strata corporation is the main corporation that continues to operate and will still be required to hold meetings, approve an annual budget, elect a council, enforce bylaws and manage the operations for all strata lots and common property and common assets. Sections are technically additional corporations that operate the same as the strata corporation, with the same duties and obligations, but they deal with the exclusive expenses and operations that apply to that section. For example, the operations of the commercial strata lots may include additional commercial insurance, maintenance exclusive to the commercial areas, and specific additional bylaws or rules that apply on to the commercial units. At the same time, the residential units will have a separate budget that applies to the costs that are solely for the residential units and their allocated and designated areas. Because every building is different, the types of costs that may be exclusive will vary. Even if a strata corporation has created sections, there are still many common costs and liabilities such as insurance, or building envelope maintenance, or parking garage access and waste disposal. As a result, the strata corporation is required to operate as both a single corporation and independent sections, so there would technically be 3 separate corporations operating under the same umbrella. It requires 3 separate strata councils or executives, 3 separate budgets, separate bank accounts, and separate annual meetings. The Strata Property Act and Regulations set out specific terms to create sections. Sections are created through the approval of a bylaw of the strata corporation and the sections, and when there are separate residential and commercial units, any bylaw amendments must be approved separately by both the residential and commercial strata corporations by a three-quarter vote at an annual or special general meeting. Your strata corporation has never approved or created separate sections, so you do not operate separately, and all common expenses are shared by all strata lots based on the unit entitlement files in the Land Title Registry. Sections bylaws are a time when strata corporations and the intended sections are strongly recommended to consult with a lawyer experienced with the Strata Property Act and the creation and operation of sections as the consequences may be significant.
Tony Gioventu, Executive Director CHOA

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Townhouse and Bare Land Bylaws

Are strata corporations that are townhouses and bare land strata permitted to adopt bylaws that limit rentals or Air BnB? Our townhouse complex in Vernon received a circular from a neighbouring property that advised rental bylaws were not enforceable in a townhouse complex, but we cannot find any legislative changes or notices that verify this issue. We have had a number of tenants in our complex over the years that have all been wonderful residents to a maximum of 10% (5) of our units and we really don’t want to increase the number of tenants as we already struggle with sufficient council members as a self-managed strata. Any updates would be appreciated. Melissa A.

Dear Melissa: Rental bylaws may apply to any residential strata lots in any strata corporation; however, there are several exemptions that are a bit complicated to administer. If your strata corporation was filed in Land Titles before January 1, 2010, and the developer filed a rental disclosure statement exempting strata lots from rentals, only the first purchaser from the developer is automatically exempt from rental bylaws. If your strata corporation was filed after January 1, 2010, and the owner developer filed a rental exemption for strata lots, those strata lots are exempted for the period shown on the rental disclosure. These vary from 10-99 years and apply to every subsequent owner for the period remaining. Every strata corporation is required to have a copy of the rental disclosure statement that is filed with the Superintendent of Real Estate. In addition to these exemptions there are 2 other provisions. Family members defined as the children or parents of the owner or the owner’s spouse is also exempt from rental bylaws, and in the event an owner experiences a hardship, most often medical/financially related, the strata corporation has to reasonably grant an exemption from the bylaws. If properly enforced and reported, most strata corporations with rental bylaws rarely reach their limits in any case. While the owner developer, family and hardship rentals are all exemptions, they are still reported on the total number of rentals on a Form B Information Certificate so an owner or buyer is aware of the potential number of rentals in the building, but they are not included when calculating the total number of permitted rentals. For example, in your strata corporation you have 5 rentals, but also have 3 family rentals, so currently there are 8 units rented under the bylaws and the exemptions, even with a 5-unit limit. I found a copy of the circular that was sent around in Vernon and it has also popped up in Kamloops, Prince George and on Vancouver Island this week. It originates from a condo blog site that is replete with errors and misinformation. The site also indicates that bare land strata corporations are only regulated by the Bare Land Strata Regulations, also incorrect. The Strata Property Act applies to all strata corporations, with additional regulations for bare land strata. I would encourage readers to source information from established associations such as CHOA and the BC Government Housing web site. Most strata corporations across BC do not limit or restrict rentals. Tenants are a crucial part of our communities, and if respected and managed well, ensure our residential communities are fully occupied with stable residents. In many strata corporations, landlords have delegated their authority for their tenants to also support the strata corporation and serve on strata council as building residents. Tenants are subject to the bylaws and rules of a strata corporation and can be fined or subject to an application to the Civil Resolution Tribunal for bylaw enforcement in the same manner as owners. For and (sic) added layer of protection for the strata corporation and other owners and residents, the Act makes owners responsible for any costs associated with tenants that relate to bylaw enforcement or damages, so it is important for strata councils to always copy notice of bylaw enforcement and complaints to owners and landlords as well as tenants. Short term accommodations such as Air BnB create a different thread of problems for strata corporations and are not a rental bylaw. They are controlled or limited through a short-term accommodation business use bylaw as they are not tenancies and regulated or licensed through local governments. Strata corporations are permitted to prohibit short term rental accommodations, unless they are subject to a zoning covenant that is frequently found in resort areas.
Tony Gioventu, Executive Director CHOA

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