Condo Smarts: Buyer beware of small strata that operates casually

Dear Tony:

We are looking at a townhouse unit in a five-plex. They insist they are not required to comply with the strata act when all five units agree to operate casually. Everyone pays the same fee and equally shares the cost of maintenance as it comes up. Problem is, there are no records, financials, maintenance records or insurance documents. Is this acceptable for small strata corporations?

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— Margaret C., Nanaimo

Dear Margaret:

We often see real estate listings that describe a small strata as nonconforming. There is no such category. Seriously, buyer beware. There are some exemptions that apply to strata corporations of two to four units, such as depreciation reports and electric planning reports, but in every other category, all strata corporations must comply with the Strata Property Act, the Regulations and the Schedule of Standard Bylaws or their own bylaw amendments.

The basic compliance with legislation is not complicated and will ensure items such as insurance for the corporation, the common property, their assets and liability are properly placed, strata fees are calculated properly, there is a minimum 10 per cent contribution to the contingency fund, a council is elected, annual financial reports are completed, and they commission a depreciation report and electric planning report.

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The real risk for the five-plex will arise when real estate transaction forms are completed. They have no information to provide, no attachments, no council elected to authorize forms, and no financial reporting. While they may have operated casually, there is always a looming dispute on the horizon when a repair is neglected, basic unfairness, or financial argument that will end up with legal costs and a likely tribunal adjudication. If the strata corporation is less than 10 years old, warranties apply under the Homeowner Protection Act. Without an elected council who is representing the corporation to identify or address claims? How are bylaws being enforced when there are disputes?

To confirm, I reviewed the registered strata plan for the property you identified. All five units pay different share of strata fees. Unit entitlement is created when a strata plan is filed. This is generally based on the size of each strata lot, or may have been filed with a simple formula of equal share. The difference in this strata is substantial. One unit is only 1,255 sq. ft in area where the largest is 1,670 sq. ft in area. That largest unit should be paying almost 25 per cent more than the smallest unit. Hopefully your inquiries will encourage this strata corporation to formalize their actions and comply with the legislation.

Tony Gioventu is executive director of the Condominium Home Owners Association. Email tony@choa.bc.ca.