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CONDOMINIUM HOME OWNERS CONTENTS
ASSOCIATION OF BC
The Case Of The Improper P5 Legislative Amendment: p 32
The Condominium Home Owners Association of BC promotes Section Expense Allocation Bulletin 700-012 - Order in
the understanding of strata property living and the interests council No 499
of strata property owners by providing: advisory services,
education, and resource support for its members. Condo Insurance And The P11 Making Sense of P39
Client-Broker Relationship Strata Insurance
MEMBERSHIP IN CHOA
Is It Common Property Or Not? P17
New members are always welcome. All members may access
CHOA’s advisory services, publications, CHOA Journals, Legislative Amendment: Strata Alert: 3/4 Votes may be
resources, seminars and workshops. For more information required to keep Gyms and
on the benefits of membership, contact our head office, Bulletin 700-013 – Ministerial P 25
or go to our website: www.choa.bc.ca pools closed during COVID 19 P41
Order M114
CHOA CONTACT INFO
Legislative Amendment: Depreciation Report P43
Toll-Free: 1.877.353.2462 Bulletin 700-014 – Order in Funding Principles
Website: www.choa.bc.ca Council No 270
Email: [email protected] P 27 Tuesday Lunch & Learn P47
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DISCLAIMER
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that it does not constitute legal or other professional advice.
Although the published material is intended to be accurate neither
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as a result of reliance on this material. Appropriate legal advice
or other expert assistance should be sought from a competent
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CHOA Journal • Fall 2020
ASK OUR CLIENTS JENNIFER NEVILLE ST E P H E N H A M ILTO N ADRIENNE MURRAY
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About how we’ve been solving strata issues for decades.
WE ADVISE ON: Negligent construction
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related issues for clients. Strata fee collections Governance and Human
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OUR RESULTS Enforcement of by-laws
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We are involved in many precedent-setting decisions in strata
property law relating to repairs, significant unfairness, collections,
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4
The Case Of The Improper Section
Expense Allocation
Adrienne M. Murray / Hamilton & Company
For many strata corporations that “T he CRT emphasized that section 195 requires
has formed sections, the allocation the expense to be solely related to the strata
of costs can seem very confusing. lots in a section in order to be shared by only
Many strata corporations believe that the owners in that section.”
when allocating costs between sections,
CHOA Journal • Fall 2020the relative benefit received or percentage could not agree on the allocation of the The CRT emphasized that section 195
of use by the section should be taken elevator repair costs between the two requires the expense to be solely related
into account to adjust that section’s sections. Trinden argued that the repair to the strata lots in a section in order to be
contribution to an expense. The recent costs should be shared equally as they shared by only the owners in that section.
Civil Resolution Tribunal (the “CRT”) had been done in the past. The strata
decision of Trinden Enterprises Ltd. v. corporation argued that the commercial The CRT then considered the meaning
The Owners, Strata Plan NW 24061 has section should pay a higher proportion of the term “solely” and found that where
clarified how costs that may benefit of elevator repair expenses because the other strata lots benefit from the expense,
more than one section must be allocated commercial strata lot had more people the expense cannot be considered to be
associated with the use of the elevator solely related to a section.
In Trinden, the strata development than did the townhouse owners.
consisted of 128 strata lots in three The CRT concluded that the elevator
buildings. The strata corporation was In determining how the cost should was used by both a commercial strata
comprised of three sections, namely an be allocated the CRT considered the lot and ten of the townhouse strata lots,
apartment section, a townhouse section provisions of the Strata Property Act and both the commercial section and
and a commercial section. One building (the “Act”). The CRT noted that, once the townhouse section benefited from
contained apartments and one commercial sections are created, section 195 of the the repair. Because strata lots in two
strata lot and the other two buildings, establishes the allocation of expenses. sections used the elevator and benefited
buildings B and C, contained townhouse Section 195 of the Act provides: from its repair, the elevator costs were
strata lots. The second commercial strata not solely related to the strata lots in
lot was located in building C and was used Subject to section 100 and one of the sections. The CRT held that
as a medical and physiotherapy office. the regulations, expenses the elevator upgrade and repair costs
of the strata corporation must be shared by all strata lot owners
The elevator in building C required repair. that relate solely to the on the basis of the unit entitlement of
Historically, the townhouse section and strata lots in a section are all strata lots. In other words, the CRT
the commercial section had equally shared by the owners of also held that section 195 does not
shared the cost of the elevator repairs. strata lots in the section… allow for more than one section to be
However, in 2019 although both the responsible for the elevator expense.
strata council and Trinden agreed
that the elevator repair cost should be
shared between the townhouse section
and the commercial section, the parties
1 Trinden Enterprises Ltd. v. The Owners, Strata Plan NW 2406, 2020 BCCRT 807
Continued on page 6 5
CHOA Journal • Fall 2020 the elevator expense was not captured Continued from page 5
by the bylaw. The CRT concluded that
The CRT also clarified that, following while the bylaw may apply to other of the Trinden decision, the strata
the decision of Norenger Development common property or common assets, corporations with sections may want
(Canada) Inc. v. Strata Plan NW 32712, it did not apply to the elevator. to review the manner in which costs
a 2018 decision of the British Columbia are allocated to ensure the strata
Supreme Court, notwithstanding that The Trinden case addressed the corporation is in compliance with
the elevator was designated as common common misconceptions in strata section 195 of the Act. •
property, if it only benefitted strata corporations in which sections have
lots in one section, it could be made been created that expenses may be Adrienne M. Murray is a lawyer with
the responsibility of that section to allocated between sections based on Hamilton & Company. For more
repair and maintain. However, because a percentage and that costs may be information please visit their website at:
the elevator in Trinden did not relate allocated to more than one section www.hamiltonco.ca
solely to a particular section, the ability without being allocated to all owners.
to make a section responsible for the Typical expenses that are allocated
repair and maintenance of the elevator, based on these misconceptions are
as permitted by Norenger, did not utility costs, landscaping and, in some
apply. Thus, the repair costs were the cases, certain repair costs. As a result
responsibility of the strata corporation
rather than any particular section.
The CRT further clarified that section 195
of the Act does not allow expenses to
be split based on use between sections
or between the strata corporation and a
section. In other words, an expense is
solely the responsibility of a section or
it is an expense of the strata corporation
and allocated among all owners based
on unit entitlement.
The clarification provided by the CRT
removes much of the confusion
surrounding the allocation of expenses
in a strata corporation that has formed
sections. An expense is either solely
related to a section and thus paid for by
the strata lots in that section, or if it is
not solely related to the strata lots in a
section, the expense is an expense of
the strata cOrporation and allocated to
all owners.
The CRT also considered the strata
corporation’s bylaws which included
a provision requiring a section to
repair and maintain common property
“appurtenant to” the section. The CRT
found that because elevator expenses
do not relate solely to one section,
2 Norenger Development (Canada) Inc. v Strata Plan NW 3271, 2018 BCSC 1690
6
CHOA Journal • Fall 2020
7
CHOA Journal • Fall 2020
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CHOA Journal • Fall 2020
10
Condo Insurance And The Client-Broker
Relationship
Janet Sinclair, CEO / Insurance Council of BC
W hen it comes to condo “B C insurance brokers are regulated
insurance in BC, there’s a lot professionals with a duty to conduct
for strata owners to know. themselves competently and ethically
This article will provide an overview of according to the Insurance Council’s
how insurance is regulated in BC, and Rules and Code of Conduct.”
the client-broker relationship from the
perspective of the Insurance Council
of BC, the provincial regulator for BC’s
insurance intermediaries.
CHOA Journal • Fall 2020 Buying Condo Insurance and products that match those needs. bodies. The Insurance Council of BC
Based on their knowledge of how regulates insurance brokers and
To get a better sense of how insurance insurers assess and cost risk, brokers other intermediaries—our licensees
is sold in BC, it’s important to can also provide advice to clients on include insurance salespersons, agents,
understand the roles and relationships how to mitigate risks to access the best agencies, and independent adjusters.
of those involved. available pricing. The BC Financial Services Authority
(BCFSA) regulates insurers—the
How Insurance Is Sold – Brokers are mainly compensated through insurance companies that offer
The Broker’s Role commissions based on insurance policies insurance products.
The purchase or renewal of insurance sold. Those commissions are usually a
typically involves three parties: the client, percentage based on the annual premium The Client-Broker Relationship
the insurance broker and insurer paid for a policy. Not every broker has
(insurance company). Brokers work access to the same insurance markets and BC insurance brokers are regulated
directly with clients to provide advice products, so it’s important to make sure professionals with a duty to conduct
and access to insurance products, you are aware of your available options. themselves competently and ethically
while insurers offer those insurance according to the Insurance Council’s
products and pay claims. Insurers The Client’s Representative Rules and Code of Conduct. They have an
determine how much risk they are For an individual unit owner’s home obligation to act in the client’s best interest
willing to bear and at what price. insurance or any other kind of personal at all times and must conduct themselves
Brokers, in turn, negotiate with the insurance, an insurance broker works in a trustworthy and honest manner.
insurance companies on behalf of the directly with the client. For strata
client to seek the coverage they are after, corporations, typically it is the strata’s A broker must disclose any conflicts
taking into consideration a number of property manager who acts as the of interest they may have concerning
factors including cost and coverage. client’s representative and deals with the their recommendations to the client and
insurance broker. disclose relevant information so their
As an intermediary in the purchase client can make an informed decision
of insurance, it is a broker’s role to How Insurance Is Regulated In BC about their insurance. This includes
work with clients to assess their needs The insurance industry in BC is regulated how and by whom your broker is being
based on their unique situation, and to at the provincial level by two oversight compensated.
find appropriate insurance solutions
Continued on page 12 11
CHOA Journal • Fall 2020 Continued from page 11
“ Earlier this year, the Insurance Council What you need
increased the notification period from to know:
30 to 60 days in response to current
market conditions.” ● Get the details regarding
about your strata’s
Broker Obligations and Your Timely Notification. Brokers are insurance policy. Contact
Condo Insurance required to provide notification to clients your property manager or
Clients rely on insurance brokers to be 60 days prior to the expiration of their try checking your strata’s
their trusted advisors in meeting their existing insurance if the broker is unable AGM package, as it is usual
insurance needs and, in turn, brokers to renew their insurance at the same practice for insurance policy
have regulatory requirements that they terms and conditions. Should the broker declarations to be included.
must meet. Brokers have an obligation to find that the same insurance renewal
make sure that clients understand the terms are not being offered, or coverage ● Make sure you know what
current insurance marketplace, the process is conditional on the client meeting your options are; not all
required to place coverage, and the types certain conditions, the broker must brokers have access to the
of coverage available. Whether renewing disclose this to the client immediately. same insurance products.
an existing policy or seeking a market Earlier this year, the Insurance Council
for a new client, a broker needs to ensure increased the notification period from 30 ● B rokers must notify
that the client understands current to 60 days in response to current market clients 60 days prior to the
market conditions. conditions. While brokers are subject to expiration of their existing
notification requirements, at this time insurance if they cannot
Duty of Care. A broker must not engage there is no notification requirement for renew their insurance
in any business practices that place the insurers so your broker may be limited in at the same terms and
interests of others ahead of their client. the information they are able to provide conditions.
The client’s interests take priority and must 60 days out.
not be sacrificed to the interests of others. ● U nderstand how
Our Role as a Regulator commission is paid for
Disclosure. Brokers must make full and the purchase/renewal of
fair disclosure of all material facts so As the regulator for brokers and your insurance. Brokers
that their client, or the client’s authorized other insurance intermediaries in the have a requirement to
representative, can make informed province, the Insurance Council of BC disclose whether they
decisions about their insurance. This oversees the conduct of our licensees in receive a commission or
includes the disclosure of: the interest of public protection. We do other remuneration for the
this by ensuring that licensees meet purchase of insurance, and
● T he relationship between the broker the standards for licensing and practice who is paying it. Brokers
and the insurer through qualification, guidance and and property managers
audits; and by disciplining when there is have a requirement to
● The nature and extent of whatever evidence that a licensee has fallen short disclose the payment of
interest, if any, the licensee has in of their obligations under the Insurance referral fees.
the transaction including, but not Council’s Rules, Code of Conduct or the
limited to, whether they will receive Financial Institutions Act. ● I f you have questions
a commission or other remuneration about brokers’ standards
related to the transaction. Currently, We can assist consumers by: of practice and conduct
there is no regulatory requirement you can contact the
that the amount of remuneration or ● Answering questions about broker Insurance Council of BC at
commission be disclosed. conduct and standards, and helping 1-877-688-0321 or practice@
you identify if an interaction or insurancecouncilofbc.com.
● W here a commission or remuneration transaction may involve misconduct;
is payable, the identity of the
company or person paying it.
12 Continued on page 13
CHOA Journal • Fall 2020 ● Investigating concerns that a broker Continued from page 12
or adjuster may have breached 13
our Rules, Code of Conduct, or the
Financial Institutions Act;
● Answering questions and helping you
access resources and information, or
connecting you to other appropriate
regulators.
If the concern is related to a strata’s
property insurance, the best person to
initiate contact with us is the authorized
representative of the strata council such
as the property manager or strata council
president. If the concern is related to an
individual owner’s unit insurance, that
owner should contact us directly.
The Financial Institutions Act limits the
Insurance Council’s regulatory authority
to our own licensees (insurance agents,
salespersons, agencies, and independent
adjusters). While we do not have
authority over insurance companies
and their employees—and as such,
cannot order them to provide coverage,
payment, or restitution—we are able to
work with you to help answer questions,
provide information, or connect you with
other resources. As part of our public
protection role as a regulator, we are
here to provide you with assistance.
Staying Informed
Amidst the backdrop of a challenging
market for strata insurance renewals,
strata owners are having to take on a
more active role in staying informed.
By having an awareness of the roles and
responsibilities of all involved, strata
owners can be all the more prepared to
engage with brokers and regulators to
ensure their needs are being met. •
Have a question about standards of
practice or conduct for insurance brokers?
You can reach the Insurance Council
of BC at 1-877-688-0321 or
[email protected].
CHOA Journal • Fall 2020
14
CHOA Journal • Fall 2020
15
CHOA Journal • Fall 2020
16
Is It Common Property Or Not?
Allyson Baker / Clark Wilson LLP
CHOA Journal • Fall 2020The Winter 2019 issue of the cooling infrastructure, and back to the The BC CRT commenced its analysis
CHOA Journal included an strata lots. The heat pumps cannot heat by noting that the Strata Property Act
article entitled “How do I figure or cool without being connected to the makes a strata corporation responsible
out what is common property in my pipe system. for the repair and maintenance of
strata plan?” (the “2019 Article”) common property but that owners
which discussed the factors to be taken Several years before the BC CRT dispute can, by bylaw, be made responsible for
into account in determining whether arose, the strata corporation adopted the repair and maintenance of limited
something within the boundaries of a a bylaw that stated that owners were common property. It was noted however
strata plan is common property or not. responsible for maintaining, repairing that there was nothing to indicate that
Since that article was published, the and keeping the heat pumps in their the heat pumps had been designated
BC Civil Resolution Tribunal (BC CRT) strata lot in good condition. From time as limited common property. It was
has released two decisions, Lin v. Strata to time, the strata corporation arranged further noted that there was no dispute
Plan LMS 4071 and Bowie v. Strata Plan for voluntary inspections of the heat that the pipes and heating and cooling
VIS 5766, dealing with components pumps by the strata corporation’s infrastructure are common property.
of heating systems located within the mechanical contractor. Owners could The BC CRT then turned to the definition
boundaries of a strata lot which confirm sign up for an inspection in their of “common property” set out in section 1
the importance of understanding how discretion and would be charged for the of the Strata Property Act:
the components within the strata lot cost of the inspection and any arising
interact with those outside of the strata repair work. "common property" means
lot in determining whether the strata
lot-located components are common Some heat pumps began to malfunction (a) that part of the land and
property or not. In both cases, there was or stop working entirely. An attempt to buildings shown on a strata plan
some variation between the heating repair one of the heat pumps resulted in that is not part of a strata lot, and
systems servicing the strata lots a significant water leak that damaged
within the complex, which may have a number of strata lots. Thereafter, the (b) pipes, wires, cables, chutes, ducts
contributed to the disputes arising. strata corporation set up a committee and other facilities for the passage
to investigate the issue, obtaining or provision of water, sewage,
Strata Plan LMS 4071 is a 191 unit information about the heat pump drainage, gas, oil, electricity,
complex, consisting of 17 townhouse system, surveying owners about any telephone, radio, television,
units and 174 apartment units located problems with the heat pumps, and garbage, heating and cooling
within a single tower. The townhouse exploring options for replacement. systems, or other similar services,
units are heated by a steam heat system, Legal opinions were also obtained on if they are located
while the apartment units each have the issue of whether the heat pumps
at least one heat pump located within were common property or not, which (i) within a floor, wall or ceiling
the unit for air filtration, heating and conflicted on the conclusion. Resolutions that forms a boundary
cooling purposes. Each heat pump is in to amend the bylaws failed, as did
turn connected to pipes inside the walls special levy resolutions to undertake (A) b etween a strata lot and
of the tower that function in a closed- repairs. Ultimately, a group of owners another strata lot,
loop system that carries water through sought to have the heat pump repair and
the pipes to common heating and maintenance bylaw declared invalid. (B) b etween a strata lot and
the common property, or
Continued on page 18 17
CHOA Journal • Fall 2020 Continued from page 17
(C) between a strata lot or heat pumps themselves. 34. W hile another heating and
common property and The report states that not cooling system involving
another parcel of land, all heat pumps need to be in heat pumps may function in
cooling or heating mode at a different manner, I find
or the same time, and that the that the evidence supports
system can accommodate the conclusion that
(ii) wholly or partially within a simultaneous heating and the system in this case
strata lot, if they are capable cooling in different strata operates as an integrated
of being and intended to be lots. This suggests that whole, as described in
used in connection with the neighbouring strata lots Fudge. Therefore, as they
enjoyment of another strata would not use or enjoy the are capable of being used
lot or the common property; other’s heat pump. in connection with the
enjoyment of another strata
It was not disputed by the parties that 32. However, a Flow Consulting lot or the CP, the heat pumps
the heat pumps were located within engineer’s February 3, 2020 fall within the definition of
the boundaries of the strata lots. As email message states that CP in the SPA. Accordingly,
such, subparagraph (a) and (b)(i) of the the entire system would under section 72 of the
definition of “common property” were need to be “rebalanced” SPA and bylaw 4.5, the
found to have no application. after individual heat strata bears the repair and
pumps were turned off in maintenance responsibility
The BC CRT then looked at subparagraph order to perform repairs. for the heat pumps.
(b)(ii) and whether the heat pumps were In addition, although the
“capable of being and intended to be engineer stated that a single In finding that the heat pumps formed
used in connection with the enjoyment heat pump could be removed part of the common property, the BC CRT
of the common property”, considering entirely without affecting the distinguished them from heating system
the Taychuk v. Strata Plan LMS 744 and operation of the others, components located within a strata lot in
Fudge v. Strata Plan NW 2636 decisions he also stated that a an earlier decision, Thiel v. Strata Plan
as part of that analysis (see the 2019 minimum of 25% of the heat VIS 6763. In the Thiel case, the strata
Article for a discussion of both cases). pumps must remain on at lot had a fan coil unit connected to a
In these cases, the courts confirmed that any given time so the main building-wide heating system. Despite
pipes located within a strata lot are condenser water pumps the connection, the fan coil unit was
common property when they are capable (which service the entire found to operate independently of the
of being and intended to be used with system) will operate properly. common property and the fan coil units
piping systems located within the in other strata lots.
common property and therefore formed 33. Based on the evidence
part of an integrated system (Taychuk before me I find that, In the Bowie decision, two of the strata
considered water supply lines while although the heat pumps lots in a 22 unit complex were heated and
Fudge involved a waste water discharge provide heating and cooling cooled by an HVAC system consisting
pipe that drained water from a washing only to the individual of a heat pump the was located on a
machine in the strata lot). strata lots, their operation common property roof connected to a
(or non-operation) is not fan coil unit that was located in or next
The evidence reviewed by the BC CRT entirely autonomous, and to the strata lot. The remaining strata
in Lin included information obtained has a degree of impact lots in the complex were heated by an
from the strata corporation’s engineering on the system as a whole. electric heating system contained within
consultant, summarised as follows: This is a different situation each strata lot.
from Thiel, where the
31. T he evidence contains a evidence established Concerned about the repair, maintenance
March 22, 2019 engineering independent operation of and electrical consumption costs
report from Flow Consulting, the FCU from the common associated with the HVAC systems,
and I find that this report hot water system. the strata corporation passed ¾ vote
provides guidance as to resolutions to designate the heat
the function of the heating pump and the fan coil units as limited
and cooling system and the
18 Continued on page 19
Continued from page 18
CHOA Journal • Fall 2020 common property and to amend of the common property a strata corporation will need to
the bylaws to provide that the strata heat pump, whose useful understand (typically by consulting
corporation was not responsible for operation is similarly with its consultants, contractors or the
the repair and maintenance of these dependent on the fan coil. applicable manufacturers materials)
components. The ¾ vote resolutions So, I find that the unit 101 how the applicable system works and
also provided for the expenditure of fan coil is also common whether the components within the
funds from the contingency reserve property, regardless of strata lot form part of an integrated
to pay for the installation of meters to whether it is located within heating system. •
measure the electrical consumption of unit 101. I find that both
the HVAC system components so that HVAC systems are entirely Allyson Baker is a lawyer with
the two strata lots could be billed in common property. Clark Wilson LLP. For more information
connection with that consumption. please visit their website at:
36. F urther, I find that the strata www.cwilson.com
The owners of the two units commenced remains responsible for
a claim against the strata corporation the HVAC systems, for the CHOA
at the BC CRT seeking an order that following reasons. eUpdate
the resolutions were improperly passed.
The BC CRT ultimately found in favour 37. S PA section 72 says that the Sign up and receive
of the owners, finding that the limited strata must repair and e-mail notifications.
common property designations were not maintain common property
properly filed in the land title office in and common assets, except The CHOA eUpdate
several respects: for LCP that a bylaw makes offers alerts, tips
an owner responsible for, and quick notes of
● The full resolution was not filed and non-LCP common interest including
with the land title office property if identified in the CHOA seminar
strata property regulations. and webinar
● T he sketch plan filed with the The HVAC systems are non- announcements,
land title office did not show LCP common property, and
the area of the fan coil unit that the regulations presently legislative changes
was to be designated as limited identify no non-LCP common and news affecting
common property property that a bylaw can strata corporations.
make an owner responsible
● What was filed in the land title for. So, I find that the strata To subscribe visit:
office varied from what was must repair and maintain the www.choa.bc.ca/
approved by the owners — in 2 non-LCP common property
particular, the changes purported HVAC systems. eupdate
to exclude the fan coil unit from
the designation As the strata corporation had not yet
started billing the owners for electrical
With the limited common property consumption associated with the HVAC
designations inoperative, the BC CRT system components, the BC CRT found
found that the heat pump and fan coil that the owners’ complaint in that regard
units formed an integrated system and was premature so no order was made in
both components had to be presented that regard.
for the HVAC system to function:
Whether the components of heating
35. G iven Fudge and Lin, I find systems located within a strata lot
that the unit 101 heat pump form part of the common property will
and fan coil are an depend on how the heating system
“integrated whole”, operates. As a result, where a dispute
where the heat pump arise over responsibility for the repair
is common property. I and maintenance of such components,
find the fan coil cannot
operate independently
19
CHOA Journal • Fall 2020
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CHOA Journal • Fall 2020
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CHOA Journal • Fall 2020
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CHOA Journal • Fall 2020 Condominium Home Owners Association of British Columbia
Leadership, Education and Resources for Strata Owners across BC
Website: www.choa.bc.ca / Toll‐free: 1.877.353.2462
Bulletin 700‐013 (April 15, 2020)
PROVINCE OF BRITISH COLUMBIA
Minister of Public Safety and Solicitor General
Emergency Program Act,
Ministerial Order No. M114
WHEREAS a declaration of a state of emergency throughout the whole of the Province of British Columbia
was declared on March 18, 2020 because of the COVID-19 pandemic;
AND WHEREAS strata corporations must be able to conduct their business in accordance with public health
advisories to reduce the threat of COVID-19 to the health and safety of persons;
AND WHEREAS section 10 (1) of the Emergency Program Act provides that I may do all acts and implement
all procedures that I consider necessary to prevent, respond to or alleviate the effects of any emergency or
disaster;
I, Mike Farnworth, Minister of Public Safety and Solicitor General, order that the attached Electronic
Attendance at Strata Property Meetings (COVID-19) Order is made
This publication contains general information only and is not intended as legal advice. Use of this publication is at your own risk. CHOA, the author and
related entities will not be liable to you or any other person for any loss or damage arising from, connected with or relating to the use of this publication
or any information contained herein by you or any other person. This publication and any attachments are intended only for the addressee. The contents
of this publication may not be reproduced, blogged, forwarded or distributed in any fashion without the explicit prior consent of the writer
Continued on page 26 25
CHOA Journal • Fall 2020 Continued from page 25
Bulletin 700‐013
Page 2 of 2
ELECTRONIC ATTENDANCE AT STRATA PROPERTY MEETINGS
(COVID-19) ORDER
Application
1 This order applies during the period that starts on the date this order is made and ends on the date on
which the last extension of the declaration of a state of emergency made March 18, 2020 under section 9
(1) of the Emergency Program Act expires or is cancelled.
Electronic attendance at strata property meetings
2 (1) In this section,
“strata property enactment” means
(a) the Strata Property Act, or
(b) any regulation made under the Strata Property Act, including, without limitation, a bylaw of
a strata corporation;
“strata property meeting” means a meeting authorized or otherwise provided for under a strata
property enactment, including, without limitation, an annual or special general meeting.
(2) Despite anything in a strata property enactment, a strata corporation may provide for attendance, or
voting in person or by proxy, at a strata property meeting by telephone or any other electronic method, if
the method permits all persons participating in the meeting to communicate with each other during the
meeting.
(3) A person who participates in, or attends or votes at, a strata property meeting in a manner
contemplated by subsection (2) is deemed, for the purposes of the strata property enactment referred to
in the definition of “strata property meeting”, to be present in person at the meeting
page 2 of 2
26
Condominium Home Owners Association of British Columbia
Leadership, Education and Resources for Strata Owners across BC
Website: www.choa.bc.ca / Toll‐free: 1.877.353.2462
Bulletin 700‐014 (May 29, 2020)
PROVINCE OF BRITISH COLUMBIA
ORDER OF THE LIEUTENANT GOVERNOR IN COUNCIL
Order in Council No. 270 , Approved and Ordered May 29, 2020
Executive Council Chambers, Victoria
On the recommendation of the undersigned, the Lieutenant Governor, by and with the advice and consent of the
Executive Council, orders that the Strata Property Regulation, B.C. Reg. 43/2000, is amended as set out in the
attached Schedule
CHOA Journal • Fall 2020 This publication contains general information only and is not intended as legal advice. Use of this publication is at your own risk. CHOA, the author and
related entities will not be liable to you or any other person for any loss or damage arising from, connected with or relating to the use of this publication
or any information contained herein by you or any other person. This publication and any attachments are intended only for the addressee. The contents
of this publication may not be reproduced, blogged, forwarded or distributed in any fashion without the explicit prior consent of the writer
Continued on page 28 27
CHOA Journal • Fall 2020 Continued from page 27
Bulletin 700‐014
Page 2 of 2
SCHEDULE
1 The Strata Property Regulation, B.C. Reg. 43/2000, is amended by adding the following section:
Definition for section 98 of the Act
6.13 For the purposes of section 98 of the Act, “prevent significant loss” includes, without limitation,
the obtaining and maintaining by the strata corporation of insurance that is required under section 149 or
150 of the Act or the strata corporation’s bylaws.
2 The following section is added:
General meetings during state of emergency
17.23 (1) In this section, “declaration of a state of emergency” and “declaration of a state
of local emergency” have the same meaning as in section 1 (1) of the Emergency
Program Act.
(2) If a declaration of a state of emergency or a declaration of a state of local
emergency is in effect where the land in a strata plan is located and at any time during the
period of one month that ends on the last day on which a general meeting of the
strata corporation must be held under any of the following provisions of the Act, the
meeting may be held up to 2 months after the last day on which the meeting must be held
under the provision:
(a) section 16 (1) [first annual general meeting to be held by owner developer];
(b) section 40 (2) [annual general meeting];
(c) section 43 (3) [special general meeting called by voters];
(d) section 43 (3.1) [special general meeting to consider winding-up resolution];
(e) section 51 (6) [special general meeting to reconsider resolution passed by 3/4
vote];
(f) section 159 (1) [general meeting to decide not to repair or replace damaged
property];
(g) section 230 [annual general meeting after deposit of subsequent phase].
page 2 of 2
28
CHOA Journal • Fall 2020 Condominium Home Owners Association of British Columbia
Leadership, Education and Resources for Strata Owners across BC
Website: www.choa.bc.ca / Toll‐free: 1.877.353.2462
Bulletin 700‐011 (August 14, 2020)
BILL 14–2020 MUNICIPAL AFFAIRS AND HOUSING STATUTES AMENDMENT ACT (No. 2), 2020
Note: the legislative changes that were enacted under this amendment, that are currently in effect, are underlined and
indicated in bold below.
STRATA PROPERTY ACT
Unapproved expenditures
98 (1) If a proposed expenditure has not been put forward for approval in the budget or at an annual or special
general meeting, the strata corporation may only make the expenditure in accordance with this section.
(2) Subject to subsection (3), the expenditure may be made out of the operating fund if the expenditure, together
with all other unapproved expenditures, whether of the same type or not, that were made under this subsection in
the same fiscal year, is
(a) less than the amount set out in the bylaws, or
(b) if the bylaws are silent as to the amount, less than $2 000 or 5% of the total contribution to the operating
fund for the current year, whichever is less.
(3) The expenditure may be made out of the operating fund or contingency reserve fund if there are reasonable
grounds to believe that an immediate expenditure is necessary to ensure safety or prevent significant loss or
damage, whether physical or otherwise.
(3.1) For the purposes of subsection (3), the prevention of significant loss includes, without limitation, the
obtaining and maintaining by the strata corporation of insurance that is required under section 149 or 150 or the
strata corporation's bylaws.
(4) A bylaw setting out an amount for the purposes of subsection (2) (a) may set out further conditions for, or
limitations on, any expenditures under that provision.
(5) Any expenditure under subsection (3) must not exceed the minimum amount needed to ensure safety or
prevent significant loss or damage.
(6) The strata corporation must inform owners as soon as feasible about any expenditure made under subsection
(3).
Property insurance required for strata corporation
149 (1) The strata corporation must obtain and maintain property insurance on
(a) common property,
(b) common assets,
(c) buildings shown on the strata plan, and
(d) fixtures built or installed on a strata lot, if the fixtures are built or installed by the owner developer as
part of the original construction on the strata lot.
(2) For the purposes of subsection (1) (d) and section 152 (b), "fixtures" has the meaning set out in the regulations.
(3) Subsection (1) (d) does not apply to a bare land strata plan.
(4) The property insurance must
(a) be on the basis of full replacement value except in prescribed circumstances, if any, and
(b) insure against major perils, as set out in the regulations, and any other perils specified in the bylaws.
This publication contains general information only and is not intended as legal advice. Use of this publication is at your own risk. CHOA, the author and
related entities will not be liable to you or any other person for any loss or damage arising from, connected with or relating to the use of this publication
or any information contained herein by you or any other person. This publication and any attachments are intended only for the addressee. The contents
of this publication may not be reproduced, blogged, forwarded or distributed in any fashion without the explicit prior consent of the writer
Continued on page 30 29
CHOA Journal • Fall 2020 Continued from page 29
Bulletin 700‐011
Page 2 of 3
Review and report on insurance
154 The strata corporation must
(a) review annually the adequacy of the strata corporation's insurance,
(b) report on the insurance coverage at each annual general meeting, and
(c) inform owners and tenants as soon as feasible of any material change in the strata corporation's
insurance coverage, including any increase in an insurance deductible.
Power to make regulations
292 (1) The Lieutenant Governor in Council may make regulations as authorized by section 41 of the Interpretation
Act.
…
(3) Without limiting subsection (1), the Lieutenant Governor in Council may make regulations as follows:
(a) defining strata plans to be bare land strata plans;
(a.1) defining "qualified person" for the purposes of section 94 (1) or 103 (6);
(a.2) prescribing a period for the purposes of section 94 (2) (b) or (c) or (3) (a) or 103 (5) (a);
(a.3) prescribing classes of strata corporations for the purposes of section 94 (3) (b) or 103 (5) (b);
(a.4) prescribing information for the purposes of section 94 (4);
(a.5) prescribing standards for the purposes of section 103 (5);
(b) defining "family" and "family member" for the purposes of section 142;
(c) defining "fixtures" and "major perils" for the purposes of section 149;
(c.1) prescribing circumstances for the purposes of section 149 (4) (a);
(d) defining "public authority" for the purposes of the definition of "leasehold landlord" in section 199;
(e) defining "habitable area" for the purposes of section 246 (4);
(f) defining any word or expression used but not defined in this Act;
(g) respecting the conduct of hearings by arbitrators;
(h) respecting the determination of the amount of the annual contribution to the contingency reserve fund
under section 93;
(i) respecting the circumstances in which a strata corporation may lend money in the contingency reserve fund
to the operating fund;
(j) respecting all matters that by this Act are required or permitted to be prescribed.
(3.01) A regulation made under subsection (3) (c.1) may be made retroactive to the date on which this subsection
comes into force or a later date, and if made retroactive is deemed to have come into force on the specified date.
Bill 14 also amended the Financial Institutions Act as follows:
FINANCIAL INSTITUTIONS ACT
Payment of commission to unlicensed agents prohibited
178 (1) An insurer, officer, agent or employee of an insurer, insurance agent or insurance salesperson must not
pay or allow to be paid, or offer or promise, a commission or compensation to a person who is not an insurance
agent licensee or insurance salesperson licensee
(a) for acting as an insurance agent or insurance salesperson in British Columbia,
(b) for referring business in relation to the insurance of a strata corporation within the meaning of the Strata
Property Act, or
(c) for any other prescribed purposes.
…
30 Continued on page 31
CHOA Journal • Fall 2020 Continued from page 30
Bulletin 700‐011
Page 3 of 3
Council may suspend, cancel or restrict licences and impose fines
231 (1) If, after due investigation, the council determines that the licensee or former licensee or any officer,
director, employee, controlling shareholder, partner or nominee of the licensee or former licensee
(a) no longer meets a licensing requirement established by a rule made by the council or did not meet that
requirement at the time the licence was issued, or at a later time,
(b) has breached or is in breach of a term, condition or restriction of the licence of the licensee,
(c) has made a material misstatement in the application for the licence of the licensee or in reply to an
inquiry addressed under this Act to the licensee,
(d) has refused or neglected to make a prompt reply to an inquiry addressed to the licensee under this Act,
(e) has contravened section 79, 94, 177 or 178 (1), or
(e.1) has contravened a prescribed provision of the regulations,
then the council by order may do one or more of the following:
(f) reprimand the licensee or former licensee;
(g) suspend or cancel the licence of the licensee;
(h) attach conditions to the licence of the licensee or amend any conditions attached to the licence;
(i) in appropriate circumstances, amend the licence of the licensee by deleting the name of a nominee;
(j) require the licensee or former licensee to cease any specified activity related to the conduct of insurance
business or to carry out any specified activity related to the conduct of insurance business;
(k) in respect of conduct described in paragraph (a), (b), (c), (d), (e) or (e.1), fine the licensee or former
licensee an amount
(i) not more than $50 000 in the case of a corporation or a partnership, or
(ii) not more than $25 000 in the case of an individual.
…
Regulations
289 (1) The Lieutenant Governor in Council may make regulations
…
(u.01) respecting disclosure by insurers and their agents to an insurance policy holder of the insurer's intention
not to renew the policy, including the time at which the disclosure must be made,
…
31
CHOA Journal • Fall 2020
Condominium Home Owners Association of British Columbia
Leadership, Education and Resources for Strata Owners across BC
Website: www.choa.bc.ca / Toll‐free: 1.877.353.2462
Bulletin 700‐012 (September 4, 2020)
PROVINCE OF BRITISH COLUMBIA ORDER OF THE
LIEUTENANT GOVERNOR IN COUNCIL
Order in Council No. 499 , Approved and Ordered September 4, 2020
Executive Council Chambers, Victoria
On the recommendation of the undersigned, the Lieutenant Governor, by and with the advice and consent of
the Executive Council, orders that
(a) sections 14 and 15 of the Municipal Affairs and Housing Statutes Amendment Act (No. 2), 2020,
S.B.C. 2020, c. 16, are brought into force, and
(b) effective November 1, 2020,
(i) the Marketing of Financial Products Regulation, B.C. Reg. 573/2004, is amended as set out in
the attached Appendix 1,
(ii) the Administrative Penalties Regulation, B.C. Reg. 22/2013, is amended as set out in the
attached Appendix 2,
(iii) the Contravention of Prescribed Provisions Regulation, B.C. Reg. 566/2004, is amended as
set out in the attached Appendix 3, and
(iv) the Prescribed Offences Regulation, B.C. Reg. 576/2004, is amended as set out in the
attached
This publication contains general information only and is not intended as legal advice. Use of this publication is at your own risk. CHOA, the author and
related entities will not be liable to you or any other person for any loss or damage arising from, connected with or relating to the use of this publication
or any information contained herein by you or any other person. This publication and any attachments are intended only for the addressee. The contents
of this publication may not be reproduced, blogged, forwarded or distributed in any fashion without the explicit prior consent of the writer
32 Continued on page 33
Continued from page 32
Bulletin 700‐012
Page 2 of 4
APPENDIX 1
1 The title of the Marketing of Financial Products Regulation, B.C. Reg. 573/2004, is repealed and the
following substituted:
FINANCIAL PRODUCTS DISCLOSURE REGULATION.
2 Section 1 is amended by adding the following definitions:
"insurance company" includes
(a) an extraprovincial insurance corporation, and
(b) a mutual fire insurance company as defined in section 188 of the Act;
"strata corporation" has the same meaning as in the Strata Property Act;
"strata insurance contract" means a contract of insurance with a strata corporation in respect of
a matter referred to in section 149 or 150 of the Strata Property Act.
3 Section 3 (1) is amended by striking out "and" at the end of paragraph (b ), by adding
"and" at the end of paragraph ( c) and by adding the following paragraph:
(d) in the case of a strata insurance contract in respect of which a commission or compensation is
to be paid,
(i) if the amount of the commission or compensation is known, the amount of the
commission or compensation, and
(ii) in any other case,
(A) the method by which the commission or compensation is to be determined,
and
(B) a reasonable estimate of the commission or compensation.
4 The following sections are added:
CHOA Journal • Fall 2020 Disclosure to strata corporation of
material change in strata insurance contract
33
3.1 (I) Subsection (2) applies to an insurance agent through whom a strata insurance contract was placed
if, not less than 45 days before the expiry of the strata insurance contract, the insurance company
provides the following information, as applicable, to the insurance agent:
(a) the insurance company's intention to not renew the strata insurance contract;
(b) the insurance company's intention to propose to renew the strata insurance contract on
different terms and conditions and,
(i) subject subparagraph
(ii), the proposed new terms and conditions, and (ii) if a proposed new term or condition
has not been finalized, the reason the term or condition has not been finalized and an
estimate of when the term or condition will be finalized and disclosed to the strata
corporation.
page 2 of 4
Continued on page 34
CHOA Journal • Fall 2020 Continued from page 33
Bulletin 700‐012
Page 3 of 4
(2) Subject to subsection (3), an insurance agent to whom this subsection applies must, not less than 30
days before the expiry of the strata insurance contract, disclose the information described subsection
(1) (a) or (b), as applicable, to the strata corporation in accordance with section 3.3.
(3) Subsection (2) does not apply to an insurance agent in respect of information described in subsection
(1) ( a) if the insurance agent, not less than 30 days before the expiry of the strata insurance contract,
places with another insurance company a replacement strata insurance contract containing
substantially similar terms and conditions as the expiring strata insurance contract.
(4) Subsection (5) applies to an insurance company if
(a) 30 days before the expiry of a strata insurance contract, either of the following apply:
(i) the insurance company intends to not renew the strata insurance contract;
(ii) the insurance company intends to propose to renew the strata insurance contract on
terms and conditions that are materially different than the existing terms and conditions,
including any increase in an insurance premium or deductible, and
(b) the insurance company did not, within the period described in subsection (1), provide the
information described in subsection (1) (a) or (b ), as applicable, to the insurance agent through
whom the strata insurance contract was placed.
(5) Without limiting section 3, an insurance company to whom this subsection applies must, not less
than 30 days before the expiry of the strata insurance contract, disclose the information described in
subsection (1) (a) or (b), as applicable, to the strata corporation in accordance with section 3.3.
Disclosure of commission if
material change in strata insurance contract
3.2 (1) This section applies to an insurance agent through whom a strata insurance contract was
placed if
(a) the insurance company, within the period described in section 3.1 (1), provides the
information described in section 3 .1 ( 1) (b) to the insurance agent, and
(b) a commission or compensation is to be paid by the insurance company to the
insurance agent.
(2) Without limiting section 3 (1) (d), an insurance agent to whom this section applies must, not
less than 30 days before the expiry of the strata insurance contract, disclose the following
information to the strata corporation in accordance with section 3.3:
(a) if the amount of the commission or compensation is known, the amount of the
commission or compensation;
(b) in any other case,
page 3 of 4
34 Continued on page 35
Continued from page 34
Bulletin 700‐012
Page 4 of 4
(i) the method by which the commission or compensation is to be determined, and
(ii) a reasonable estimate of the commission or compensation.
Method of disclosure to strata
corporation under section 3.1 or 3.2
3.3 Despite any provision of the Act, if information must be disclosed to a strata corporation under
section 3.1 or 3.2 of this regulation, a document containing the information must be given to the strata
corporation in accordance with section 63 or 64 of the Strata Property Act.
APPENDIX 2
1 The Schedule to the Administrative Penalties Regulation, B. C. Reg. 22/2013, is amended
(a) in items 120, 121 and 122 in Column 2 by striking out "Marketing of Financial Products
Regulation" and substituting "Financial Products Disclosure Regulation", and
(b) by adding the following item as indicated:
Column 1 Column 2 Column 3
Item Prescribed provision of Act or regulation Monetary Penalty
Corporation Individual
121.1 Section 3.1 (5) of the Financial Products $50 000
Disclosure Regulation, B.C. Reg. 573/2004
CHOA Journal • Fall 2020 APPENDIX 3
1 Section 2 of the Contravention of Prescribed Provisions Regulation, B.C.
Reg. 566/2004, is amended by striking out "and 4 of the Marketing of Financial Products
Regulation" and substituting ", 3.1, 3.2 and 4 of the Financial Products Disclosure
Regulation".
APPENDIX 4
1 Section 2 of the Prescribed Offences Regulation, B.C. Reg. 576/2004, is repealed and
the following substituted:
Prescribed offences
2 For the purposes of sections 252 (2) (b.l) and 253 (2) of the Act, sections 2, 3, 3.1, 3.2
and 4 of the Financial Products Disclosure Regulation are prescribed provisions of the
regulations.
page 4 of 4
35 35
CHOA Journal • Fall 2020
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CHOA Journal • Fall 2020
37
CHOA Journal • Fall 2020
38
Making Sense Of Strata Insurance
Insurance Brokers Association of B.C.
CHOA Journal • Fall 2020Strata property ownership is often ● Owner’s unit policy – All unit owners The long-term viability of strata
marketed as offering “carefree should have their own coverage. properties depends on all residents
living.” In fact, the shared ownership Learn more about what the unit policy being proactive in managing their units
of strata properties brings an added layer of (usually referred to as a condo policy) and their buildings. Insurance plays an
complexity that requires an understanding typically covers. Show your insurance important role in the health of strata
of the laws that govern how owners must broker the building insurance properties and communities because it
work together to manage their property. summary so that your unit coverage makes it possible for owners to be made
can be tailored accordingly and financially whole again after a loss.
The insurance coverage needed for the ensure there are no gaps between the
building (common areas) and individually two policies. Landlords who rent their Strata properties come in an almost
owned units is an example of this units to others and their tenants both infinite variety of shapes, sizes and
complexity. Why are separate insurance need specific insurance policies. complexities. Consequently, there isn’t
policies needed? How do strata owners a one-size-fits-all insurance policy for
ensure they have coverage that seamlessly ● M anaging the building – Insurance a strata property. Strata Insurance
protects their belongings within their costs are a major component of a can help strata owners get a better
units and their equity in the building? strata’s operating budget. Insurance understanding of the various types of
How can owners prevent the losses that appraisals and depreciation reports are insurance involved and how they work
have the potential to drive building two resources to ensure a building’s together. For information regarding
insurance premiums up – or worse, make coverage is adequate. This section their specific needs, owners and strata
the building difficult to insure? also covers other insurance options to councils should always obtain the advice
consider such as errors and omissions of a licensed insurance broker. •
These and other questions are answered insurance and new home warranties.
in Strata Insurance: What you need to To download a copy of the Strata Insurance
know to protect your strata property ● Big risks – Both the building policy guide visit http://ibabc.org/pdf_files/
investment, a guide created by the and the unit policy can provide IBABC-Strata-Handbook-2020.pdf
Insurance Brokers Association of coverage for major perils such as
B.C. to educate strata owners in the earthquakes and water damage.
complexities of insurance for strata
properties and to assist them in making ● S trata insurance rate increases
informed insurance decisions. – Currently strata corporations are
seeing increases in premiums and
The guide includes information on: deductibles for their strata insurance.
Learn more about the factors
● S trata building policy – The strata contributing to these increases and
corporation’s common property is what buildings can do to limit their
insured with a commercial general risks and reduce their insurance costs.
liability policy. Learn more about
what the building’s policy typically ● Making a claim – What to do in the
covers and how it can be tailored for case of a loss in a unit or the common
the many strata property variations: property that requires a claim against
apartments and townhouses, duplexes, an insurance policy. This section also
bare land stratas, and stratas with a discusses options for resolving a dispute
mix of residential and retail units. between a unit owner and their insurance
company, an owner and the strata
corporation, or an owner and their broker.
39
CHOA Journal • Fall 2020
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40
Strata Alert: ¾ Votes may be Required
to keep Gyms and Pools Closed During
Covid-19 Pandemic
Alex J. Chang / Lesperance Mendes Lawyers
CHOA Journal • Fall 2020In response to the COVID-19 However, the CRT also ruled As a result of this decision,
pandemic, many strata corporations that several months after the strata corporations
made the responsible choice to close closure, the safety concerns that have not begun
common amenities, such as pools, gyms, could no longer be considered considering how they may
saunas and party rooms. However, in “immediate” to meet the safely reopen common
the recent decision of Brogan v. The requirement of s. 71(b) and facilities should do so or
Owners, Strata Plan 845, 2020 BCCRT therefore, the strata needed pass ¾ votes to keep them
1196, the Civil Resolution Tribunal to comply with s. 71(a) and closed indefinitely
(CRT) ruled that a strata needed to pass pass a ¾ vote if it wanted to
a ¾ vote at a general meeting to keep keep the pool closed. The the return to operation of gyms and
them closed. CRT found that the Vancouver fitness centres. WorkSafeBC protocols
Island Health Authority also apply because a strata’s common
The applicant in Brogan argued that a ¾ provides guidance on how facilities are workplaces for those
vote was required under s. 71 of the Strata pools can be safely reopened that maintain them. As well, pools in
Property Act (the “SPA”) to keep the pool by implementing rules, strata corporations with four or more
in his strata closed. The strata responded policies and procedures to comply with strata lots are subject to the BC’s Pool
that it had closed the pool in March 2020 public health orders and public health Regulation, which remains unchanged.
to ensure safety due to the pandemic. guidelines.
Implementing WorkSafeBC and regional
Strata corporations cannot significantly The CRT ordered the strata to, within health protocols may require significant
change the use or appearance of the 30 days of the decision, to reopen the changes and increased cost to operate
common property unless it meets the pool with appropriate safety measures those facilities safely. If a strata council
conditions of s. 71 (a) or (b) of the SPA. in place or call a general meeting for wants to keep their facilities closed
Section 71(a) says that a strata can the purpose of proposing a ¾ vote because those burdens are too great,
significantly change the use of common resolution to keep it closed. The CRT then it should present information to
property if the change is approved by a also dismissed the owner’s claim to be the owners at a general meeting so they
¾ vote of owners at a general meeting. reimbursed a portion of his strata fees understand the costs and limitations of
Section 71(b) states that a strata can also that went towards maintaining the pool reopening. If there are increased costs to
significantly change the use of common while it was closed, on the basis that reopening, then the strata may also want
property if “there are reasonable the decision to close the pool was not to consider presenting ¾ votes at the
grounds to believe that immediate significantly unfair to the owner. same general meeting to ensure those
change is necessary to ensure safety or costs are funded.•
prevent significant loss or damage.” As a result of this decision, strata
corporations that have not begun Alex J. Chang is an Associate with
The CRT concluded that given the considering how they may safely reopen Lesperance Mendes. For more
public health order, the public health common facilities should do so or pass information please visit their website at:
guidelines relating to COVID-19, and ¾ votes to keep them closed indefinitely. www.lmlaw.ca
how little was known of the COVID-
19 virus in March 2020, the strata had In addition to the regional health
reasonable grounds to believe that authorities’ guidelines, all stratas
immediate pool closure was necessary weighing whether to reopen should
to ensure the safety per s. 71(b). consider WorkSafeBC’s Protocols for
41
CHOA Journal • Fall 2020
42
Depreciation Report Funding Principles
Principles lay the cornerstone of financial planning.
Jeremy Bramwell / Strata Reserve Planning
CHOA Journal • Fall 2020Accountants use GAAP The second principle, a stable When the monthly strata
(Generally Accepted contribution rate, is desirable as it fee contribution rate is
Accounting Principles). is the hallmark of a proactive plan. not stable, it upsets the
Appraisers use CUSPAP (Canadian This means that the rate of annual third principle, which is
Uniform Standards of Professional increases is stable, that is similar all contributions should
Appraisal Practice). Depreciation (i.e.. 5% annually). Contributions be distributed evenly. It
Report providers follow 4 Funding should be supplemented by also upsets the financial
Principles to create alternative scenarios Special Levies when sufficient model of the Benchmark
how the CRF and how related expenses funds are required. Special Analysis, which relies on a
should be funded. levies are simply the making up stable contribution rate.
of deferred contributions in the
Funding Principles past. The contributions were not Contribution rates that increase over
collected, and now need to be time as a percentage, are a violation
1. Suffcient Cash collected all at once to pay for of the Funding Principles as it does
2. Stable Contribution Rate an extraordinary cost. Special not distribute costs evenly and is not
3. Evenly Distributed Levies do not upset the steady fiscally responsible as the higher rate
4. Fiscally Responsible contribution rate principal in of increases in later years of the plan
the Funding Principles as they are are not realistically achievable. Again,
The first principle is to design a temporary in nature. is it believable that the owners in years
funding plan that will provide the 20-30 will pay 11% increases while the
Strata Corporation with sufficient cash When the monthly strata fee owners in years 1-10 pay a contribution
reserves to perform their reserve fund contribution rate is not stable, it increasing at 2% annually?
projects when required. This means that upsets the third principle, which is all
any funding plan must have a mix of contributions should be distributed The third principle is that the reserve
contributions (strata fees), special levies evenly. It also upsets the financial fund contributions are evenly
(special assessments), interest income model of the Benchmark Analysis, which distributed across all the owners over
and proceeds of any strata loan. These relies on a stable contribution rate. the years. This enables each owner
are the only 4 permitted sources of to pay their “fair share” of the strata
Strata Corporation income on a Why should one set of owners in years corporation’s reserve expenditures.
regular basis. 1-10 pay a contribution rate increasing at
7% annually, while the following owners When a Strata Corporation has a
pay at the rate of 3%? The original deficiency in the reserve fund, in theory
owners are paying some of the money
that owners in the later years should
be paying.
1 The Benchmark Analysis shows the physical aspects of the various Depreciation Report components, including the life cycle analysis and the cost estimates. The cost
estimates provide for inflationary cost increases over time and interest income from reserve fund investments. It is required to calculate the Fully Funded model, in order
to calculate Reserve Adequacy, the internationally accepted method of measuring the financial health of a Strata Corporation.
Continued on page 44 43
CHOA Journal • Fall 2020 Continued from page 43
it means the past owners have decided the strata corporation, who in turn Board of Directors has to the Company
to reduce the money that was supposed approve these contributions at the and its shareholders. Safe decisions for
to be contributed to the CRF to reduce annual general meeting as part of the Council members, are decisions that will
strata fees. In reality it usually means budget approvals. This is a majority vote not get them unelected for completing
that the Strata Corporation was not decision. their fiduciary duty.
aware of the level of contributions that
were required for future renewals. When we talk about fiscally responsible In summary, understanding the
funding models, we mean a plan that Funding Principals will lead the Strata
The truth is very few Strata Corporations will not cause financial hardship or Corporation to understanding the
in BC are fully funded. The result is that impact the market value. A cash flow basic financial reasoning Depreciation
it is rare that the contributions will meet that is not fiscally responsible will not Report providers use in preparation of a
the expenditure requirements. That be fair and equitable to owners and may realistic funding plan.•
means when a person buys a strata lot, cause financial hardship to a degree
they are buying with the likely future where the contributions are impossible Jeremy Bramwell is President of Strata
liability of special levies. to achieve. Reserve Planning. For more information
please visit their websie at:
Finally, the financial plan must be Strata Councils have a fiduciary duty to www.stratareserveplanning.com
fiscally responsible and “safe” for the owners to maintain the assets of the
Council members to recommend to Strata Corporation. It is like the duty a
Tuesday Lunch & Learn with CHOA
Periodically CHOA will be bringing together industry experts to discuss
the many issues affecting BC’s strata community. Written and presented to
assist strata councils, strata managers, owners, contractors,
service providers and industry partners these webinars will
be conducted using Zoom webinar and are free to attend.
Each webinar will be announced using our eUpdate subscription
service and registration will open one week prior to the scheduled
date of the webinar. If you don’t already subscribe to our free eUpdate
newsletter, do so today at www.choa.bc.ca/eupdate
THE NEXT: For more
information please
Jan. 19, 2021 Topic: Homeowners & Landlords Insurance visit the CHOA website at:
Sponsor: Power Strata Systems
www.choa.bc.ca/seminars/
Feb. 23, 2021 Topic: Voting Methods & Options for
Electronic Meetings
Sponsor: Cygnus Contracting
44
CHOA Journal • Fall 2020
45
CHOA Journal • Fall 2020
Fischer & Company
Law Corporation
Don’t try to solve a Condominium
puzzle without all of the pieces.
Enforcement of Rights & Bylaw Enforcement
ObligaƟons Property DesignaƟons
Strata LiƟgaƟon and Disputes
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And Much More...
We provide a range of legal services in relaƟon to condominium law
throughout B.C. Contact us to discuss the scope of our services and
whether we can assist with a parƟcular legal issue.
Phone: 250-712-0066 Suite 202 - 1447 Ellis Street
Fax: 250-712-0061 Kelowna, B.C. V1Y 2A3
www.fischerandcompany.ca
46
Tuesday Lunch & Learn With CHOA
Condominium Home Owners Association of BC
Over the summer we hosted 17 FYI, each webinar is announced using webinar. Stay informed. If you don’t
“Tuesday Lunch & Learn with the CHOA eUpdate subscription already subscribe to our free eUpdate
CHOA” webinars, which were service and registration will open one newsletter, do so today at
attended by over 6000 participants week prior to the scheduled date of the www.choa.bc.ca/eupdate ●
clearly demonstrating the overwhelming
success of these webinars. Thank you to Technical Safety BC (TSBC) ● Sign up for the TSBC newsletter:
our many registrants and speakers for subscribe.technicalsafetybc.ca/
signing on and joining us each week. ● H omepage: subscribe
www technicalsafetybc.ca
Building on the success of the “Tuesday ● Questions? Please email:
Lunch & Learn with CHOA” summer ● B44-16 safety code for elevators and [email protected]
webinar series we will continue to host escalators: www.technicalsafetybc.
these webinars once a month in the fall ca/elevating-devices/b44-16- Health Canada
and winter. elevating-safety-code-and-mcp-
requirements ● E quipment recalls:
On Tues. October 6th we held our www.healthycanadians.gc.ca/recall-
first fall “Tuesday Lunch & Learn with ● Carbon Monoxide (CO): alert-rappel-avis/index-eng.php
CHOA” webinar with Technical Safety www.technicalsafetybc.ca/public-
BC; discussing gas fireplace regulations, safety/carbon-monoxide-safety Resources on Carbon
carbon monoxide information and Monoxide Education
elevating device requirements.
● E levating Devices FAQs: ● British Columbia Fire Chiefs’
Throughout the webinar the speakers www.technicalsafetybc.ca/covid-19/ Association: fcabc.ca
referenced several useful resources — elevating-devices-faqs
please see the following list.
CHOA Journal • Fall 2020 ● E quipment recalls: ● Fire Prevention Officers’
If you missed any of our “Tuesday Lunch www.technicalsafetybc.ca/ Association of BC: www.fpoa.bc.ca
& Learn with CHOA” webinars or wish news-events/recalls
to view a presentation again, don’t worry, ● F ortis BC: www.fortisbc.com/safety-
all of the webinars are archived on the ● F ind a Licensed Contractor: outages/natural-gas-safety/carbon-
CHOA website at: www.choa.bc.ca/ www.technicalsafetybc.ca/ monoxide-safety
resources/webinars/ or visit the CHOA find-licensed-contractor
YouTube channel (www.youtube.com – ● Office of the Fire Commissioner:
search CHOA BC). ● L earning Centre: learning. www.gov.bc.ca/FireSafety
technicalsafetybc.ca/#/public-
Written and presented to assist strata dashboard ● Pacific Northern Gas: www.png.ca
councils, strata managers, owners,
contractors, service providers and industry
partners the “Tuesday Lunch & Learn with
CHOA” webinars are conducted using
Zoom webinar and are free to attend.
47
CHOA Journal • Fall 2020
48
CHOA Journal • Fall 2020
49
CHOA Journal • Fall 2020
50
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