Strata Documents and Minutes

Is strata right for me? This is a personal question and each strata is different. When you are buying into a strata you are buying into a community and you should carefully read through the Form B package, the rules, minutes, and bylaws to ensure that who your are matches the “personality” of the community. When in doubt don’t be afraid to call the strata council president.

The Strata Form B is a large stack of documents, should I get a lawyer to review? Most of these documents are strata rule and minute and are not written by lawyers, they are written by your strata council and should be easy to understand. Unfortunately legal review of these minute is not as effective as a your own personal review as it is most important that you (and not your lawyer) feel comfortable with the way the community if being run. This being said, I always encourage my clients to, after reading the minutes, give me a call when any specific items of concern they may wish to discuss.

What are some red flag in the strata Form B package and minutes? Things to watch out for include: discussion of future repairs, reoccurring problems and disputes, and dysfunctional or disinterested councils.

What is a property depreciation report and how can I tell if a strata contingency fund is “fully funded”? Each strata is required to commission a property depreciation report every three years. This report sets out models which detail how the building will require maintenance and upkeep over the next few decades and can assist in foreseeing the likelihood of special assessments. Each depreciation report sets out three funding models and by comparing the current state of the contingency reserve and the monthly CRF contribution to these models you can determine how closely the strata is following the reports recommendations.

Written by Kelowna Real Estate Lawyer Peter Borszcz.

OMREB AGM Presentations 2014

Thank you to Okanagan Mainline Real Estate Board (@OMREBcze) for inviting me to speak at their recent AGM, held in Kelowna on March 13, 2014.

Lecture Notes:

1. Strata Due Diligence and Strata Depreciation Reports for Realtors

2. Westbank First Nations and INAC Residential Sales Contracts

It is our pleasure to assist many local Realtors with hundreds of OMREB area transactions each year. If we can help you, please feel free to call (250-762-5434) or email.

Written by Kelowna Real Estate Lawyer Peter Borszcz

four-points-by-sheraton

 

Strata Depreciation Reports in Kelowna Real Estate.

Under the Strata Property Act, a Contingency Reserve Fund (CRF) is established to pay for extraordinary expenses, but under the Act, the amount in the CRF was established by a formula (which had NO relationship  to the age of the building!) Furthermore, the amount of contribution to the CRF was CAPPED, unless an ¾ vote was obtained to had additional contributions (hard to plan for the future).

There were amendments to the Strata Property Act in 2009 for stratas to commission Strata Depreciation Reports on the policy basis that long term planning and maintenance will prolong the lifecycle of building systems and reduce premature failure.

Now in British Columbia, Strata Corporations (with 5 or more units) are required to commission a Strata Depreciation Report by DEC 13, 2013 or to pass a s.94(3) resolution (with ¾ vote) for an 18 month exemption to this new legislated requirement. Importantly, this does not create a “separate fund” for repairs, but educates the strata council if their current contingency fund is “in line” with expect future costs. Strata Councils are required to update reports every three years

A Strata Depreciation Report includes:

  1.  Physical Inventory of Assets
  2. Evaluation based on on-site Inspection
  3. Repair, Renewal and Maintenance Costs for a 30 year plan
  4. Assumptions
  5. Three Year Cash Flow Models

Reports Are a MANDATORY attachment to the Strata Form B  with Kelowna Home Buyers receive from their Realtor.

This Form B now must also include:

  • The rules of the strata corporation;
  • The current budget of the strata corporation;
  •  Any rental disclosure statement;
  • Current strata depreciation report
  • Parking Stall and Storage Locker information;

When reviewing the Strata Depreciation Report, Kelowna Home Buyers should ask:

  1. Is the Form B complete (containing current Rules, Budget, Rental Disclosure, and Depreciation Report)
  2. Does the Buyer understand the Report?
  3. Has the strata deferred its Report obligations under s.94(3)?
  4. Does the financial forecast in the Report and the strata budget align?
  5. Should anything in the Report be reflected in the Purchase Price when analyzing comparators?

Presentation Slides: Depreciation Reports Presentation (OCT 2013)

Written by Kelowna Real Estate Lawyer Peter Borszcz.

leaky-condos

Can I have a pet in my new home?

“Can I bring my (dogs/cats/lizards/emus) to my new home.” is a phone call I get on a weekly basis by Purchasers who want to ensure the furry, fuzzy, and scaly members of their family are welcome in their new home.

Generally there are three sources of law that can impose limitations on the right of a home owner to have domestic pets at their premises. Owners who want to ensure that their pet is permitted in the new home should check the following:

  1. City of Kelowna Zoning and Local Government Bylaws
  2. Statutory Building Schemes and Restrictive Covenants
  3. Strata Bylaws

Local Government Bylaws

The Regional District of Central Okanagan administers dog control and barking bylaws within most areas of the Central Okanagan (RDCO dog control information here). Dog Control Bylaw No.366 limits to a maximum of only 2 dogs allowed per premises, a special kennel license is required for three or more dogs (note: a dog kennel (3 or more dogs) may also require a business license and property zoning must be sufficient – see City of Kelowna Zoning Information here) .

Statutory Building Schemes and Covenants

Statutory Building Scheme and Covenants are land title charges which limit an owners use of the property. Some of these charges will common place limits on the the pets that can be kept on the property. For example most older residential building scheme (common found in Kelowna properties built in the 1970s and 1980s in Glenrosa and Rutland) state that “no more than 2 domestic dogs or cats and no horses, cattle, swine, sheep, or other livestock can be situated on the property”. It is advisable to discuss these matter with your real estate lawyer who can review your land title with you.

Strata Rules and Bylaws on Pets

Buyers with pets who are considering buying into a strata corporation, should ensure they are intimately familiar with the strata rules and bylaws which may limit a Buyer’s ability to keep a pet. Buyers should review these documents carefully as these documents not usually reviewed by lawyers or Realtor (unless they are specifically engaged to).

If a Strata Corporation is using the standard bylaws (and has not amended them), a strata owner must not keep any pets on a strata lot other than one or more of the following:

  • a reasonable number of fish or other small aquarium animals;
  • a reasonable number of small caged mammals;
  • up to two caged birds;
  • one dog or one cat

Strata Corporations can amend these standard bylaws and can restrict: the number of pets, the type, kind, breed or weight of pets, or require the pet to be registered with the Strata Corporation.  The pets which exist at the time the bylaw is passed may continue to live in that strata unit until the pet’s death (they are grandfathered under the old rules).

Written by Peter Borszcz, a Kelowna Real Estate Lawyer and Kelowna Business Lawyer. 

apartment dogs

Saving Your Client Money in a Real Estate Transaction

This weeks blog post is definitely not legal advice, however growing up in the Real Estate industry for the past 34 years, there are definitely a few ways I have discovered that both Realtors and Lawyers can add value to their clients transaction:

Negotiate from a position of strength – in short, ensure that your client has done everything they can do to help a deal move forward. This includes obvious things like obtaining a pre-approval and limiting subject conditions only to “bare essential items” (like title review, strata docs, home inspection, financing). However, taking this to the next level means having this discussion with your client:

    1. What is the BEST outcome if the deal does NOT go through? And
    2. What is the WORST outcome if the deal does NOT go through?
These two questions very quickly get to the heart of your client’s motivation.

Setting good dates – everyone wants to close at the end of the month, this means that you client is just one of many people needing services from lawyers, movers, strata companies. The best advice here is to remove subject conditions at least 30 days prior to closing, and have closing occur on the “off-weeks” during a month (ie; those weeks that do not contain the 15th or 30th).

    Knowing the Local Area – there are many areas in the Central Okanagan where housing costs will be dramatically different for a number of reasons that are not immediately apparent from the listing, for example:

      1. Are you too far from a fire hydrant/ protection area to obtain cost effective fire insurance (Some parts of the Upper Mission)?
      2. Does the area you are in have such poor water quality which will necessitate you bringing in outside sources (ie; Glenmore – Ellison Irrigation District)?
      3. Does the smaller municipality mean that you property taxes are going to be markedly higher (ie; Lake Country, Peachland)

    Search out Hidden Costs

      1. Get a good home inspection, but then get a follow-up expert inspection if anything substantive arises (ie; roof, foundation, building envelope/ water, electrical, plumbing).
      2. Get to know your strata council – everyone reads strata docs, this is standard. However don’t be afraid to take the extra step of calling the Strata Council President, you’d be surprised what doesn’t make it into the minutes.

    Bare Land Strata

    In a recent ruling of the Real Estate Council a Realtor in Vancouver was suspend for failing to adequately describe to his client that his property was bare land strata. In this issue of the BC Real Estate Law Blog we discuss the nature of Bare Land Strata and what Realtors should be explaining to clients when they market this type of property.
    Bare Land Strata often looks to an uninformed client as if it is free hold property and is defined by the Strata Property Act as a strata plan is shown as horizontal measurements to survey markers (similar to a subdivision plan) and not by reference to walls or floors. Developers have recently favored this style of development as it may allow for variance of  lot sizes (and thereby increased density).
    Unlike a stratified apartment style condominium, the common property elements may not me immediately apparent to the Buyer. Even though a Bare Land Strata subdivision may look like any other normal subdivision, it strata fees, rules, regulations, and strata council like other types of strata property. Note, the fees and the services provided by a bare land strata council will vary greatly between developments.

    Realtors should ensure they obtain all the required information so their clients can make informed decisions to  purchase. By obtaining the Land Title from BC Online to any property, the Realtor will be able to quickly tell whether they are dealing with strata property. The legal description of property will state the the property is a STRATA LOT. The Realtor can then contact the Strata Council to obtain the bylaws, the minutes, the Form B and Form F, which will disclose to the client those services which are provide by the strata council and the strata fees charged to the property. Some examples of bare land strata communities in the Okanagan include Horizon Drive and Canyon Ridge.

    Strata Property Rentals

    The applicability of a bylaw restricting the rental of strata property is an area of law which requires the interpretation the Strata Property Act and the Strata Property Regulations.
    Generally, a strata corporation may impose bylaws which limit the number of rentals which are permitted in the building. The enforceability of those bylaws (assuming they are properly enacted by the strata council) on owners who wish to rent is the subject of this blog entry.

    A. Sometimes Rental Restrictions DO NOT apply to the FIRST BUYER. A owner who has purchased a strata lot from a developer will not be subject to rental restrictions if:
    i) a “FORM J” has been filed which has permitted the developer to rent the strata unit purchased by the owner; and,
    ii) the time period specified in the “FORM J” has not expired.

    A common misconception in the industry is that all “first owners” have an exemption from Rental Restriction Bylaws, this is simply not true. Buyers and Realtors should ensure they obtain a copy of the filed Form J.

    B. Rental Restriction Bylaws do not apply immediately if a unit is currently rented at the time the bylaw is passed. If the previously rented unit is VACANT when the bylaw comes into force then, the application of the bylaw to that unit is delayed for ONE YEAR. If the previously rented unit is OCCUPIED when the bylaw comes into force then, the bylaw applies ONE YEAR AFTER the occupying tenant moves out.

    The key point here is that upon passage of the bylaw, the rental restriction WILL apply to the owner’s rented unit; it is simply a matter of time. This piece of legislation is simply a mechanism to ensure that tenants will not find themselves “on the street”, but it does little to protect the interest of owners. I strongly advise owners, who are facing a proposed bylaw restricting rentals to rally other owners to their cause prior to the meeting on the issue. Once the bylaw is enacted, you may have no choice but to eventually sell your property.