When disaster strikes, who keeps paying the bills?
26 July 2017
Our building was recently damaged in a fire that has required everyone
to move out while the fire, water and smoke damage is repaired. We have
been informed that it could be up to a year before we are allowed to
In the duration, all of the owners have to find other accommodation and this is doubling our costs.
Several owners have approached council and requested that strata fees
be suspended until we are permitted to move back into our building.
Can we do this? It would be a substantial savings for the owners if this were possible.
The strata corporation continues to operate and is exposed to all of
its financial obligations and liabilities even though a fire has
essentially shut down occupancy of your building.
The strata council does not have the authority to suspend strata fees and must continue to enforce the bylaws.
Your strata will continue to have service agreements and utilities such
as elevators, waste management, electrical and gas, water and sewer and
HVAC contracts. General operations costs such as insurance, legal
services, management and administration will not only continue to
function but may actually have some increases due to the scope of
Unless the strata corporation convenes a special general meeting and
approves other financial options, likely by 3/4 vote, the approved
budgets and schedule of strata fees will still be due and payable
monthly as set out in your bylaws.
I would recommend legal advice to ensure your resolutions comply with the Act.
Once you reach your current fiscal year end, any surplus that remains
—if there are reductions in operating costs—can be carried over to your
next year as revenue and offset strata fees for the next fiscal
period. That may provide some financial relief to your owners.
It is also critical for your strata council to continue to meet monthly
or more frequently if necessary during the construction and restoration
to maintain direct contact with your insurance broker and insurance
provider on behalf of the owners.
This will enable your council to provide updated information to owners
about scheduling, matters that affect owners and when they can return
to their homes.
A meeting between the council and your insurance broker is extremely
valuable and will give your council the ability to find out if there
are any exemptions or exclusions in the policy that may require
additional funding or decision making.
The strata corporation is not responsible for the living-out costs of
owners. While some strata corporation policies may cover living-out
expenses for owners for a limited period of time, each owner is
responsible to insure for their personal liability, living-out
allowances, personal property and betterments to their strata lots.
It is beneficial during claims and construction that all communication
be documented. Don’t rely on verbal conversations as they often result