Editorial: Strata councils keeping woefully inadequate records, contingency funds
11 February 2016
Condominium owners and purchasers should be greatly alarmed at news
that so many strata corporations in B.C. are avoiding the task of
securing depreciation reports (Reserve Fund Studies). And, even the
strata councils that do commission the document are not properly
preparing for their buildings’ future maintenance needs.
a conspiracy of silence
The situation reflects a conspiracy of silence, where various parties
involved do not wish to know the truth, or have others know that they
know it. It is as though people are hoping the potential problems
associated with this sector of B.C.’s housing stock will go away.
But, of course, they will not. As things stand, 40 to 50 per cent of
strata councils are choosing not to commission depreciation reports.
Meanwhile, the depreciation reports that have been completed
demonstrate that strata corporations have been setting monthly condo
fees and maintaining contingency funds that are woefully inadequate to
the task of repairing and maintaining their condominium buildings.
The financial gap is astonishing. Appraiser and real estate consultant
Jeremy Bramwell says that among his clients, generally representative
of provincial strata, less than two per cent of condo boards have
reserve funds that are even 35 per cent adequate to address their
buildings’ maintenance requirements.
Monthly condo fees are too low
Monthly condo fees are too low, in part because of housing
affordability pressures. But keeping them low is not the answer. The
owners inevitably will pay one way or the other to maintain their
buildings. Reserve funds that are not up to the job simply translate
into onerous special financial assessments on owners.
The provincial government acted responsibly in 2011 in amending the
Strata Property Act to require the depreciation reports, with a
deadline of December, 2013. But they were wrong to allow a loophole
that permits a strata corporation to avoid commissioning a depreciation
report if three quarters of owners turn thumbs down.
In the interests of transparency, all condominiums should be required
to equip themselves with the documents. Condo purchasers need a level
playing field. It is not fair for some to have the benefit of a report
and others to make their purchase in ignorance of future financial
Even more important, condo owners must begin an important discussion
about the widespread inadequacy of existing contingency funds and what
must be done to remedy this alarming situation.
Condominiums are becoming the housing option of choice for most
Vancouver homebuyers these days. It serves no one’s interest to keep
owners in the dark about their personal financial obligations.