Editorial: Strata councils keeping woefully inadequate records, contingency funds
Vancouver Sun
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 implications.

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.

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