The Provisional Differences in Small and Large Strata Schemes

A strata scheme is usually a single building, or a selection of buildings in which the owners have small portions called lots. These schemes can be small communities. As such, the actions and approach of some people of the scheme can have a direct impact on the lifestyle of others in the same community. This is why in strata schemes the most important part for the people is to remain conscious about their responsibilities along with the rules and regulations of the scheme. Most corporations that own strata schemes usually hire property management companies or professional managers to look after their strata.

Generally, there are two types of provisions in strata schemes: small and large. Both of these provisions are discussed in this post in detail.

Small Schemes Provisions

  • Executive Committee, which is usually created by the owner corporation, needs to be formed between the owners. Elections aren’t necessarily required for people in the Executive Committee.
  • A quorum takes place in meetings, but only when all the owners of the lots are present.
  • The buildings in the scheme are kept separated from the other in order to avoid the need for insurance as all owners can mutually decide whether or not insurance is required.
  • Owners are allowed to have their buildings insured individually.
  • Since a common property is missing, owners have the ability to not opt for a sinking fund. As such, none of the buildings in the scheme are placed outside the lots.
  • Auditing of a statements and financial accounts is not required. In any case the owners of the lots wish to have their accounts audited, meeting the auditing standards is unnecessary.

Large Schemes Provisions

  • Auditing of financial accounts is necessary every year. As such, the auditing process needs to be strictly carried out on a yearly basis.
  • An expected amount that is likely to be used on specified things needs to be listed under the annual budgets.
  • The owner corporation of the scheme needs to obtain at least two or more quotations for the items that are likely to cost more than the official amount.
  • The Executive Committee isn’t allowed to spend over 10% of the budget, except of course, in case there are any emergencies.
  • A notice detailing any upcoming Executive Committee Meetings needs to be provided to all of the lot owners. Forwarding the notices through the scheme’s notice board is usually acceptable.

A large scheme which consists of a larger number of lots needs to have all of its proceedings handled in a different manner as compared to a small scheme that consists of only 2 owners. Simply put, the more owners a strata scheme features, the higher the chances of conflict among all of them. As such, strata schemes managing the affairs need to enforce special policies and terms in order to make sure all issues and underlying conflicts are taken care of effectively.

 

 

Wednesday, May 20 2015

Top 5 Questions to Ask When Joining a Strata Community

Strata schemes are becoming increasingly popular in this side of the world. They are effectively small communities where the activities and attitudes of residents can have a significant impact on the satisfaction and enjoyment of others. Therefore, it is imperative to be aware of your obligations, responsibilities, and rights before you start living in a strata unit.

Here are some of the questions you need to have answers to before you consider joining a strata community:

1. How Do Strata’s Work?

One of the most important questions to ask is how strata communities actually work. While this question is better answered by your realtor, as an overview, this is what you need to know:

  • Common property ownership - If you own a unit in a strata complex, you share certain areas with the other residents. These include the roof, gardens, walkways, fences, elevators, etc. 
  • Strata Corporation - this is the ownership at large - every single owner in the complex. 
  • Strata Council - a group of elected owners who oversee the day to day operations of the building and corporate affairs

2. What do I actually own?

Let’s start by listing the things you don’t own - gardens, pools, parking space, lifts, foyers, stairs, hallways, the outside – these are the things that you share with the other residents. In short, you own the inner space of your unit and little else.

3. The Four R’s -- Rights, Rules, Regulations and Restrictions

In strata communities, there may be heavy-handed and detailed set of bylaws or there may be very few. Either way, it is very important for you to know what they are because these set of rules and rights will directly affect your lifestyle and comfort. You should be well aware of the regulations and restrictions that apply on all the owners within the strata community. 

Restrictions like pets, age, rentals, or any others that may be enforced by a way of written warning or fines, you should know. The best way to do so is to acquire a full copy of the by-aws that are specific to your owner’s corporation so that you understand the rules you will be required to live by. 

4. Who to call?

Educate yourself about the responsibilities and rights when living in a strata title property. What’s more, educate yourself and know what the emergency arrangements are in place or who to contact on your executive committee if something goes wrong in the building. 

5. The Perks and Downsides?

Clearly know and weigh the perks and downsides of strata community living and how it will suit your lifestyle.

  • Are there more restrictions on the way you live or less?
  • What are the chances of security breaches?
  • Less or more control over the money spent on your property (strata fees and special assessments to be kept in mind)?
  • Is strata living more affordable for you?

 These are some of the potential perks and downsides of living in a strata community. 

The answers to these questions determine whether strata community living is for you or not. So don’t jump the gun, take your time, weigh your options, know and be aware of all the possibilities and then come to a decision.

 

 

Thursday, May 14 2015

Sharing is Caring - Stay in Contact with your Neighborhours via a Condo Portal

While there are countless ways through which condo portals can benefit the management, this innovative technology tool can also help users overcome communication barriers and allow residents to interact with each other. 

Here is a look at some of the features of condo portals that allow condo communities to live like a big family:

1. Message Forum

There are a number of features that allow condo residents to communicate with each other. They can communicate via simple messages. Gone are those days when you had to worry about synchronizing all your contacts as with condo portals, you can automatically connect to all the community members. You can also initiate group chat sessions which allow more than two people to communicate to each other. 

2. Share Pictures

Portals not only allow you to send messages, but also allow registered users to exchange media files. You can share pictures and other important documents. As reliable portals provide connection through SSL, so you don’t have to worry about security issues. A condo portal provides residents a customized and centrally administered forum, through which they can stay connected with each other. Despite busy schedules, you can communicate to your neighbors as you only need an internet connection and a portable gadget to enjoy seamless connectivity.

3. Access Information

Another amazing feature of condo portals which allows residents to know about each other is residents’ database. Database contains basic information about every resident of condo community and allows registered users to access this information. As these portals are centrally monitored, so no unauthentic or unregistered user can access this information.

4. Discuss 

Portals provide residents an open and live forum to discuss residential issues with each other. This not only allows them to care for each other but also provides them an opportunity to live comfortably. 

5. Inform Management

While your residents can discuss problems with each other, they can also inform the management personnel about their problems. This allows condo associations to take action in a timely manner.

6. Stay Connected

All you need to access the portal is an active account and a reliable internet connection. You can access your portal via any portable gadget (mobile, laptop etc.). It means that you can stay connected with your community even if you are travelling. Automatic notifications keep you updated about important news regarding your condo. For example, if you are away on vacation, you can still receive important news announcements.

Condominium portals can bring condo communities closer. However, it is important to subscribe to such a portal that provides you secure access through SSL, thus ensuring you complete privacy and data protection.  

 
Tuesday, May 12 2015

Prompt Response To Residents - The Basic Responsibility of the Condo Board

The condo boards that are responsible for managing these multimillion businesses must have prompt responses to condo residents at the heart of their condo management strategies. Essentially, it is the responsibility of the board to service the condo residents in the most effective way possible, and this can only be possible when there is an active two-way communication between both the parties involved, and when the condo board promptly responds to concerns raised by the residents.

At the core, condo boards are just like miniature governments, condo board members are elected by the owners to effectively manage the condos, and deal with all aspects involved in their management. Just as the government has a responsibility to inform, to communicate, and to respond, it is also the basic responsibility of a condo board to promptly respond to the residents.

What Issues Can Arise If The Board Doesn’t Respond Timely?

Residents have to face little challenges related to their condos regularly, and for this, they feel there is a need to consult the condo board, and when the condo board doesn’t respond within a reasonable time period, it can become quite a hassle and result in frustration for the residents. Untimely responses may also lead the residents to develop a negative perception about the board members, which can be an obstacle in the development of a relation of mutual trust and cooperation between the board and the residents. 

How Will Prompt Responses Benefit The Condo Board?

It is the condo board’s responsibility to implement rules, review complaints, resolve problems, impose fines, conduct essential repair and maintenance etc. to ensure that the condos are run smoothly and efficiently, and the residents are satisfied. To perform all their responsibilities, the condo board will have to engage with the residents and maintain prompt to rightfully address the responsibilities that have been assigned to them by the condo owners. 

The Condo Act clearly spells out the responsibilities of the condo board, and it does mandate communication responsibilities on the board. The board members must hence take out the time to respond to all communication that comes their way. They must take the initiative required to solve the problems affecting condo residents that can range from anything such as building damage to reckless residents.

Condo boards can suitably hire third parties or outsource operational duties to professional companies, but that also won’t relieve them of the communication responsibilities, along with that even, they will have to participate and know all about what is happening in the condo community, and play an active role in warranting smooth governance of the condo. 

How can a Condo Board Quickly Respond to Residents

There are several ways by virtue of which the condo board can suitably communicate with the residents. They can either choose to maintain contact through text messages, calls, emails, and an effective communication system.

In addition, the condo board must ensure that important information must be provided to residents on time, and when customers send in their queries, the condo board must deal with them cordially to foster a positive relationship and an affable environment in the condo neighborhood.

 
Wednesday, May 06 2015

Condo Disputes and Unreasonable Neighbours

Living in a condominium most often involves sharing space with others. Different living styles, customs, religions, ethnicity, ages, food, etcetera, all requires a great deal more consideration and accommodation than the privacy afforded by living in a single detached home or acreage.

Issues arise daily between those living in close proximity to others and with those charged with the responsibility of looking after the maintenance, repair and the enforcement of by-laws and rules in condominiums. Most of these issue become disputes due to a false expectation that one can do what one likes in their own home without any consideration of how their living style will affect the comfort of others. Add a lack of understanding, respect and a lack of communication and we have disputes.  

Condo corporations enact by-laws, rules and policies to provide everyone with some guidance in creating a harmonious and enjoyable living environment. Most residents have the great expectation that someone else will enforce these by-laws and rules. Someone else will handle all issues and solve all problems and that no effort is required by individuals themselves. Indeed, the condo Act verifies this expectation by indicating that the board of directors must enforce the bylaws and rules.  Most conveniently set aside, is the responsibility of each and every resident, to abide by the by-laws, rules and policies.  

Lack of accommodation: an example.

Persons on a lower level smoke on the balcony creating an irritant to persons living above. This results in a letter to the board of directors who in turn notify the property manager, who in turns sends a letter to the offending owner. It occurs to no-one that this not a non-smoking building. 

Next, the police are called in as a use of a prohibited substance is suspected. The police of course require proof, which is not available. In retribution, the persons of the lower unit report excessive noise being created by persons in the above unit. 

No investigation is done. However, the people in the upper unit still receive a letter of complaint. Ultimately, the board decides that a mediator be called upon to settle the dispute at the cost of the disputants. The disputants on being contacted by the mediator decline to attend the mediation process and everybody hopes the issues will disappear. 

Is there a better way? Would it have helped, if both parties had been requested to appear at the next board meeting to explain to each other the discomfort being created and to discuss options to resolve the issues? To persuade both to attend, could the notice indicate that a failure to attend might result in a court action and mandatory mediation?

Lack of communication and understanding: an example.

A music student diligently practices playing the piano for two hours each and every day. One neighbour sends a letter of complaint to the board, which sends it to the property manager, who sends a letter to the piano player with an order to stop playing. No contact with other neighbours, no noise measurements, no communication between parties. The piano player offers to meet with the board and the complainant to discuss play time, but the offer is declined. More letters follow with a fine imposed and subsequent threat to caveat.

Is there a better way? Would there be value in a discussion between the two disputants to work out a playing time agreeable to both. Would it make the result binding if the disputants were advised that no resolution would require mediation or court action at their costs? 

Dependent upon the seriousness of the situation, encouraging disputants to meet each other face to face in a controlled atmosphere and be encouraged to resolve their issues themselves, rather than have a third party decide, would seem to be more productive. 

This article has been written by Gerrit Roosenboom.
Gerrit Roosenboom is a 22 year veteran of the Canadian Condominium Institute (CCI) having served on the Board of two condo corporations, the Board of five CCI chapters across Canada and served on the National Executive of CCI. He is Past President of CCI Edmonton and practices mediation and arbitration.

Thursday, April 30 2015

How To Choose The Proper Reserve Fund Study Provider

In order to get the right Reserve Fund Study it is important to understand what you want out of it.  Boards should use the study as a guide for planning. In order to get a study that you as the board can use, it is important to find the right provider.  Products vary from provider to provider. Providers have different funding philosophies as well as financial planning ideas.  Questions you should ask providers when getting a proposal are:

1. Do you incorporate construction inflation?

Some providers do not use construction inflation. What happens with this is that the roof stays the same price now as when it requires replacement in 10 years.  Is this reasonable?  Construction inflation rates can vary and are just best guesses in most cases.  History on the increase of costs over the past years should be used to gauge what construction inflation rates are, however it is hard to determine a construction boom – where supply and demand would cause prices to escalate dramatically.

2. Do you incorporate a contingency and a safety margin?

Contingencies allow for small errors in expected costs.  Some providers use an amount of 2% - 5% of the annual replacement costs for a contingency amount.  Safety margin amounts are useful in a buffer for the replacement of components that are not visible for inspection (underground services). Some providers incorporate funds for unforeseen replacements.  This has you saving for items that may never require replacement. 

3. What are the qualifications of the person doing the study?

There are a few organizations that offer certification to people who perform Reserve Fund Studies.  One such accreditation is the CRP from The Real Estate Institute of Canada.  

Is certification required?  The act states that a qualified person must do the study.  A qualified person is someone who has the knowledge and experience in respect to depreciating property, the operation and maintenance of the property, and cost associated with replacement of the common property.  The Act does not say that you must have an engineering company perform the study or be certified through any institution.  Property Managers, Accountants, Real Estate Agents, and Adjusters bring their own unique experience to the development of a Reserve Fund Study.

When hiring a company to perform your Reserve Fund Study, find out who in the company is completing the work.

4. What level of customization is the Provider willing to provide?

Some providers will NOT phase component replacement, some providers phase everything.  What is reasonable for your corporation?

5. How many funding options will be provided?

Will the provider supply you with only one option for the required funding?  Will it be a mathematical solution that does not take into consideration any of the social factors?

6. What funding philosophy do you use?

Some providers still use a funding philosophy that incorporates a short fall amount.  This is called equity replacement – you put in what you use up, and need to catch up if you are behind.  Most providers use a reasonable and sufficient funding philosophy – you rob Peter to pay Paul and make sure that the funds are in the account to cover the cost of replacement as it occurs.

7. How long will it take once awarded?

Do you need your study within 30 days of award?  Good luck.  Most providers have a waiting list of at least a couple of months.  Any study that is required generally sooner than 60 days will cost you more.  Plan in advance and ask for proposals at least 6 months prior to when you need your study done.

8. Will you provide a sample study for the board to review to ensure that the document is usable for their purposes?

Every provider should have a sample study for your review.  Is this a document that the board can use?  The board should use the Reserve Fund Study as a tool to plan annual maintenance and budget for replacement.

9. What is included in the proposal cost?

Is a meeting with the board included in the cost of the Reserve Fund study?  Or is this an extra?  Is the option for attending an AGM included?

10. Cost?

Cost should not always be the driving factor in determining which provider you go with.  The most expensive is not always the best and the cheapest is not always the worst.  Always ask for references.

The answers to these questions will assist you in determining which provider will be the best fit with your needs.  

Full Study vs. Update

The condominium property act states:  At the conclusion of 5 years from the day that the most recent reserve fund plan was approved, the corporation must, in accordance with the same procedures, requirements and restrictions to which section 23 is subject, 

  • carry out a reserve fund study
  • prepare a reserve fund report,
  • approve a reserve fund plan, and 
  • provide to the owners for the owners’ information copies of the approved reserve fund plan referred to in clause (c) prior to collection of any funds for the purposes of those matters dealt with in the reserve fund report…

The concept of a Five Year “UPDATE” is that you have the same provider supply you with your new Reserve Fund Study.  This provider would not have to quantify the common property components (count and measure).  However, site inspection to review the condition of the components is mandatory.  The corporation would receive a complete new study.

 

This article has been written by Sharon Bigelow.
Sharon is a Bigelow is a Reserve Fund Study Consultant in Edmonton, AB, Canada. You may contact Sharon at Phone: 780-965-0965 

Tuesday, April 28 2015