HPO OFFERS ASSISTANCE TO LEAKY CONDO OWNERS

by the Homeowner Protection Office

The Homeowner Protection Office (HPO) has now been open for two and one half years and continues to offer assistance to leaky condo owners. As you may be aware the HPO is a provincial Crown Corporation formed in response to the recommendations from the original Barrett Commission report on the quality of condominium construction in British Columbia. The report prompted the development of the Homeowner Protection Act that was passed on July 28, 1998 for the main purposes of strengthening consumer protection for new homebuyers and improving the quality of residential construction in the province. The Act provided for the creation of the Homeowner Protection Office that officially opened on October 1, 1998.

The HPO is responsible for: administering a no-interest repair loan program and a PST Relief Grant program for owners of leaky homes, residential builder licensing and establishing the framework for and monitoring the mandatory third-party home warranty insurance system as well as a research and education function designed to benefit the residential construction industry and consumers.

One of the main program areas of the HPO is to administer the Homeowner's Reconstruction Loan Program. This program provides no-interest loans to owners of leaky condominiums, housing co-operatives and other homes that are unable to pay for repairs related to premature building envelope failures. This ensures that owners do not lose their homes simply because they can't pay for repairs. The program is not a general compensation program; rather, it is simply a means of providing assistance to those homeowners who are most in need. Pension assets, RRSP assets, and the first $10,000 in liquid assets are exempt.

Most homeowners are eligible if they:

• own a leaky condominium or other home in the coastal climate zone where the building envelope deteriorated sooner than expected
• do not have savings or investments that could be used to pay for repairs
• are age 60 or older then pension assets, RRIF/RRSP assets, and the first $250,000 in liquid assets are exempt
• do not have enough equity in their home to qualify for conventional mortgage financing or cannot afford the monthly payment on a conventional loan.

Loan amounts are based on the cost to repair the building envelope plus any related legal costs. Participating lending institutions provide the principal for the loans. Homeowners make monthly, principal-only payments to the lending institutions at an affordable level set by the HPO. The HPO pays the interest portion of the loan directly to the lending institutions on behalf of the homeowners.

In some instances, the program's minimum monthly payment of $50 represents too much of a burden. In theses cases, the HPO approves deferred payment loans that do not require any payments of interest or principal for as long as the homeowner lives in the home.

By March 31, 2001 the HPO had approved almost 5,300 no-interest loans totaling almost $115 million. The average loan approved was just under $23,000.

The Homeowner Protection Office also administers the PST Relief Grant for repairs completed on or after July 28, 1998, the date the Homeowner Protection Act was passed. Unlike the Homeowner's Reconstruction Loan Program, strata councils and co-operative housing boards apply for the grant as a group, not as individual homeowners. Owners of single-family homes are also eligible.

The HPO received 147 PST Relief Grant applications by the end of March 2001. A total of almost $2.2 million in grants has been approved with an average grant amount per application of $17,570.

Another way the HPO ensures consumer protection for leaky condo owners is through the licensing and mandatory warranty insurance requirements for building envelope renovators. As of September 30, 2000, repair contractors who perform building envelope renovations must be licensed by the Homeowner Protection Office and provide mandatory, third-party warranty insurance in order to get a building permit for applicable building envelope renovations. In geographic areas where building permits are not required for such renovations, licensing and warranty insurance must be in place prior to the commencement of the renovations.

Minimum coverage and standards for warranty insurance covering building envelope renovations are now set by regulations. The minimum coverage includes 2 years on labour and materials. If 60 per cent or more of any wall is replaced, a 5-year warranty on water penetration is also provided.

To further assist leaky condo owner's the HPO offers free Repair Process Seminar. Topics discussed at the seminars include: the no-interest repair loan and PST Relief Grant programs, legal considerations, technical aspects and the process required to repair building envelopes. To date over 1,3000 people have attended these seminars.

The HPO also offers on-site meetings to owners of strata buildings to provide information about the Homeowner's Reconstruction Loan and PST Relief Grant programs. Usually held in the evening or on weekends to accommodate the schedules of strata council members this service offers personalized service to homeowners in need of assistance. To date, 250strata corporations have taken advantage of this free service.

In addition, several print materials have been developed to address the specific needs of owners of leaky homes. Some of these publications include such topics as: Managing Major Repairs, Options for Resolving Residential Construction Disputes, the 4 Step Approach to Managing a Major Repair, Selecting a Contractor, Selecting a Lawyer, Selecting a Building Envelope Consultant, Guide to the Homeowner's Reconstruction Loan Program, and others.

In its first two and one-half years of operations, the Homeowner Protection Office has interacted with 761 leaky buildings representing 45,660 homes. Considering the Barrett Report's initial estimate of 50,000 homes affected by the leaky condo crisis, the office has successfully reached the majority of these affected homeowners.

For further information please call the Homeowner Protection Office information line at 1-800-407-7757 or visit the web site at www.hpo.bc.ca.