This is the second part of a two-part article covering all aspects of condominium management, financial planning and communication between knowledgeable council members and strata lot owners

Recipe for Running a Smooth Condo Ship¾Part 2

by Brynice Agnew (extensive additions/changes by P.C.A.)

This is the second part of a two-part article covering aspects of strata management, financial planning and communication.

3. Financial Planning

i Financial Management includes:

a) Periodic studies for known replacement items, maintenance and repairs. e.g., roof replacement, foundations, carpet, etc.;

b) Periodic review of the contingency reserve fund;

c) A monthly statement of income and expenditures plus a comparison with the budget.

ii Strata fees for:

a) The operating Fund. Theoretically at the end of each year there should be neither a profit nor a deficit, and exactly the right amount of money in the Contingency Reserve Fund (CRF). It is probably more important to have surpluses since they can be dealt with more easily than deficits;

b) Contingency Reserve Fund.

iii Contingency Reserve Fund:

a) Each strata corporation shall have a CRF to provide for future, non-annual, unusual or extraordinary expenditures. See SPA Sections 92, 93, 95 and 96;

b) Where the CRF contains less than 25% of the total annual operating fund budget, the corporation shall put at least another 5 10% of the operating fund budget into the CRF. When the CRF total is between 25% and 100% of the operating fund budget, the corporation may put in any amount. When the CRF total equals the annual operating fund budget, a resolution of 75% of the owners is needed to put in additional amounts of money, SPA Section 93;

c) Must be accounted for separately and must be invested in accordance with SPA Section 95;

d) Funds may only be expended from the CRF in accordance with SPA Sections 95(4), 96 and 98;

e) 3.3.5 CRF will enhance unit sales and enhance owner peace of mind.

iv Budgeting:

a) The property manager usually prepares the budget in conjunction with the council and then presents it to the owners for their approval at the annual general meeting. The authority for spending money on behalf of the SC comes from this approval;

b) Among other things, the budget must show the estimated operating fund expenditures itemized by category of expenditure. SPA Section 103.

c) Remember the council cannot, except in emergencies spend more than $2,000 or 5% of the total operating budget for the current year (subject to the bylaws) on an expenditure that was not approved in the annual budget or authorized by resolution. SPA Section 98.

v Major Maintenance:

a) Study major maintenance items and evaluate replacement needs with a depreciation report. SPA Section 94.

b) Unexpected replacement of major items may require special levies. Disclose this information to owners. SPA Section 108.

vi Common expenses and collection procedures:

a) If monthly strata fees are not paid promptly, consider a fine for late payment. Fines become additional to next month’s strata fee.

b) The SC may register a lien against the strata lot if an owner fails to pay the strata fee. The Certificate of Lien, Form G must be filed at the Land Titles Office. SPA Section 116(1). The owner may also be denied voting rights, subject to the SC’s bylaws. Section 53(2) SPA.

vii Building Deficiency:

a) Be aware of the limitation periods in launching lawsuits against the developer. Generally speaking, the faster you act the better your position;

b) Do not be afraid to get an engineering study to determine the extent of any building deficiency.

4. Communication

i General Meetings of the Strata Corporation:

a) The first annual general meeting (AGM) shall be called by the owner/developer and the meeting shall be held on the earlier of the date on which 50% plus one of the strata lots have been conveyed to purchasers or a date 9 months after the date of the first conveyance of a strata lot to a purchaser. SPA Section 16;

b) Subsequent AGMs shall be held annually. SPA Section 40;

c) Persons holding at least 25% of the strata corporation’s votes may, by written demand, require a special general meeting. SPA Section 43;

d) The strata corporation must give at least 2 weeks notice of an annual or special general meeting. SPA Section 45. Realistically this means at least 20 days if even a single notice is not delivered in person. This is explained in some detail in a chart in Instruction Guide 14 – How to Enforce Bylaws and Rules, issued by the Superintendent of Real Estate;

e) Subject to the bylaws, a quorum for a corporation of 4 or more strata lots or owners is one third of the strata corporation’s votes present in person or by proxy. SPA Section 48;

f) Subject to the bylaws, the president of the council shall be the chairman of all general meetings. In the president’s absence or in case the president vacates the chair, the vice-president of the council shall act as chairman. In other cases the eligible voters shall elect a chairman.

ii Preparation for Annual General Meeting:

a) The strata corporation must give at least 2 weeks notice of an annual or special general meeting. SPA Section 45;

b) Prepare the AGM package and mail it with sufficient time for absentee owners. Realistically this means at least 20 days if even a single notice is not delivered in person. This is explained in some detail in a chart in Instruction Guide 14—How to Enforce Bylaws and Rules, issued by the Superintendent of Real Estate;

c) The AGM “package” should include:

- Covering letter

- Notice of AGM agenda

- Description of matters that will be voted on

- Proposed budget and financial statement, SPA Section 103

- Proxy form

- Proposed wording of any resolutions requiring a ¾ or unanimous vote;

d) Establish council nomination committee;

e) Have registration sheet and voting cards ready at the door.

iii Strata Council Meetings

a) The council is elected by the owners and, subject to the bylaws, consists of not less than 3 or more than 7 members;

b) Except where there is only one owner, and subject to the bylaws, a quorum of the council is 2 where the council consists of 4 or less members, 3 where it consists of 5 or 6 members, and 4 where it consists of 7 members;

c) The president of the council has the casting vote in addition to their original vote;

d) At meetings of the council all matters shall be determined by simple majority vote;

e) Communication is essential. Councils are the catalyst of condominium owners.

5. Establishing a Feeling of Community

i Proper Maintenance

a) The job of the council is always easier in a strata where there is a feeling that the owners belong to a community. Resident interest is developed through communication and pride of ownership, which is facilitated through proper maintenance of the development. The overall impact results in less abuse of common property and improved cooperation and harmony among residents.

b) Council should ensure proposed budgets adequately provide for at least one visual improvement over and above regular maintenance;

c) Promptly attend to minor repairs and advise owners of larger expenditures undertaken.

ii Ways to develop a feeling of community:

a) Distribute a Newsletter

· Periodically mail a circular to highlight social activities of an on-going or special nature that the residents are encouraged to participate in;

· Periodically mail a circular to highlight development areas requiring resident cooperation, e.g., landscaping and patios.

b) Form a Welcoming Committee:

· Appoint an interested owner or councilor as a welcoming committee to visit new residents and verbally discuss any queries regarding the corporation.

c) Ensure all new owners receive a brochure advising of adjustments to the condominium lifestyle, council member list, bylaws, rules, Strata Property Act and annual operating budget;

d) Minutes:

· All owners should receive timely and informative minutes of all council meetings, subject to the bylaws.

e) Meetings:

· Ensure your general meetings are a pleasant, time-worthy experience for owners. The chairman should present a verbal overview of the year’s activities, outlining accomplishments and difficulties experienced by council. Council sub-committee chairs should present verbal overviews of the year’s activities, outlining accomplishments and difficulties experienced by committees.

· Organize owner get-togethers throughout the year, such as town hall meetings or a fire safety and security meeting, readily available through public authorities who will attend and present same.

f) Fund-raisers:

· Make an attempt to meet with and talk to your neighbours. Work parties reduce maintenance costs; a pub night provides the setting for an informal social; garage sales raise funds for that special Corporation purchase.

g) Owner Investment:

· Educate owners to realize they have a vested interest in the financial and physical well being of the Corporation.

· Through peer pressure encourage owners participation, particularly in serving as a council member for a term;

h) Disputes:

· If disputes arise between an owner and council, invite, or the owner can request, to attend a council meeting to address the matter.

· Consider various forms of informal dispute resolution, including letters, telephone calls; personal visits from the manager and/or council president.

· Consider utilizing, subject to the bylaws, the voluntary dispute resolution bylaw.

· Consider arbitration should the dispute be of such a nature that it cannot be readily resolved. SPA Section 124.

This thorough and interesting article was written by Brynice Agnew (A.C.C.I.) in the fall of 1992 and appeared in Volume 1, Number 4 of the Condo Chronicle, was repeated in the two-part format in Volume 2 Number 1 in Februay1997 and Volume 2 Number 2 in June 1997. We have updated it to encompass changes from the Strata Property Act.