Strata Alert: Top 5 Issues For New Strata Corporations – #2 Collecting Records

Top 5 Issues For New Strata Corporations – #2 Collecting Records

 With everything seeming new and shiny, many buyers can enter a honeymoon period with their new strata corporations. Many may also be preoccupied with moving and settling in. However, there are many issues that a new strata corporation should deal with early on to avoid running into trouble later.

This ongoing countdown series of Strata Alerts will review the five most urgent matters a new strata corporation should address so that the advice your strata lawyer gives you does not include the words, “your strata would be in a better place if this had been dealt with sooner.”

The first article in this series discussed the importance of owners taking control of the strata corporation by ensuring the developer calls the first annual general meeting (AGM). This second article in our countdown deals with ensuring that the developer provides the documents and records needed to manage the strata corporation at the first AGM.

Under s. 20 of the Strata Property Act, at the first AGM, the owner-developer must place before the owners and give the new strata council copies of certain documents that are important to nearly every aspect of managing a strata corporation. Many of these critical documents can be grouped broadly into the following categories:

Construction Documents

1. 1. 1. all building permit plans and any amendments;
      2. all other documents indicating the location of a pipe, wire, cable, chute, duct, or other facility for the passage or provision of systems or services;
      3. all warranties, manuals, schematic drawings, operating instructions, service guides, manufacturers’ documentation, and other similar information respecting the construction, installation, operation, maintenance, repair, and servicing of the development;
      4. all warranty information provided to the owner developer’s contractors, subcontractors, and persons who supplied labour or materials to the development;
      5. names and addresses of all project managers, consultants, contractors, subcontractors, and persons who supplied labour or materials to the development; and
      6. any reports obtained by the strata corporation respecting repair or maintenance of major items in the strata corporation.

Legal Documents

7. all contracts entered into by or on behalf of the strata corporation, including insurance policies;

8. any marketing or rental disclosure statements;

9. the registered strata plan;

10. the bylaws and rules;

11. any decision of an arbitrator or judge, or the Civil Resolution Tribunal, in a proceeding in which the strata corporation was a party,

12. any legal opinions obtained by the strata corporation

Financial Documents 

13. current and past budgets and financial statements;

14. bank statements, canceled cheques, and certificates of deposit.

This non-exhaustive list highlights some of the critical information a strata corporation must get from the owner-developer at the outset.

The construction documents are crucial for managing the repair and maintenance of the building. However, they are also urgently needed to submit warranty claims on time. Without them, the strata may not know all the warranties that apply to a particular defect. Without all the plans and drawings, the strata’s consultants may not even be able to determine if an issue was built as designed and should be claimed under warranty. Early warranty claims will be a future topic in this countdown series.

The legal records can be iessentialfor various reasons, including how common expenses are shared, which will also be the subject of future articles in this series.

The financial records are necessary to ensure that the developer has contributed the right amount to the common expenses, including when interim budgets are in effect. That, too, will be the topic of a future article in this series.

Any other financial records can also be obtained from the developer under s. 23 of the Strata Property Act, but the developer is only required to keep those documents for two years plus a week after the first AGM.

Unfortunately, we often see developers fail to provide all the required records, and in some cases, no records are provided at all. Strata managers and councils sometimes overlook this important step until they need the document or a legal dispute arises. By then, the developer may not still have all the documents or may be unwilling to cooperate. The strata corporation may also lose some of its remedies against the developer for obtaining these documents. Under s 20(3) of the Strata Property Act, if documents are not provided, and the strata corporation pays money to obtain them, that amount can be claimed as a debt from the developer. If the developer still owns a strata lot, then this debt can be secured by filing a lien against the strata lot. Once registered, all the reasonable legal costs of enforcing that lien are also recoverable (see Strata Plan KAS 2428 v. Baettig, 2017 BCCA 377). However, securing the debt with a lien may not be viable after the developer sells the last strata lot.

If you are unsure if your strata corporation has received all the required documents, or it is having difficulty obtaining records from a developer or wants to claim the cost of obtaining these records from other sources, we recommend you speak to an experienced strata lawyer.

Lesperance Mendes has been representing and advising British Columbia strata corporations, strata owners, and strata managers since 1997. To find out more about our strata property law practice, contact any member of our strata property law practice group: Paul G. Mendes, Sat Harwood, Alex Chang, or Amanda Magee.

THIS ARTICLE IS NOT LEGAL ADVICE:  This article provides general information and should not be relied upon without independent legal advice with respect to the specific facts of your case.