Condominium Boards Facing Legal Issues

It is anticipated that, at some point, a condominium corporation's Board of Directors will be faced with a legal challenge. The Board's duty is to work as a team to ensure that their condominium corporation is run smoothly and is maintained to the highest possible standards. One of their main tools to ensure compliance and participation by all owners in the corporation is with the implementation of bylaws which, every condominium corporation in Albert must have. These bylaws outline many important issues such as defining common areas, pet restrictions, noise restrictions, use of common area, etc.

Individuals purchasing a condominium are also buying into the corporation and should understand that they are entering into an agreement with the corporation to abide by the bylaws. Condominium corporations have the legal right, and moreover a duty, to pursue infractions of the bylaws, including issuing fines and pursuing legal action against those who refuse to comply or are repeat offenders.

In general, upon a violation of a bylaw, the owner of the unit will receive notice from the Board explaining the infraction, detailing the actions they need to take to rectify the situation and a time-line within which they are expected to comply. Often, an owner may not know that a particular bylaw exists and this type of notice serves as a friendly, but stern reminder. In cases where an owner does not comply or has repeatedly offended, the Board may be faced with the decision whether or not to hire legal representation to further pursue the owner.

This decision should not be taken lightly by the Board. They should understand the ramifications that this type of action could have on the condominium corporation, including: high legal costs, public scrutiny, and possibly the loss of the legal battle.

 In a recent decision made by the Court of Queen's Bench of Alberta (Condominium Corporation No. 042 5636 v. Chevillard, 2012 ABQB 131), the judge ruled against a condominium corporation trying to recoup both the fines that were imposed on an owner who violated the condominium's pet bylaws on multiple occasions and the legal expenses that were accrued throughout the process.

Regarding the collection of fines imposed by the corporation, the judge cited that the evidence brought forward was unsupported due to the fact that there was no evidence proving the bylaws in place were ever established through the correct process (a resolution), making them non-binding. The judge stated that the owner had rectified the situation and that the condominium corporation had failed to verify that the issue was still ongoing at the time the motion was brought to the court. Furthermore, the judge ruled that there was no basis for the corporation to collect such fines from the defendant and therefore the legal costs could not be recouped from the defendant.

When pursuing issues legally, the Board should have confidence in their property management company that they will provide sound advice and will direct them to legal council that is capable of understanding the Alberta Condominium Act and the corporation's bylaws to ensure there is in fact a legal case to pursue. The above mentioned case could have been avoided with some more due diligence and better guidance from the property management company, and even more so, by a competent lawyer.

Non-Smoking Condominiums?

The restrictions put in place by Alberta's provincial and municipal governments in recent years has made it illegal to smoke inside public establishments, or even within 5 meters outside of such a building (in Edmonton). This seems to be a continuing trend with very little opposition from public opinion.

With the apparent acceptance of these laws by smokers, is it so unthinkable to implement a smoking ban in private homes or cars? Alberta's Premier, Allison Redford, has recently set forth plans to ban smoking in private cars when children are present, following the lead of other provinces and territories. What's the next step?

A smoking ban in detached private homes may not be seen anytime soon, however, non-smoking by-laws have already been implemented by condominium corporations throughout Canada. Such by-laws vary in nature from banning smoking in common areas, to balconies/patios only, and as far as a having a completely smoke-free condominium complex. Enforcing these by-laws may be difficult due to the lack of precedence and case law in our courts, however the idea is gaining judicial momentum nationally.  

An example of this, is a condominium corporation in Victoria, The Mosaic, that did not change their by-laws and decided to battle second-hand smoke through a nuisance clause in their current by-laws. This has been proven effective multiple times as they have been able to show that a owner who smokes is interfering with the lifestyle of a non-smoking owner when she/he expected when joining the condominium corporation.

Pivotal is able to advise all of the condominium corporations that it manages of the direction in which a Board needs to take, in order to implement a non-smoking policy. There are several very important factors that a Board must consider before making such a major change to its by-laws, which should be carefully explained by your property management company.

Please contact Pivotal directly if your Board needs help making any type of changes to your by-laws.

Condominium Fire Safety - Are You Safe?

Fire safety should be taken very seriously by your condominium corporation. With the rash of recent residential building fires throughout Alberta, it has left many wondering how safe they really are. Your condominium Board will work closely with a property management company to ensure that not only your investment in the corporation is protected, but that your personal safety is never in danger.

Condominium buildings require by law, an evacuation plan along with multiple types of fire-fighting equipment. An evacuation plan will offer at least two emergency routes from each of the owners suite, and each occupant of the building should be aware of the plan. The following is key fire-fighting equipment that should be present in every building: fire separation doors, fire alarms, subsidiary fire alarm power, emergency exit doors, emergency lights, sprinklers, fire extinguishers, and fire alarm pull stations. Other equipment such as fire panels, hoses with water access may be found in larger buildings.

For townhouse style condominium corporations, there is less fire prevention requirements for the Board to tend to, compared with a condominium building. Within such complexes there may be private fire hydrants which need to be inspected by a qualified company on a regular basis, however if there are only public hydrants for the complex, Epcor will monitor and inspect them.

Your property management company should have already developed an emergency plan for your residents in case of a fire or evacuation of the property (in case of a gas leak, water leak, etc.) This plan should include a meeting point, along with people in charge of communicating with emergency first-responders (fire department, police, red cross, etc.). Of utmost importance, this plan should include a venue where owners may converge, in case of severe weather, when it is unreasonable to expect people to be outside for an extended period of time. This plan should be distributed to all residents.

Your property management company should advise your Board of the necessary requirements for testing of all fire-fighting and prevention equipment on a regular basis by qualified personnel. For residents of Edmonton who wish to inquire for themselves, they may contact the City of Edmonton Fire Rescue Services.

A special thanks to Keith Fenton from the City of Edmonton Fire Rescue Services for supplying us with information on this matter.

What is the Significance of a Reserve Fund?

Your condominium corporation reserve fund should be the most important financial issue that concerns  your Board. The status of the reserve fund can drastically influence the value of your investment in the condominium corporation. Financial planning for your reserve fund should be a main focal point for your property manager. They should be able to offer guidance and assistance when dealing with all financial issues, and your Board should have confidence in their ability to protect your investment.

Every condominium corporation has a reserve fund for one main reason: to set aside money in a consistent and controlled manner in order to fund future major repair & replacement projects to the common property. Such projects are set forth in the reserve fund study which is to be done at a minimum of every 5 years. It outlines the expected projects and their costs for the next 25 years, along with a forecasted budget of money needed in the reserve to fund these projects. This, in turn allows the Board to create a plan outlining the specifics of how the reserve will be funded to accommodate these future expenses.

All attempts should be made to avoid using the reserve fund to cover expenses for capital improvements that are not included in the reserve plan. If, for any reason, the Board decides they would like to use the reserve fund for a project that is not included in the plan, they must pass a special resolution with 75% approval amongst the owners. On top of this, the Alberta Condominium Act  states that your reserve fund is used for unplanned projects, the remaining balance of the fund must be sufficient to cover the upcoming costs mentioned in the reserve study. In instances where using the reserve fund for unexpected expenses is not viable, a special assessment will be done and costs passed onto the owners.

All owners of a condominium corporation should have access to the most recent reserve fund study and the corporation's current financial statements. A comparison between both of these documents will allow an owner to assess whether or not the reserve fund is within an acceptable valuation.

At a final glance, a reserve fund that is below the recommended levels mentioned in the reserve fund study puts the condominium corporation in a very vulnerable position and will undoubtedly negatively affect the value of the property. Comparatively a reserve fund that is in line with the reserve fund study or has a surplus, maximizes return potential of the investment for the owners.

Why are my Condo Fees so High?

Condo fees are part of the lifestyle when an individual decides to enjoy the ownership of a condominium. Whether it's an investment property or their own home, the condo fees are used by the condominium corporation to maintain the property and to protect all of the owners' investment in the corporation. A primary responsibility of the Board is to ensure that the condo fees are used to ensure that the common areas are well maintained, but more importantly to ensure that future major renovations and/or replacements of common property are adequately budgeted.

Condo fees will vary dependant on the type of property.  A hi-rise condominium with underground parking will be at the higher end of the spectrum and  townhomes or carriage style will be at the lower end.  A high-rise building, as opposed to row housing, requires elevators, underground parking, central electrical and heating/cooling systems, higher insurance premiums, on-site maintenance and administrative staff, and a large amount of indoor common area.

The effective age of a condominium and the amenities that are offered are also contributing factors to condo fees. As a property ages, it costs more to maintain, and condominiums are no exception. The maintenance needed as a condominium ages will be more frequent and more intensive, resulting in a higher expense. The number, and type, of amenities that you find within a complex play a role in maintenance costs of the common area.

While the preceding paragraphs provide justification for varied condo fees, they do not precluded the possibility of mismanaged or misappropriated funds. A responsible management company will guide your Board and make suggestions that will relieve costs and possibly lower condo fees.

Finally, the management of your funds should be taken seriously, as it represents the future of your investment in the corporation. Your property management company must be able to explain all finance inquiries to your corporations' Board and account for all funds when asked to.

Condominium Insurance

A condominium owner recently asked Pivotal Property Management the following question:


"What type of insurance do I need to purchase for my condominium?"

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This is an excellent question! Many condo owners scrambled to ensure that they have the necessary insurance coverage after a recent fire  at Heatheridge Estates, an 80+ unit condominium complex on Edmonton's south side that pretty much destroyed the whole building.

All condominium corporations are required by law to insure the corporations' property, and is paid for with a portion of your condominium fees. This includes all of the common area. In most cases this will include the walls and structure of each individually owned unit. As an owner you can verify the exact coverage that your condominium corporation has by requesting a copy of the insurance policy from your condominium Board or property management company.

As an owner of a condo/home a major priority should be insuring the contents of your home. This is NOT included  in your monthly condominium fees or condominium corporation policy. This insurance is relatively inexpensive, depending on the cash value amount you wish to insure your contents for, and can be set up by contacting your insurance company of choice.

When living in a condominium complex, liability insurance should seriously be considered. Not only will liability insurance cover you against another individual's claim within your property, but also extends protection from any damage that occurs to another's property that has been deemed to be your fault. For example if you leave a tap running and it floods the unit below yours, liability coverage would come into play.

There is never a shortage of insurance available and you can insure pretty much anything these days. As always we recommend that you seek out professional advice regarding insurance and work with an insurance broker to determine your specific needs and requirements.

Which Property Management Company is Right for You?

Most condominium corporations struggle with finding a competent, professional, and knowledgeable property management company. They often cycle through property management companies on a yearly basis, hiring one after another that does not satisfy their needs or provide professional service. This will be an ongoing issue as many property management companies are unable to retain competent property managers and fail to maintain a strong ethical and/or moral business model.

As a condominium Board member you will undoubtedly be faced with participating in the selection of a property management company for your condominium corporation. This can be a daunting task, especially if you're unsure of what you're looking for, what questions to ask, or have been victim to the deceit of a management company in the past.

The first step in seeking out a new management company is to request a proposal from various companies. At this point you can read through their presentations and determine those that offer the services you require and appear to be professional. Once you have short-listed the companies, make sure to interview them. This is your Board's opportunity to meet the management company and get a true feeling of how you think they would work with you and if they seem like a genuine candidate for your business.

Make sure to request that the manager who will be assigned to your corporation is present at the interview! Many companies may have been around for years and years, and send a member of their senior management to the interview to answer questions, but is their employee who will be assigned to your corporation just as competent and capable of answering your questions and concerns?

Be prepared for the interview. Asking the right questions will allow you to make the best informed decision. Pivotal Property Management includes a list of key questions your condominium Board may want to ask prospective managers in each of its proposal packages. Here is a sample of questions from Pivotal's list:

·         What type of administrative tasks are expected to be handled by the Board?

·         How will I be able to contact my Condominium Manager and will he/she be my primary contact?

·         How will the presence of your Condominium Manager at our meetings improve the efficiency of the Board?

·         How will you ensure our Condominium Corporation receives the best prices for contract work?