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Leaky condos part III – a problem risen from the dead

I’ve told you about our experience with leaky condos.  And how the leaky condo catastrophe came about.  But the question now is “Why is this a problem NOW?”

LeakyCondo2

It’s ba-ack!

Because until now, strata councils who run condominium buildings could avoid submitting depreciation reports.  As this story in the Vancouver Sun succinctly puts it:

Lax maintenance has been a long-standing issue for stratas, according to Tony Gioventu, executive director of the Condominium Homeowners Association of B.C., “hence the evolution of the introduction of depreciation reports.”

The province made a depreciation report a requirement of the Strata Property Act in 2011. It contains a detailed assessment of a condo building’s condition, and a schedule for when major components, including its exterior, would need repair.

“Depreciation reports are forcing strata corporations to acknowledge what they have, and forcing them into planning (for repairs),” Gioventu said in an interview.

The requirement was enacted in 2011, but wasn’t put in force until last December to give B.C.’s 30,000 strata corporations time to commission the reports.

When we left our condominium last year the strata council was preparing to create a depreciation report.  It would cost time and trouble, and of course, money, but they knew what the report would say — that the building was well-maintained and had undergone rain screening in 2000, that it had a new roof and would last for many years.

Many, many condo buildings were updated and repaired and will, with proper maintenance, provide safe and comfortable housing for decades to come. And depreciation reports are necessary for all condo buildings, regardless of whether they have had leaks or were repaired and kept up.  It provides a good background on the building, and if you are hoping to sell your condo it is a great asset to show the prospective buyers and their mortgage provider.

According to this story from Daphne Bramham in the Vancouver Sun,

By Dec. 14, 2013, strata corporations must have 30-year depreciation plans that indicate when major infrastructure will need to be replaced, what the maintenance schedules are and the expected cost of each item. The plans must be updated every three years so that owners and potential buyers will have a realistic glimpse of what lies ahead.

So it appears that the problem is solved.  Those condo building who have not kept up their regular (or emergency) repairs will quickly fix everything, and the home owners and future buyers will be sure that the building is sound.

Nope.  Not quite that easy.  There are several reasons why this is a crisis for some condominium owners.

1. Playing by the old rules

When you live in a strata building you pay maintenance fees every month.  These pay for the general upkeep of the building, the shared costs for the gardening, garbage, etc.  But a portion of those fees go into a contingency fund — money set aside for big expenses.  Repairing the garage.  Replacing the boiler.  Stuff that comes up once in a while that you really can’t budget for.  But until 2009 there was a restriction on how large a contingency fund could be.  So even if you convinced the owners to pay an extra, say, $300 a month in maintenance fees to pay for a new roof that would be needed in 20 years (and good luck with that), you simply weren’t allowed to.  So to pay for these really big repairs you need a special assessment.

2. The 3/4 rule

You need three-quarters of the owners of the suites in any strata corporation to agree to any special assessments.  In our old strata building, these special assessments passed rather easily.  A new roof costs this much.  Your share is this much.  Vote.  And we all agreed that we wanted the building to be maintained and we voted yes.  Then we coughed up our share.  I thought that was the way all stratas were run.  But it’s not.  There were 14 suites in our building.  If just four owners voted against the assessment we would not have gotten a new roof.  We were lucky that everyone was on the same side in this issue.  That there were no internal feuds that played out, that people had enough money to contribute.

But if you lived in a strata where people did not want to fix the whole building, where they tried to patch up little problems that turned into big problems, or where they just could not afford to pay those large assessments, your day of reckoning is at hand.

3. The money

At one time, leaky condo strata corporations could avail themselves of an interest-free loan run through the B.C. Homeowner Protection Office.  That program ended in 2009 after 11 years.  So if your problems didn’t show up until after then, or you couldn’t convince your neighbours that they needed to fix the entire building, you will have to find another way to finance that big, big repair bill.  Now.  Before the depreciation report.

4. The market

The insane Vancouver housing market applies to all condo owners — not just those in Coal Harbour luxury penthouses.  For what it costs to move into a two-bedroom 25-year-old condo in the area you could have a very nice detached home in Edmonton or Saskatoon.  So that often means people in those 25-year-old condos are already paying hefty mortgage payments, plus their monthly maintenance payments.  Some people are on fixed incomes, retired or on disability.   They simply cannot afford the extra costs those repairs would require.   And all these people will be quite hooped, one way or another.

They have to repair their homes, but can’t afford to repair their homes, but can’t sell their un-repaired homes and move anywhere else.

So there you have it.  A problem we thought had just gone away was hiding, like that nasty piece of mould on the inside of a wall, just waiting to spread and eat up your life savings.

 

 

Leaky condos part II – why oh why?

In my previous post, I quoted a Vancouver Sun article on leaky condos.  Years after we thought the problem was gone, it’s back.  Like a bad rash, or in this case, a pernicious mould.

Why are so many Vancouver condos prone to leaking?

Well, into the WayBack machine, to see what life was like in Vancouver in the late 80s.

Expo 86 had really moved the city along.  The nightlife was bouncy, with live-music venues downtown and in Gastown.  New bylaws were made to loosen up the liquor laws — we were a fun town!  And the Vancouver Canucks were pinning their hopes on young Jim Benning.

Jim_Benning

Deja vu

 

All this activity meant more people were moving to the city, and that put pressure on current housing stock.  So in the years 1982 through the early 1990’s, the city encouraged a new-fangled type of housing that Vancouver hadn’t seen before — condos.

Vancouver had apartments since the beginning, but they were usually built specifically for rental.  Apartment ownership in a strata corporation was a new thing.  At first it meant existing buildings “going condo” – selling their suites to the tenants.  In those halcyon days you could purchase a condo for about $40K — a nice one, too.  Then zoning changes meant that residential homes in neighbourhoods like Kitsilano and around City Hall could be replaced by condominiums.

So we had a situation where there was a high demand for this housing — plus land to build it on.  What could possibly go wrong?

1. The climate — damp – ish

Vancouver gets 1153.1 mm of rain per year, about double that of that notoriously rainy city, London. Nearly twice as much as San Francisco, California.  I put this at the top of the list because it’s really something that should determine everything else.  But it seems to have been ignored by everyone all through the process of building these leaky condos.

2. Regulations – no good deed goes unpunished

The Canadian Building Code altered their rules to increase the sealing of exterior walls.  That meant that in the dry cold of a Saskatchewan winter, the sealed walls would keep the cold out and the warm in.  Great in Saskatchewan — but the rule meant that whatever entered the exterior — heat or moisture — would be trapped inside.

The City of Vancouver changed their regulations to include eaves and overhangs in the allowable floor space.  There was therefore a penalty to having a wide roof overhang.  Much better to build right to the outside of the allowable limit, with no overhang at all! Also the floor space was measured from the outside of the exterior wall — not the inside.  So thinner walls were encouraged.

To reiterate:  the buildings would have to be air-tight, but not protected from any precipitation.

3. Design — let’s borrow from the neighbours

Vancouver needed a new type of building — a three or four storey apartment building that would incorporate modern building techniques and style.  We hadn’t seen this style of building in the area — but California had!

CaliforniaCondo

Arched windows!  Lots of parapets, changing roof lines, open walkways!  Very little roof overhang.  And all wrapped up in stucco.  It was better than modern — it was Post Modern!

We liked it!  We built it!  We bought it!

A design that was originally fashioned for a place with half our annual rainfall.

4. Construction — new materials because — progress

Lots of Vancouver buildings are covered in stucco.  Good old-fashioned cement stucco.  But now there was something new and improved — exterior insulation finishing system (or EIFS).  It seals the exterior, just like the Canadian Building Code requires.  And you can put it smack against the sheathing, for which they used that new stuff, fibreboard.   Putting the EIFS right on the fibreboard reduced the thickness of the walls, which meant that the City of Vancouver measurements from the outside of the exterior walls would not reduce the size of the floor space within the suites.

5. Builders – the more the merrier

The demand for housing was there.  The materials were there.  The design was there.  All you needed was someone to put it together.  And companies sprung up like, well, mushrooms.  Reputable builders were booked up months or even years in advance.  So less-than-reputable builders stepped into the breech.  Also, builders and developers would form a new company for each project.  When the project was finished, the company would just dissolve.  Into thin air. Inspectors were overworked and often not familiar with the new designs and the new building materials.

6. Owners — what’s that smell?

New condominiums sold just as they were supposed to — like deceptively constructed hotcakes.  They were lovely to look at.  And for some time they were fine.  It takes a few years for those interesting roof lines and arched windows to let water through that impervious exterior into the fibreboard that soaks it up. It takes a bit longer for those sodden boards to start moulding and rotting.  Then problems apppear.

Then it took a few years for strata boards to realize that the leak in 4A and the saggy balcony on 2C were related.  The building was disintegrating from the outside in.  And there was only one answer — ripping off the entire exterior and replacing it with rain screening. And that took money.  Money from the owners.

The company that had constructed it didn’t exist any more.  The New Home Warranty only covered buildings constructed after 1999.

Some strata boards faced the problem head on.  Like the board in our old building they rain screened their homes, absorbed the cost, and kept their places from deteriorating. They were the smart ones.

Many of the buildings ones that did not rain screen around 2000 did it in the subsequent years, and they had to pay much higher costs because construction costs have shot up in the past decade.

But there were others….who have not fared so well.  And they may be about to bid farewell to their life’s savings.

More on that in Part III

 

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