By the Commission of Strata Corporations’ own admission; the management of most gated communities or Strata Corporations, has deteriorated from a free-for-all, to chaos and confusion. The Commission was not as colourful in its description as I am, but its own investigations, which targeted Strata Corporations, revealed as much. I was among the 50 or so members of the public and representatives of the Commission at a meeting at the Girl Guides Headquarters in Kingston last month. We discussed some of the amendments to the Registration (Strata Titles) Act, commonly referred to as the Strata Act, the Commission was proposing to the government. The Commission hopes that if these proposed amendments are passed, they will clarify some of the Strata Act’s vague clauses. The expected results will be stiffer penalties through the courts on errant Strata Corporations, which may restore order to the present chaos of residential Strata Corporations. Here are some of the Commission’s revelations, recommendations and the implications for your Strata.
Lack of Financial and Other Records
The Strata Act stipulates that strata corporations must submit annual returns to the Commission, yet only 12% of strata corporations did so this year. Over the last three years, only 10% of strata corporations filed returns. The financial statement, the minutes of the Annual General Meeting, the names of owners delinquent in the payment of maintenance fees, are some of the main reports included in the annual return. So roughly 90% of strata corporations have been without any oversight by the Commission. The Commission wants an amendment in the Act to allow the court to fine a Strata Corporation up to $500,000 for non submission of annual returns, a penalty strata owners would have to pay.
Lack of Accountability
In 2014 the Commission audited the records of only 1.5% of strata corporations which amounts to merely 21 of the approximately 1300 registered corporations. Of those audited, 88% were in breach of several By Laws. Many infractions, related to the common areas, were serious enough to prevent the Strata from receiving property insurance coverage and deny mortgages to potential strata owners.
The Commission admits that these “Negative occurrences (are) linked to ineffective management of strata corporations”. I have been writing for some time about why poor strata management is a peril of owning a strata unit. Poorly managed strata corporations depress the real estate value of the collective and individual strata unit. Amendment of the Strata Act to give more power to the Commission is fine. But will the Commission enforce the new and existing rules?
What can you do? If you own a strata unit make enquiries of your Executive Committee and insist that the Committee adheres to the Strata Act. If you are about to buy a strata unit check that the Strata Corporation you are about to buy into is certified compliant. A certificate of compliance is your best proof that the management of your Strata is free of chaos and confusion.