This week Viewpoint Vancouver covered the challenge of tall towers and outlined some of the nightmarish costs when building systems fail. Such challenges will be expensive for insurance companies, and may lead to substantial increases and requirements for strata insurance, impacting all stratas.
There are already existing problems for stratas in British Columbia: it takes a vote of 75 percent of owners to approve maintenance that may be required in a building. And that, given the sad collapse of a strata building in Florida, needs to be updated now.
Journalist Daphne Bramham shared an article written by Zena Olijnyk in Canadian Lawyer Magazine points out that amendments need to be made in the BC Strata Property Act to ensure that buildings requiring life safety repair can be immediately upgraded without requiring an onerous approval rate of three-quarters of owners (many who may be absent or offshore).
And in British Columbia, while mandatory reports on building condition are necessary every three years in stratas,they can be deferred longer if 75 percent of owners agree to wait.
The tragic implosion of the Surfside Florida Champlain Towers points out the errors of deferred maintenance, and not having enough contingency funding. That condo association had only seven percent of the funds in their reserve fund to do the structural work necessary for the building. Strata owners had not seen the necessity of repairing the structure.
As Ms. Olijnyk writes, “While the inspecting engineers did not find signs of imminent structural failure, the necessary work was urgent. However, many residents balked at the US $9.1 million bill, refusing to approve the required work. It took three years of bitter infighting before an agreement was finally reached, and by then, the estimated cost jumped to US $15 million. Work had just begun when the building collapsed on June 24.”
While all strata properties in the province must have property and liability insurance as described in the Strata Property Act, that insurance has become increasingly expensive. The B.C. government stepped in last year to ameliorate the skyrocketing insurance rates as discussed in this article by Lori Culbert and Dan Fumano.
Look for the impact of climate change, sea rise, tower building technology and condition of the building to impact what and when strata insurance will cover losses. And as all those mature strata buildings constructed in the 1980’s to 1990’s have their regular maintenance check-ups, expect strata regulation and insurance coverage to change, reflecting prudence and risk calculation.
Changes in the BC Strata Property Act are needed to ensure necessary maintenance is never deferred, and that strata building contingency funds are large enough not to financially impede strata owners who may just be getting by.