“We did not have sufficient funds in our contingency in the event of an emergency, so we had to resort to a special general meeting and approve a special levy to all owners.”

Article content

Dear Tony:

Our strata highrise was one of many hard hit by the insurance increases last year. Our deductible increased to $100,000 for water escape. Unfortunately, we had a unit that involved a claim resulting from a tragic incident with an owner who passed away. We did not have sufficient funds in our contingency in the event of an emergency, so we had to resort to a special general meeting and approve a special levy to all owners.

Our strata council has reached an agreement with the family to pay for the deductible when the unit is sold this year, but every owner was required to pay their share of the levy in the duration. This did raise a question that no one seems able to answer. If the unit sells and the $100,000 is paid back to the corporation, what happens to that money? Because we were all levied, and the levy account would be totally restored, does this mean the levy is refunded to each owner?

— Darren K., Penticton

Advertisement

This advertisement has not loaded yet, but your article continues below.

Article content

Dear Darren:

How special levies are managed, the purpose of the levy, and in this case, what happens to the proceeds in the event the funds are recovered, are all conditions that should have been written into the language of the levy. This is the one exception of the Strata Property Act that does not require a special general meeting or the approval of a three-quarter vote.

The strata council may issue the special levy, but the levy must still comply with the requirements of the act, which includes the following: (a) the purpose of the levy; (b) the total amount of the levy; (c) the method used to determine each strata lot’s share of the levy; (d) the amount of each strata lot’s share of the levy; (e) the date by which the levy is to be paid or, if the levy is payable in instalments, the dates by which the instalments are to be paid.

This will require the strata council to establish the wording of the resolution for the levy. The resolution is voted on by majority vote of council, at a council meeting. I strongly recommend the strata council consult with their lawyer to ensure all required provisions are met for insurance deductible levies. It will make this process much easier if the language includes the management or refund of the levy if the deductible is recovered and clarity on who the money is refunded to and on receipt of the funds when the refunds will be issued.

An insurance deductible resulting from a claim on the strata corporation policy is a common expense. While an owner’s insurance may cover the deductible and pay that amount directly to the strata insurance provider, there are frequent delays or refusals to authorize or pay a deductible until the strata corporation seeks an order through the courts or the CRT.

Advertisement

This advertisement has not loaded yet, but your article continues below.

Article content

To proceed with the claim and the repairs, the strata corporation is required to pay the deductible and, in return, may issue a special levy to avoid depleting the reserve funds or if they do not have sufficient funds. The reason the act does not require a three-quarter vote is the insurance deductible is not optional.

What would have occurred if your owners had simply not voted in favour of the special levy? Delays, legal consultation and likely another meeting to follow would have extended the claim and increased costs for everyone.

Most strata corporations have a legal service package as part of their insurance policies. This is a valuable time to take advantage of those services before deciding on how to pay for, recover and refund deductibles.

Tony Gioventu is executive director of the Condominium Home Owners Association. Email tony@choa.bc.ca

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

LEAVE A REPLY

Please enter your comment!
Please enter your name here