Condo Smarts
Vancouver Province February 14th, 2010

DearCondoSmarts: Ourstratahad a flood before the holidays where an overloaded washing machine went manic and soaked three units in our building. The council was contacted; it made arrangements for restoration and we had fans in hallways and holes cut in the walls for dryers. The owners were impressed that it happened so quickly.

As for the owner with the manic washing machine, she just received a bill for the deductible amount of $5,000. She was about to pay it, but noticed the bill was not from the insurance company, so called the insurer to see the insurance invoice. Council refused to file the claim and we'venowfoundoutthecouncilhired themselves to do the restoration work and bill it back to the owner.

There was no adjuster involved, and no report on the scope of the work done, or if even all the restoration was complete. One owner is still left with a wet, stained ceiling and no one coming to her aid. Is it a conflict of interest when council members pay themselves?

Dear Liz: Conflict of interest is a common bone of contention in strata corporations when the council executes decisions that result in personal benefits without the consent of the strata owners or exempting the benefited strata council member. The Strata Property Act says in part: "A council member who has a direct or indirect interest in a contract or transaction with the strata or decision that is a subject being addressed by the strata ... must 1) disclose fully and promptly to the council the nature and extent of the interest 2) abstain from voting on the transaction or matter, and 3) leave thecouncilmeetingwiththecontract, transaction or matter is discussed and while the remaining council votes on the contract, transaction or matter."

Here are the basics. Strata council must act in the best interest of the strata corporation; they cannot be compensatedfortheirdutiesascouncil members without the approval of the corporation, either in the budget, in the bylaws or by approved 3/4 vote at a general meeting; and a council member cannot vote on the awarding of a contract, transaction, or matter where he or she has some sort of direct or indirect personal or beneficial gain. Strata council can determine who it contracts with, and that could include a council member, but is that person qualified? Would it be a prudent decision to contract with a council member who may not be qualified, covered by WCB, insured or even competent to perform the work? Were the repairs and restoration completed properly?

In addition, the owner affected by the alleged deductible claim likely also now has a problem with her own insurance company's willingness to cover the deductible claim, as it is not a deductible, but an invoice from the strata corporation of a related repair. Council members who try to cut corners on the cost of claims or whoattempttocompensateeachother for any of the strata council duties without the strata approval are just opening the door for conflicts.

Tony Gioventu is executive-director of the Condominium Home Owners' Association. Send questions to him at tony@choa.bc.ca

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