The Blog

The importance of establishing “standard unit finish” in your condo

Dear Maria; It is our understanding that in 2020 several key updates come into effect that will change the definition of a standard insurable unit. Can you tell me how these changes affect us? And what we can do to prepare for this?

If you live in a condominium that is Professionally Managed by New Concept Management Inc., then you would have received information that the Provincial Government announced substantial changes to Alberta’s Condominium Property Act (CPA) and Condominium Property Regulations (CPR) on December 14, 2018. One of the changes that are being made is the mandatory requirement under the new regulations (Section 34-Application of initial bylaws to pre-existing corporations) that all condominium corporations in Alberta re-write their bylaws to comply with the new
Property Act of Alberta. The Government in essence, has given all condominiums 1 year from July 1, 2019, to have this completed. If you would like to learn more, you can read
February’s article by logging onto newconceptmanagement.com/blog. In speaking with Harold Weidman, of Reliance Asset Consulting, who is not only an expert in his field but also an expert on
this topic, has taken the initiative to help educate the condominium industry on key factors that each condominium board should take into consideration when updating their
bylaws. If you want to be compliant, here’s what Harold recommends.

a. Will you implement several classes of Standard Unit Finishes or just one (example would be staged bare land developments or mixed developments such as townhouses and apartments)?
b. Setting your Standard Unit Finishes as listed in the Regulations — must be reasonable, clear in definition and easily taken into
consideration in the costing process.
c. Owners at AGM can vote and either adopt or amend these Standards. Because owners are openly involved in this process, Boards must be prepared with extensive background information to mitigate problems and best defend their positions.
d. Determine what options are open to the Corporation to change existing standards
(dependent on their position in the annual update cycle).
e. Understand what options are available if the 2019 Insurance Renewal Date of the policy occurs before items a., b., c. and d. occur.

What if I don’t have a “Standard Insurable Unit”? If the board doesn’t have Standard Unit Finishes defined, they’re not alone. Unfortunately, most Boards do not have this in place, as it’s never been a requirement. The Standard Unit Finishes identified in our reports allow Boards to understand what is and more importantly what is NOT included. This is a common requirement for an appraisal firm to adhere to professional appraisal standards.

How does this regulation affect Non-Residential Standard Unit Finishes? There are no critical changes noted in the revised regulations and the interior finishes will continue to be the responsibility of the owner and/or tenants.

What about Bare Land Bylaws where Standard Finishes are limited to the shell of the Unit building interior? There continues to be varying opinions based on the definitions included in the bylaws on “shell finishes”. These require clarification for costing purposes given the varied termination for finishes inside the buildings and what, if any, items are described for interior structural components and rough-ins for heating, plumbing and electrical.

These are just a tidbit of the key factors to a standard unit finish and what steps you can take as a board. As a condominium manager with New Concept Management, I cannot stress the importance for each condominium corporation to have a clearly written bylaw that defines its standard unit finishes.

Thank you to Harold Weidman, for his helpful insight into this article and for his continued support to the condominium industry. Until next time …

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RESOLVING ETHICAL DILEMMAS

Putting in place a Code of Ethics helps condo boards resolve disputes

Question : Dear Maria; How important is it for an elected Officer or Director to maintain confidentiality of Board decisions?
Answer : Very important is the correct answer. We need only look at the current political scandals in Canada and the U.S. to see how important it is to conform to a code of ethics.

Boards have an obligation to act honestly and in good faith and in the best interest of the condominium corporation. If the board chooses not to follow the standard of care, this can put the condominium corporation in a position of liability.

In addition, the board of directors must exercise care, diligence and skill that a prudent person would exercise in comparable circumstances. In other words, not putting the condominium corporation in harms way and always acting with prudence when making decisions.

Once elected, the condominium board of directors have specific and critical duties that they must adhere to. These duties are listed in the condominium corporation bylaws. It’s important for board members to understand and be familiar with the bylaws, since they will be held accountable to them and the owners.

It’s also recommended that boards implement a Code of Ethics that can be signed by all members of the board. A Code of Ethics will set clear and precise guidelines that members of the board can follow, and it will help set the framework of how to handle conflicts within their condominium community.

For example: if a director has a relative they want to hire to complete a certain project at the condominium or in the insistence where a director is in breach of a bylaw. The Code of Ethics can help determine the best course of action to address that particular situation.

It can be overwhelming and time consuming for a board to create a code of ethics. So let me help set you in the right direction. New Concept Management Inc. recommends some, if not all of the
following to be included in your code of ethics.

• Honesty and Good Faith
• Care, Diligence and Skill
• Conflict of Interest
• Confidentiality
• Good Conduct
• Education
• Abuse of Proxies
• Support
• Defamation
• Minimize Conflict
• Performance of Duties
• Scope of Authority
• Agreement
• Unsanctioned Board Meetings

When you as a board create your code of ethics, be sure to define in detail and set the parameters for each of the codes. This way, there is clear understanding behind the meaning of the rules. Also, don’t forget to sign and date your code of ethics.

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THE IMPORTANCE OF CONDO FEES

The maintenance of your condo is in your hands

Hi Maria; Can you tell me why condo fees are so important?

Answer : You’ve heard me say it before and it goes without saying. A condo is a living organism and the condo fee is its lifeline. If you’re living in a condo, this is as constant as giving birth and paying taxes, but it is completely necessary for the good of your condo.

Every condominium operates under the same basic financial principles. Owners pay condominium contributions (also referred to as “fees”) to the condominium corporation. These contributions are
calculated based on unit factor assigned to their unit.

Condominium contributions vary with large amenity-rich buildings usually having higher fees than smaller buildings with minimal to no amenities.

The condo fees are made up of all the costs associated with running the condo corporation. From water and sewer expenses, common electricity, insurance, payment to a management company, legal, landscaping and snow removal are just a few items that may be included in putting together a budget.

And let’s not forget, a portion of this fee is allocated towards the capital reserves to pay for major expenditures over the lifetime of the building. The great thing about being on a condominium board is they decide how owners’ contributions will be allocated each year. The board is required to provide owners with a yearly financial reporting, typically done at an annual general meeting, showing how their money was allocated in the previous year and how it proposes to use the upcoming year’s contributions. Condominium fees are not optional or negotiable and must be paid to the corporation on a monthly basis, normally on the first of the month. Owners who default in paying their condo fees can put their condo corporation in jeopardy, and
tend to place a burden on those owners who do pay.

Before making the decision to move into a condo, ask yourself, “can I afford to pay the monthly condo fees and any extra expenses that might occur.” Condominiums are not the same as
purchasing a single-family home. A side from paying condo fees, you also have a responsibility to follow bylaws that govern the condominium corporation. These are specific rules that must be followed. The moral of this story is simple: If you choose to live in a condo, be prepared. Know the facts and always plan for the unexpected. Don’t place the burden on other owners to pay your fees

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