We had the really useful opportunity to view a webinar this week featuring Tony Gioventu, executive director of the Condominium Homeowners Association, commonly known as CHOA, which has 200,000 members. Tony’s experience in this field is extensive, including being a co-writer of the Strata Property Act and the author of many articles & blogs for strata owners, corporations and government agencies. Yes – Tony is the acknowledged expert for good reason. The following information is gleaned from this webinar – with more to come next week….
With 32,000 strata corporations in BC, we have the largest number in Canada. Following this year’s surprise, and in many cases, substantial, hike in both premiums and deductibles, the obvious question arises – what alternatives do we have from the dwindling number of insurance companies trying to hedge their bets from a growing number of natural disasters? Our values have risen exponentially over recent years (all the way up to a BC building valued at $500 million) affecting replacement and restoration costs. Apparently our municipalities have managed their insurance successfully by means of a ‘captive’ insurance model, which functions as a corporation, maintaining its own structure and being “incredibly well managed”. This would be a long haul viable solution, not necessary less costly, but specific to the needs of condo owners and more predictable. In BC we have the specific challenge – high risk of earthquake – definitely influencing the risk factor for insurance companies.
More immediate solutions being discussed are the ways proactive stratas can help themselves and how government can assist in upgrading both the building and retrofit codes. 80% of insurance claims are due to water – the higher the hi rise, the greater the risk. Installing bylaws with regard to steel braided hoses, replacing toilet seals, ensuring that owners have the insurance deductibles covered by their personal insurance etc. will be helpful to stratas as preventative measures.
Depreciation reports become quickly outdated and CHOA recommends that 3 years is the longest period there should be between reports. As these can be waived by owners on an annual basis, it is likely that regular depreciation reports will become mandatory, in order to create a level playing field. This will be valuable in terms of bank financing and renegotiating with insurance providers. One likely imminent change is that, with higher ratio mortgages, banks will begin requesting the strata insurance documents, a practice they stopped a number of years ago. All of these practices will help to protect and inform prospective buyers
In short, owners will have to maintain and repair their buildings with regular follow up – low maintenance fees are “false economy”. Beware buyers!
As consultation continues between the government, Choa and insurance brokers, we can anticipate legislation sooner rather than later with regard to mitigating the collective risk.
Half of our province’s population live in condos, so, collectively, we must take responsibility, aided by by tighter regulations. Lots more to talk about…In the meantime, Choa’s website is www.choa.bc.ca & ph. 1-877-353-2462.
Enjoy the summer weather – but let’s remember safe distancing, small groups and hand hygiene got us this far. We still have you safely covered and can answer your real estate questions in this busy housing market.
Generations Real Estate Partners:- Michelle Hawthorne, Scott Johnson, Sheila Francis, Ray Harris and Shane Goutsis.