Spring 2019 Condo Voice 1[1] · 2019. 10. 16. · Title: Spring 2019 Condo Voice 1[1].pdf Created...

IN THIS ISSUE SPRING 2019

Determining Condo Total Replacement Cost Spring Cleaning at Condo Corporations The Pitfalls of Deferring Maintenance What is co-insurance? A checklist for setting condo budget priorities Q & A Keeping It Confidential Ten Condo Safety Tips to Consider Did you know?

CONDO VOICE SOUTH SASKATCHEWAN SPRING 2019

Spring 2019

Temps to -30 tonight feeling like the -40s. Chilly Sat and Sunday, warming next week.

It’s March 1 as I start doing this newsletter and like many of us here in South Saskatchewan, I wonder if this winter will really ever end.

As always though, we are the eternal optimists and believe it will get better. The weather has been causing havoc across the country this year and is giving all condos challenges with their maintenance programs. How to use new technologies, not just for cost saving but also for their other advantages is an important part of future planning and many of us have taken advantage of the rebate programs offered by Sask Power and Sask Energy to upgrade our systems, lower our costs and of course reduce the impact of emissions on the environment.

Information and education continue to be critical resources for all directors and managers. The education committee continues to assist in this endeavour with events like the Insurance workshop held in November and the March Bylaws and Enforcement Lunch and Learn. The Condo 100 Directors Course is May 25. Other seminar topics are being researched. We also wish to mention how many of our Business Partners so willingly give of their time and expertise to assist in this continuing education of our CCI members and how thankful we are for this assistance. Thank you as well to those who advertise in our Condo Voice, AGM info and on our website. Without this continued support we could not hold the educational and informational events that we do.

The final Thank you goes to the wonderful individuals on the CCI Board who also volunteer so generously of their time to organize, research and assist with everything necessary to make events happen and of course to our Administrator for handling our day to day operations.

As the saying goes: ‘Spring is just around the corner’; so, enjoy our Spring information.

It’s now March 28th, and Spring is on its way, by the time you read this you will be able to say, “it has arrived.”

Thankfully.

-Dawna Matthews

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Determining Condo Total Replacement Cost and Understanding Fluctuations - By Cameron Carter, B. Com, RI (BC), CRP Normac

There are many practical ways to measure the value of a condominium property in Canada, some being more useful than others in specific circumstances. For insurance purposes, the value of a condominium asset is defined by its full replacement cost, known to appraisers as the Total Insurable Value. This total insurable value (TIV) is the all-encompassing cost to fully replace the property in the event of a total loss and includes items such as the cost of materials, labour, bylaw and building code revisions, as well as changes to standard materials deemed no longer appropriate.

Total Insurable Value Explained

Determining TIV is different than the methods used for other property valuations. Market Value appraisals, a report an owner would obtain to finance their home purchase includes a consideration for the value of the land which can impact the overall valuation drastically. Properties that generate revenue would normally be appraised using the Income Approach which estimates the value of a property based on how much net income is created. The approach an owner would take to establish an accurate TIV for insurance purposes is different and starts by hiring a reputable third-party firm to complete an insurance appraisal. Once hired the company starts the process of identifying, assessing, analysing, and reporting on the current replacement cost of the property. As mentioned, there are a multitude of components that must be evaluated: building structure and systems, all common assets, applicable bylaw and building codes, landscaping, and even the cost of demolition. Once all factors have been accurately accounted for, the insurance appraiser can provide the condominium with the TIV, which enables the owners or manager to insure the property sufficiently. If appraised too high, the condominium corporation will be paying excess amounts of money in premiums for insurance. If appraised too low, the asset is at high risk in the unfortunate event of a total loss. This issue is more complex when considering the many external factors that can cause fluctuations of the TIV of a property.

TIV - Factors and Considerations

Construction Type, Materials, and Labour Considerations

Looking at insurance appraisals through the lenses of an appraiser, the three major considerations for costs are the type of construction, materials, and labour. As economic conditions fluctuate, so do these variables. Changes to supply and demand, workforce composition, even international trade can all contribute to rapid and profound TIV fluctuations

Location and Scale

While the TIV has nothing to do with the market value of the land, location can have a substantial impact on the replacement cost. Many contractors charge more for their services in urban areas than in rural areas. Locations that are considered affluent will often get higher quotes from contractors. Demolition is another significant contributor to the total replacement value. Demolition and removal jobs in urban areas will cost significantly more due to space limitations, traffic considerations, imposed standards for separating materials, and development permits that may be required. Smaller properties do not benefit from economies of scale that exist on larger projects. For example, material suppliers typically offer discounts on larger orders, and this can lead to an overall lower cost per square foot of construction. Furthermore, small suites do not equate to lower costs because all suites still require all the same utilities


and amenities such as appliances. In larger units, those expenditures are spread across more floor area, thus the price per square foot can be lower.

Bylaw and Building Code, Building Practices

Bylaws and building codes are an important consideration when appraising condominium assets. Due to variations between municipalities and provinces, bylaws and building codes must be assessed in detail on a case-by-case basis as discrepancies between current standards and older structures can reflect large portions of a building’s full replacement value. Experienced appraisers have seen cases wherein new building codes and bylaws represented up to 30% of an asset’s TIV. Examples include updates to fire protection standards, elevator codes, and parking requirements that would entail large amounts of capital to rebuild to current day standards

Current fluctuations explained

The aggregate of all previous factors results in total insurable value fluctuations which, when shifting above the insured value of a condominium property, pose a serious concern for owners and managers. Currently, certain economic conditions have had a great impact on TIV, including:

Supply and Demand of Raw Materials

Supply and demand of materials such as steel, concrete, and softwood lumber has been transitioning through a period of major imbalance, causing extreme price increases1. With an overall decline in steel production, global increases in demand for steel have drastically affected pricing. According to the World Steel Association, the cost of steel has been increasing since July 2017 and is expected to rise again by 8% through 20182. Canadian softwood lumber production has been stifled by recent, record-level forest fires, beetle infestations, and by climate change3. In 2017 alone, building and construction costs saw an increase of 10% - 40% due to BC’s wildfires. This reduction in supply has led to sawmill closures in Canada, further contributing to record level pricing.

International Trade

A deterioration in trade relations between Canada and the USA has further affected increases in material costs. The USMCA is the new trade deal to replace NAFTA and it may have a significant impact on the exchange rate between the two countries. Tariffs on raw materials are another main consideration regarding fluctuating prices. It is expected that steel tariffs alone could raise condominium prices by $10,000 CAD5.

Labour Market Shortages

Lack of skilled labour equates to higher charges by contractors and construction companies as wage increases are needed to attract workers. As of December 2017, Canada was reported to have a national shortage of 38,000 construction jobs, third on the list of industries experiencing labour shortages6. By March of 2018, the construction industry had jumped to the number two spot7. This year, overall labour costs are expected to raise an additional 2-3%, influencing overall construction costs as well as expenses such as demolition and debris removal, both major components of a condominium’s TIV. With labour shortages affecting many other industries besides construction, we believe that this issue will have a profound affect on construction costs for the foreseeable future. The TIV is the essential figure to replace a property in the event of a major loss. With so many variables to consider, your best protection from the risk of loss is to obtain an appraisal from specialists in the field.


Spring Cleaning at Condo Corporations -Richard Murray Condo Strength Chair Grand River

It may not seem like it yet, but Spring is just around the corner. With that in mind, condo Boards should investigate some annual tasks.

Firstly, you should have already started, if not already completed, your contract negotiations for your lawn maintenance, if you have any. These are usually completed by tender and take a good month or more to finalize. You will likely use the services of your Property Manager to garner a list of potential candidates, or you may use your own resources. Either way, it is important to get some references if you do not already know a candidate. Contracts can be for a single season, but also, many corporations set a multi-year contract to firm up pricing for budgeting purposes. Showing the potential for a multi-year contract may also create better pricing and better performance since poor work will jeopardize a larger fiscal reward for a contractor. Also, in projects such as lawn maintenance and snow removal, the first year of a contract will be a learning experience and the subsequent years will give you the work standards that you really want.

You will want to have the prospects all walk the site with your Property Manager so that questions can be properly answered, and issues pointed out in advance. While letting a prospect do his/her own site visitation may result in a reduced-price quote, what you really want is a proper job done as your priority, with good pricing the second. It is also an excellent idea to take photos of the site in advance of awarding the contract and providing copies of these to the awarded recipient. In this way, there are no disputes about the existing conditions of the property prior to the landscaper initiating the contract. Apply the same logic when contracting out your snow removal provider.

Now is also the time to assess the snow removal situation. Has your snow removal company damaged any landscaping? Does your contract stipulate that they must fix damage that they caused while completing their contract? It should.

If you do not have an on-site Property Manager or are self-managed, you have more work to do. There is a protocol to follow to tender a project. If you do not have one in place, you may wish to contract the writer to get a standardized set of protocols to consider. Knowledge is strength.

Fire alarm inspections need to be performed at least annually. All units must be inspected by an independent inspector. It could be a staff member or an appointed alternate. The point is that you cannot rely on the honour system from the resident. The negatives are just too great. Often, a specific date is advertised, and individual unit residents are provided with a door notice advising when their unit is to be inspected. Allow for an alternative or multiple date since people do have their own life schedules and you need to reasonably accommodate these. Advised times will likely only be for an AM or PM on a day. Weekends or evenings may be preferable, and your notice should include advising that if no one is available when scheduled, a fee may be charged for a come-back inspection.

With the new rules about carbon monoxide alarms, (Saskatchewan has no Provincial CO detector law and the National Building Code of Canada is adopted, requiring smoke alarms in all new dwelling units, sleeping rooms, and on every floor.) you need to check for these too. Remember that there needs to be one alarm per level for fire and one alarm for carbon monoxide/unit. Whoever does the testing likely should have a few new alarms for sale when inspecting. Alarms must be replaced at least every 10 years, but the batteries need replacing much more frequently. Remember also that if a unit originally had a wired alarm, it must be replaced with another wired alarm. New versions of wired alarms now come with a battery backup. Have your Manager check with a professional fire alarm company to ensure you have everything looked after properly. You do not want any issues where the condo corporation could be held responsible.

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Site inspections of all common properties should be done at least twice annually. By this, I mean a full site inspection, not just a quick look around. Look for items requiring maintenance or repair. Look at everything from a safety perspective. If you have balconies, check that the support structures are in good condition. You might even wish to modify your rules to stipulate weight and numbers restrictions for balconies. Look carefully at all roads and sidewalks. Are there any defects or uneven surfaces that could cause accidents? Deal with them. Are all lights in common areas working properly? Consider replacing defective lighting with LEDs. Do you have common areas like pools or tennis courts or party rooms? Check all these thoroughly. If you have a pool, do you have the plans in place for lifeguards, bromine supplies and similar all looked after? Do any walls in common areas need repainting?

Do you have emergency evacuation exercises? These should be completed at least annually, possibly more frequently. Do you have any keyed areas? Are the records as to access up to date? For security for your premises, do you change codes occasionally? Now would be a good time to do this.

If you have your own private streets, you likely have catch basins that need to be vacuumed out each Spring. Plan for that work now. Do exterior/common windows need to be washed? Firm up your work plans now.

If you have any work that needs to be done in better weather, look to contracting that out sooner, not later. Many times, you can get better pricing if work is done in fringe periods like Spring and Fall when the contractors have staff on hand but are not yet fully busy because their work is weather based. If a contractor can do work at their discretion when a nice day comes along, they love this option as it brings in money when they have the time and their personnel are not yet fully committed elsewhere. Also, minor work can be accommodated in fringe periods and many contractors will only work on large projects in the optimum work periods such as Summer, so your smaller projects get left undone.

In summation, think like a professional and use common sense. By mid Summer you should be thinking about your Winter projects. Everything takes time and not just on your part. A busy contractor cannot just drop what they are doing to give you a quote.

While this is not a complete overview it should give you enough to get you started in the right direction.

Good luck. Think Spring!

Inside have your trusty green cleaners at the ready — baking soda, vinegar and Non-toxic. Low-cost hydrogenperoxide. Hydrogen peroxide is a safe cleaner to use around kids, or anyone with respiratory problems, because it’s not a lung irritant. When cleaning it is best to avoid cleaners and chemicals that can pose a danger. Bleach can be corrosive and a skin irritant. Most cleaners sold in stores contain hydrochloric acid, ammonia or formaldehyde.

drops of essential oils to give vinegar a more appealing fragrance.washer and eliminate odours. Run a full cycle with a cup of baking soda.

minutes.ing vinegar mixed with a small amount of baking soda. Scrub all

surfaces. Let it sit in a toilet or sink for half an hour to help eliminate odours. All other surfaces including mirrors andglass can be cleaned using a vinegar-water solution.

pe down items with a microfiber cloth using some lemon juice or essential oils.


The Pitfalls of Deferring Maintenance and Repairs in Condominiums

Deferring maintenance can have measurable short-term gains. Delaying repairs or replacement to building components or systems can be done to provide cash flow relief, meet budgetary expectations, or delay the non-financial impact of the project.

However, deferring maintenance also comes with risks and potential costs

Pitfall 1: Lack of consideration of the risks associated with emergency failure

Properly forecasted and planned replacement and repair projects consider construction variables such as urgency and material delivery time. There are numerous systems throughout complexes that require continuous operation and greatly affect the community in the event of unexpected failure. While considering deferring a repair or replacement project, a corporation must address the risk, adverse impact, and the additional costs that an emergency failure of the system could impose during the deferral period. Envision a main breaker switch replacement that is deferred due to immediate budgetary issues. Properly planned, any scheduled shutdown of the power during the project is addressed by notification to the owners or by arrangements of temporary power. In the event of emergency failure, the risks associated with the potential lack of availability and costs of emergency power, coupled with the additional strain of dealing with a community that just lost power may be worth re-evaluating budgetary priorities on aging equipment where the negative impact of unexpected failure is so great.

Pitfall 2: Uncontrolled or concealed continual degradation

Individual building elements are part of an overall system that rely on the integrity and proper functionality of all components. A failed caulking joint around a window can lead to water infiltration that damages drywall and saturates insulation, resulting in heat loss at the wall assembly. Deferring maintenance of elements where the failure is damaging other, sometimes concealed, secondary elements without proper consideration of the costs and impacts of repairing these secondary elements will often result in significantly increased future maintenance and repair costs. Countless localized and minor repairs projects have spiralled into large, multi-year, costly, and disruptive projects under the guise of deferred maintenance.

Pitfall 3: Ignorance to volatility of material cost

Condominium budgets expect costs to increase over time in line with inflation. When evaluating future costs of deferred maintenance, condominiums often look to the local construction price indices which indicate year over year general inflation. However, materials or equipment that are related to a specific commodity, such as aluminum in high-rise windows or petroleum in asphalt, may see price increases over a relatively short period of time that fall outside the range of the general forecasted inflation rates.


Window frame replacement projects that were deferred from 2013 to 2015 would have expected a general construction price increase of 2.3% (Statistics Canada), however, aluminum prices varied significantly in this period, increasing by 17% at their peak. Although aluminium does not make up the entirety of these projects, over a 2-year period, the changes in material costs affected overall construction costs, resulting in an estimated increase in project cost of 6%. These unexpected changes could negate the original benefits of deferral altogether.

Pitfall 4: Life-extending repairs associated with deferral does not return an appropriate benefit

Occasionally, useful service lives of aging elements can be extended with minor to moderate repairs, thus reasonably deferring their subsequent major overhaul or replacement. The cost and scale of these life-extending repairs must be evaluated in relation to the benefit or savings of their deferral. The cost of the life-extending repairs may not be reasonable when considering the amount of time that the repairs defer the subsequent project. The cost of these refurbishments will always be significantly lower than a complete window frame replacement, however, if the value of the refurbishment is 35% of the value of the future replacement, and is only expected to extend the service life of the windows by 25%, consideration should be given to dealing with the window elements as a whole, without delay.

Managing Risk

Deferring repairs and assessing priorities is a part of building management and operation. The money isn’t always available every year, and if it is, it may not be in the best interest of the community to carry out a specific project at a given time. All project deferrals contain risk, which are evaluated by the probability of failure in relation to the impact of failure. In the examples above, we’ve suggested cases where the risks were either improperly managed or ignored altogether. A comprehensive review and preventative maintenance inspection should be performed when considering any deferral to ensure that you do not get trapped in one of the pitfalls.

- condensed from Justin Tudor Keller Engineering.com

Want to be a published author? A benefit of CCI membership is the opportunity to write an article forpublication inCCI-SSK "Condo voice" quarterly magazine. If you are a condominium director with a stor to tell or advice torelay to other condominium boards, let us know! If you are a professional or business partner company offeringservices or products to condominiums and have a relevant article, let us know!

The subject matter should be current, concise and helpful. The topic should relate to the operation or management of condominiums and not be of an ad ertisin nature. Articles can be between 500 - 1500 words in length.

Contact us at [email protected]


What is co-insurance? -from Insurance Institute of Canada Material

Coinsurance may well be one of the most confusing and misunderstood terms in insurance. While not all inclusive, this article will cover the basic concept.

Coinsurance is the percentage of value that the policyholder is required to insure. If you insure your property for less than that amount your insurance company imposes a “coinsurance penalty” once a claim is filed. The value is determined at the time of the loss and if the amount of insurance is found to be under the stated coinsurance percentage then a penalty is applied reducing the claim payment.

Coinsurance is also a provision of an insurance policy that provides that the insurance company and the insured will apportion between them any loss covered by the policy according to a fixed percentage of the value for which the property, is insured.

This clause makes sure policyholders insure their property to an appropriate value and that the insurer receives a fair premium for the risk, whether on a replacement cost basis or on an actual cash value basis (subject to depreciation). The co-insurance clause can also be found on business interruption policies where it ensures that policyholders insure their revenue stream to an appropriate value.

Insurance is intended to spread the risk of any loss among every insured who purchases a policy from an insurance company and the company itself. The likelihood that every policyholder will suffer the loss that has been insured against is slim, and, therefore, an insurance company should be able to compensate those who have losses, if those policyholders have complied with the terms of their policies.

Co-insurance divides the risk of loss according to the amount of insurance purchased by each person through the payment of premiums. The size of insurance premiums is based primarily upon the value of the property covered by the policy. If a person fails to insure a property for an amount close to its actual cash value or replacement cost, then the person must accept a greater share of the risk of loss than someone who pays larger premiums to insure his or her property for an amount close or equal to its actual value.

How does co-insurance work?

Generally, co-insurance is expressed as a percentage. The most common clauses require policyholders to insure to 80%, (for property insured on an actual cash value (depreciated value) basis.) 90%, is normally used: for buildings and contents insured for replacement cost, or 100% % is normally used: for profits business interruption.

For instance, a building valued at $1,000,000 replacement value with a co-insurance clause of 90% must be insured for no less than $900,000. The same building with an 80% co-insurance clause must be insured for no less than $800,000. There are other percentages and applications used and your broker will advise you of the steps to take to ensure your property is insured to a fair value and you won’t end up on the wrong side of a co-insurance calculation.

What if I choose to insure for less than the amount required by the co-insurance clause? If an owner chooses to insure for less than the amount required by the co-insurance clause, the property owner is essentially agreeing to retain part of the risk rather than transfer it to the insurance company. He or she thus becomes a ‘co-insurer’ and will share the loss with the insurance company according to a simple calculation.

Here are two examples that demonstrate how the clause works:

Building Value $1,000,000 Co-insurance Requirement 90% Required Amount of Insurance $ 900,000


Actual Amount of Insurance $ 600,000 Amount of Loss $ 300,000

The co-insurance formula is: (Actual Amount of Insurance) X Amount of Loss = Amount of claim (Required Amount of Insurance)

Inserting the amounts above in the formula produces the following calculation: ($600,000) X $300,000 = $200,000 ($900,000)

So, the owner absorbs a $100,000 co-insurance penalty. Since he chose to retain one-third of the risk himself rather than transfer it to the insurer, he absorbs one-third of the loss. If the building had been insured to the amount required by the 90% co-insurance clause then the co-insurance calculation would look like this:

(Actual Amount of Insurance) X Amount of Loss = Amount of claim (Required Amount of Insurance) ($900,000) X $300,000 = $300,000 ($900,000) In the second example, since the owner met the co-insurance requirement, he was not a coinsurer and his claim gets paid without penalty.

Will insurance companies allow the deletion of the co-insurance clause?

Generally, insurers will not allow the co-insurance clause to be deleted. They want to ensure they receive a premium which fairly reflects the total reconstruction value of the property insured, and covers the risk assumed by the insurer. Under certain circumstances, an insurer will replace the percentage co-insurance clause with a “stated amount co-insurance” clause.

With the stated amount co-insurance clause, a pre-agreed value replaces the percentage amount. If the amount insured is not less than the amount agreed to, the property owner cannot become a co-insurer and won’t face the penalties created by underinsurance. If the property is insured for less than the agreed value, the stated amount co-insurance clause reverts to the standard 90% clause – and the potential for an underinsurance penalty returns.

To obtain the stated amount co-insurance clause, the policyholder must satisfy the insurer the amount of coverage is a fair approximation of the true cost. Normally, a “reconstruction appraisal” will be required. Market value or purchase price can be dramatically different from replacement cost. Relying on them can produce some nasty surprises following a loss.

Always check with your insurance broker for expert advice!


CCI South Sask. Condo 100

SAVE THE DATE Regina

May 25,2019 Our Second This Year Now 4 hours 9am-1pm

More Details Soon Condo 100 Course

Special Thanks to Lindsay Oliver and Kelsey Kreklewich -Olive Waller Zinkhan & Waller LLP for an engaging,interactive Lunch & Learn on Battling Bylaws.They gave lots of insight into what we can and cannot do as Directors, when to usesmall claims or Court of Queens’ Bench and so much more.

Was ana ropert ana e ent


BREAK BAD CONDO BOARD HABITS

-Liron Daniels

Much like people, condo boards can develop bad habits that are hard to break. Even good condo boards, from time to time, need to break out of bad habits.

Conflicting Public Opinions

Condo boards can and should have disagreements. This remains the best way to come to the best possible solutions. Once there has been a majority vote the board should speak with a unified voice. Whether giving direction to management, dealing with vendors or communicating with residents a condo board should speak with a single voice. Directors voicing dissenting opinions outside of board meetings can weaken a condo board.

Failure to Vote and Record Decisions

After deliberation and decision, condo boards can neglect to have a formal vote or record decisions. Lack of formal records, meaning undocumented actions, are not legal. They can place any policy or financial decision at risk.

Fabricating Problems to Address

Serving as a condo director is hard enough without creating “problems” that don’t exist. Avoid demanding new procedures or processes likely to create more problems. That vendor who fails to perform as expected or resident who fails to abide by condo rules is more likely to be an isolated situation rather than reason to deliberate and question the way things are currently being done.


A checklist for setting condo budget priorities

- By Van Smith for Condo Business

Some may think of condo budget review as a yawn fest; however, others may spend hours working out the smallest of details. That’s because a budget is basically a financial plan — not sexy, but extremely important in the condominium industry. Budgeting is so important that the Condominium Act requires all corporations to maintain an operating budget and a capital budget for the repair and replacement of major components.

The elected directors for a condominium corporation meet annually to review a preliminary budget —early enough to allow time for review and final approval of the budget before it gets distributed to the unit owners.

Management firms put several days into preparing the budget and the supporting documents to justify the budget categories and amounts. Much data is gathered, including historical data from prior years, new utility rates, insurance estimates, WCB rates, and contracted services, all to assist with budget packages.

Setting priorities

How does a board determine budget priorities when faced with rate increases? Well, this challenge normally presents itself when increases are excessive.

Numerous condominium corporations are faced with double-digit rate increases for different reasons. In new buildings, the second-year budget tends to rise significantly due to costs deferred by the developer. In older buildings, unanticipated repairs or higher than anticipated repairs may also lead to dramatic increases.

The challenge for most directors is accepting an increase that will have a financial impact on their neighbours and themselves. Consider the following checklist when sitting down as a board to discuss budget priorities.

Review director responsibilities: The role of the director is to perform the duties and obligationsof the corporation, regardless of cost. If the roof is leaking and requires major repair, the board mustbudget to repair the roof even if it is expensive and will increase maintenance fees.Determine who has priority: Sometimes a small group of vocal unit owners makes requestssuch as that the five-year-old gym equipment be replaced. Although it would be nice to change theequipment, it is likely that the equipment will last another 10 years. Determine whether items are apriority for most owners or a select few.Maintain the standard: Condominiums are like hotels, as they can either offer several amenitiesand services, or a just a few. Buildings with high-end and wide-ranging services are generally occupiedby people who want to live a certain lifestyle and will pay for those luxury services. Budget to maintainthe standard owners have come to expect.Consult with professionals: Professionals can evaluate buildings and document the condition ofitems such as the roof or the underground garage, as examples. They are also able to prioritize amaintenance schedule to help directors plan for the repairs or replacement of items.


Building improvements: Consider establishing an ongoing budget category for buildingimprovements, such as installing an automatic door operator to provide easier access for residents.Some other examples include energy conservation/retrofit projects and signage upgrades. When facedwith budgetary constraints, consider small projects that have a big impact.Operating versus reserve: Although a reserve fund can be used to replace a window, it’s best tobudget an amount within the operating budget to handle some replacements. For example, a 10-year-oldbuilding with 600 window units should consider an annual operating budget of one per cent (or six units)for repairs and replacement. The reserve fund should be used for a complete or phased replacement ofthe windows in accordance with the reserve fund study. Windows are just one example; the sameprocess applies for all reserve fund items.

Over/under budget

Setting budgets isn’t a perfect science. The idea is to set realistic estimates based on the information available and stick as closely to that framework as possible. Unforeseen events can lead to budget shortfalls, or more happily, budget surpluses. Here’s a note about budget surpluses, though:

Ever heard stories about public sectors unnecessarily spending all their budget? This also happens in the private sector, where departments may try to use up remaining dollars before year end. The concern is if they don’t spend all their budget, then their budgets will be cut in the following year.

This isn’t quite the same in condominiums as the common expenses are collected based on each unit owner’s proportionate share of the corporation’s expenses. If there’s a surplus at the end of the fiscal year, the common surplus can be applied to the reserve fund or used toward future operating expenses.

Setting budget priorities involves making difficult decisions. This process can be made more manageable by using the above checklist as a guide. It should help directors focus on meeting their responsibilities by regularly maintaining and improving the building while delivering the services residents expect within the corporation’s means.

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Q & A Q: Is there a maximum percentage that the corporation can increase monthly maintenance fees by each year?

A: There can be no upper limit to costs; whatever it costs to operate the condominium each year has to be paid by the owners. The only way to significantly reduce costs in the long run is to reduce or eliminate services presently enjoyed by owners and this leads to a building that becomes run down and a poorer place to live.

Q: Do we have to have Sask. WC?

A: Generally, you must register if your firm:

• Works in an industry that is defined as mandatory under the Act, and

• Employs and pays workers on a regular, casual or contract basis.

• Has a director that reports employment income on a Canada Revenue Agency T4 income tax slip.

• Condo Associations are a mandatory industry and are required to register if they hire workers orcontractors. If registration does not occur within 30 days of employing workers, a late registration penalty will beapplied.

• Condo owners pay fees to the Condominium Corporation which may include maintenance of common areas, wasteremoval, building repairs, etc. which require workers.

If you don’t register

It is against the law to avoid registering with us. If you don’t register, you could be:

• Fined, even if a worker is not injured.

• Required to pay the total compensation costs of a worker’s injury, and

• Required to pay three years in retroactive insurance premiums, even if a worker is not injured.

Q: Does my Condo have to file with CRA?

A: All Canadian condominium corporations must file a corporate income tax return each year, even if there is no tax payable. Generally, condominium corporations are considered non-profit organizations that are exempt from tax under paragraph 149 (1)(l) of the Income Tax Act (ITA). A condominium corporation’s taxation status is based on the particulars of the condominium corporation each fiscal year.

1. What returns does a condominium corporation have to file each year?

A condominium corporation must file a Corporation Income Tax Return (T2) or a T2 Short Return.

(Visit our CCI South Saskatchewan website for more detailed information on this in FAQ under the Resource Tab.)


Q: How often does the reserve fund study need to be conducted?

A: The initial reserve fund study is required within three years of the date of the corporation’s first annual meeting. If the condominium was created through conversion of an existing apartment building, a reserve fund study must be undertaken by the developer before the sale of any unit. After the initial reserve fund study, a new one is required every five years thereafter.

Clause 58.1(3)(a) and Subsection 58.1(4.1) of the Act and Section 51.2 of the Regulations

Q: Why do we need a new study in five years?

A: The reserve fund plan once it has been created must be adaptable enough to allow for any changes due to circumstances or occurrences that happen during the 5-year life of the plan. The reserve fund plan once it has been created must be adaptable enough to allow for any changes due to circumstances or occurrences that happen during the 5-year life of the plan.

The Condominium Property Act is designed to provide consumer now specifies enhanced professional qualifications for eligible Reserve Fund Study providers. See Section 51) of the Regulation which details the methodology, and experience required of Reserve Fund providers in the operation and maintenance of depreciating property. Additionally, directors and employees of the corporation are prohibited to act as Reserve Fund Study providers. Section 51 of regulations

A Reserve Fund Report must assess each listed item of depreciating property in terms of age and time remaining before its maintenance and replacement is likely. This assessment includes the probable cost incurred at the time of the actual maintenance and or replacement. The resulting document projects a stream of Reserve Fund cash outflows, based not on the Board priorities, but only on the current condition and on the standard useful service life expectancy of each listed item.

A Reserve Fund Plan, which meets the requirements of the Act, will provide a high degree but not an absolute degree of assurance that enough funds will be available in any one year for necessary repairs and replacements of the listed depreciating property. Even if Reserve Contributions are collected and used only for purposes in accordance with the Act, there is a small possibility that reserve funds will be depleted and a special assessment will be required

Boards should, therefore, monitor and ensure that some minimum balance is projected in the Reserve Fund Account in case that required repairs will come in earlier and at higher costs than estimated. It is a mater of probabilities determined by experts and the Act explicitly prohibits Boards from second guessing a qualified Reserve Fund Provider who has adhered to the methodology prescribed in Regulation .1 1. . However, legislation provides Boards with the authority to change and update Reserve Fund Plans by changing the amount and time of each Reserve Fund Contribution projected in each year

. Each reserve fund plan is somewhat unique to the Condominium.


More Condominium Terms to know: Condominium Plan The Survey Plan that was registered under the Condominium Property Act of Saskatchewan at Land Titles. It defines the unit boundaries and the property of the Corporation.

Exclusive Use Areas The Board has the authority to grant exclusive use of the common property to any Owner. For example, a deck or parking stall. Owners can be responsible for the maintenance of any exclusive use areas that they have been granted.

Reserve Fund That portion of the annual budget that is set aside by the Corporation for the repair and replacement of the common property, portions of the units and the Corporation’s property that are not repaired or replaced annually.

Standard Unit Description

Standard unit description means the standard unit description for each unit or class of units that is: (i) prepared by the developer and accompanies an application to issue titles pursuant to section 5.1; or (ii) contained in the bylaws;

Title

“Title” means, respecting a condominium unit, the right to: an ownership share in the condominium unit; and (ii) a share in the common property;

Unit The premises owned by you. (i) in the case of a building, a space that is situated within the building and described as a unit in a condominium plan by reference to floors, walls or ceilings or other monuments as defined in The Land Surveys Act, 2000 within the building; and (ii) in any other case, land that is situated within a parcel and described as a unit in a condominium plan by reference to boundaries governed by monuments placed pursuant to the provisions of The Land Surveys Act, 2000 and the regulations made pursuant to that Act respecting subdivision surveys.


KEEPING IT CONFIDENTIAL

Confidentiality is sometimes required for the Board of a condominium corporation. Difficult issues arise that require tough decisions to be made in every condo one time or another. These are best discussed behind closed doors, and details should not appear in meeting minutes that might later be circulated to owners.

This can require a bit of juggling in some cases. Some condominiums have open Board meetings, so that other owners are informed and feel involved. But if the Board is discussing possible liens on units whose owners are not paying their contributions to common expenses, the non-board members should be asked to leave, and minutes should omit the suite numbers and names of those affected.

Other issues that require confidentiality would be a situation that could embarrass an owner. An alleged transgression could be a simple mistake, and it wouldn’t be fair to publicly discuss the noise thought to be coming from one unit, for example, when it later turns out it was coming from next door. In short, any potential discipline issue or concern affecting a homeowner’s personal situation or finances should be discussed privately. As

well, Directors should be reminded not to disclose those names to owners who are not members of the Board.

Minutes should still be recorded fully. In this case, Board members, other owners, and even potential home purchasers reading the condominium documents, all have a right to know how many suites are in arrears, what the impact is on the operating budget, and what steps are being taken to collect the needed money. Condominium owners reading the minutes will be reassured to know that their Board is protecting the collective interest. But specifically, which suites are involved is not essential knowledge for owners who are not Board members.

We must remember that while condominium corporations are legal entities, they are also political organizations. Human relations are important, as is fair dealing with individuals, consideration for their circumstances and, of course, confidentiality on sensitive issues.

Whether you are self-managing 12 units in a three-storey building or govern a100-unit townhouse development with professional management, we should be sensitive to how it would feel if you were the party being discussed. Behind closed doors your Directors can have a full discussion, all the options for actions can be explored, minutes can record what was decided, but no one will face embarrassment among their neighbors beyond the Board.


Ten Condo Safety Tips to Consider -Micron

1) Be aware of your surroundings. Acquaintingyourself with your neighbors will give you a betteridea of their regular arrival and departure times soyou will be better prepared to spot irregularities inthe building and respond in kind.

2) Know the location of all fire exits andstairwells in your building; this includes indoorparking and storage areas. If your buildings garageis equipped with panic buttons knowing thelocations of those buttons can help you respondquickly in an emergency.

3) Part of being aware is keeping an eye onaccess control. Most condo owner’s mistakeaccess control for security, but they are not thesame. Access control is selectively restricting entryto the building; security, however, would work withaccess control to alert personnel of a perimeterbreach, or if a door remained open longer than theallotted time. While access control working withsecurity is more desirable there are still preventativemeasures that tenants can implement to increasebuilding safety.

4) Unwanted visitors can gain entry to the buildingthrough the parking garage. When entering, orexiting, the garage, stop and make sure that thegarage door is completely closed before drivingaway, or parking, to thwart unwanted visitors fromslipping into the building. If you notice an exteriordoor being propped open notify the buildingmanager about a potential breach. While it mayseem nice and neighborly to hold the door forsomeone unless you know them you could beputting the rest of the building at risk.

5) It is important to note that you should neverpursue someone trying to gain access to yourbuilding. Notify authorities, your buildings securityforce or your building manager of the situation andkeep a safe distance away.

6) Keep your unit locked at all times, not onlywhen you are gone, but also when you are home.Also, make use of your peephole; if you do not

have a peephole talk to management about getting one installed. If you do not know the person on the other side of the door take precautions before opening the door.

7) Personal safety is important in condos. Whenfirst moving into a condo make sure the locks havebeen changed since the previous tenant. If youmake copies of your keys keep track of how manythere are and who is in possession of them. Youshould never hide or leave a key outside of yourunit.

8) As a new resident you should take theprecaution of not putting your full name on yourmailbox. Instead you should only use your initials,or your last name. This will prevent unwantedpeople from trying to trick your neighbors intobelieving they know you and thus letting strangersinto the building.

9) Use caution if you live on the lower floors ofyour condo building. Make sure you do not leaveyour valuables on display, particularly when you arenot home. Also, make sure to keep the balconydoors locked when not in use, even if you arehome.

10) The final tip is probably the easiest to enforce.Report any burnt out lights in entry ways, hallways,stairwells and parking garages. Lighting is one ofthe cheapest deterrents to crime. By notifying thebuilding maintenance about dimmed or burnt outlights you are increasing the condos safety.

These tips are all transferrable safety measures that can be used outside of condos to help keep yourself and those around you safe. Don’t forget to share these tips to help keep family, friends and neighbors safe!


Did you know? The GeniePad website has a message forum where you can ask questions of CCI members and see answers from other owners? Sign up- it’s free for CCI members? Go to: ccisouthsask.geniepad.com to Register.

Did you know?

Education of your directors is an investment for a better administration and the educational cost should always be covered by the corporations. Many corporations have a line in their annual budget to make sure their directors do attend these seminars.

Did you know?

An insurer may have a duty to defend an insured in a lawsuit filed against the insured by a third party. This duty usually arises if the claims in the suit against the insured fall within the coverage of a liability policy.

If a third party caused a loss covered by a policy, the insurance company may have the right to sue the third party in place of the insured. This right is called Subrogation, and it is designed to make the party that is responsible for a loss bear the burden of the loss. It also prevents an insured from recovering twice: once from the insurance company, and once from the responsible party.

An insurance company can subrogate claims only on certain types of policies. Property and liability insurance policies allow subrogation because the basis for the payment of claims is indemnification, or reimbursement, of the insured for losses. Conversely, life insurance policies do not allow subrogation.

Subrogation definition and example:

n. assuming the legal rights of a person for whom expenses or a debt has been paid. Typically, subrogationoccurs when an insurance company which pays its insured client for injuries and losses then sues the partywhich the injured person contends caused the damages to him/her. Example: Fred Farmer negligently builds abonfire which gets out of control and starts a grass fire which spreads to Ned Neighbor's barn. Good HandsInsurance Co. has insured the barn, pays Neighbor his estimated cost of reconstruction of the barn, and thensues Farmer for that amount. Farmer will have all the "defenses" to the insurance company's suit that he wouldhave had against Neighbor, including the contention that the cost of repairing the barn was less than Neighborwas paid or that Neighbor negligently got in the way of firefighters trying to put out the grass fire.

And now you know!

BE CODE SMART

The best way to protect yo urself from discrimination and from complaints is to know and respect The Saskatchewan Human Rights Code.

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Policy on Support Animals

“...every person is free and equal in dignity and rights...” (Section 3, The Saskatchewan Human Rights Code)

The Saskatchewan Human Rights Code The Saskatchewan Human Rights Code (the “Code”) requires the accommodation of persons with disabilities. The definition of disability includes mental disorders. Pursuant to s. 2(1)(i.1) “mental disorder” means a disorder of thought, perception, feelings or behaviour that impairs a person’s:

(i) judgment;(ii) capacity to recognize reality;(iii) ability to associate with others; or(iv) ability to meet the ordinary demands of life.

Emotional Support Animals An Emotional Support Animal is one that has been proven to be effective at alleviating symptoms of certain mental disorders. These animals provide therapeutic nurture and support to their handlers/partners. Emotional Support Animals may be prescribed by a professional or be proven retroactively where they started out as a pet but result in a person’s disability improving and are therefore identified by a professional as necessary. Typically, Emotional Support Animals are for at home support but they may be required for other forms of supports by some people. Emotional Support Animals do not require specialized training.

Case Law Emotional support animals have been recognized as alleviating symptoms of certain mental disorders.

Court decisions in Ontario have found that landlords and condominium associations have a duty to accommodate an emotional support animal where medical evidence establishes that

the resident requires the animal to alleviate symptoms of a mental disorder.1 In some cases, however, the medical evidence has been found to be insufficient to support the requirement for a support animal.2

Housing The Commission accepts and investigates complaints in housing where a complainant provides sufficient medical evidence to establish that an emotional support animal is required in housing. If a person establishes a requirement for an emotional support animal, a “no pets” policy in rental or condominium housing does not apply. People with certain mental disorders rely on support animals for everyday living, and require accommodation in housing.

(i) Requesting rental housing with a supportanimal

Being able to substantiate the disability is essential in order to request an accommodation. It is also essential for the person with a disability to establish that the use of a support animal is necessary to assist them in their home. The tenant

ATTENTION: NEW POLICY FROM HUMAN RIGHTS ON EMOTIONAL SUPPORT ANIMALS

SASKATCHEWAN HUMAN RIGHTS COMMISSION

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need not disclose the details of his or her disability, nor provide a detailed medical history. Rather, the tenant must establish only that the tenant: (1) has a disability, (2) requires the support animal because of their disability and (3) would be at significant risk of an adverse health consequence in the absence of the animal. The tenant will be able to establish these requirements with a letter or prescription from an appropriate professional such as a physician or psychologist.

(ii) Considering the requestOnce the disability and requirement for a supportanimal is established, the tenant’s request shouldbe considered using a “reasonableness test”. It israre that a request for accommodation to allowsupport animals in rental accommodation willconstitute an undue hardship. Accommodationmay not be possible if there is another tenantwith a medically substantiated allergy who wouldbe affected or if the tenant fails to properlycontrol the animal. Each request foraccommodation must be assessed individually.Conflicting requests for accommodation shouldbe carefully examined to determine if it ispossible to reconcile the requests.

When the request for accommodation is accepted, the “no pets” policy is lifted. Lifting the “no pets” policy is a form of accommodation and recognizes that support animals are not pets. No other measures such as extra damage or security deposits may be taken where the “no pets” rule is lifted.

Accommodating a tenant with a support animal may result in some additional expense or inconvenience to the landlord. Unless the expense or disruption impacts the landlord’s operation in a fundamental way (to the point of undue hardship) the expense or inconvenience must be accepted. In the event that a support animal causes significant damage to a rental unit, the tenant may be held financially liable.

Emotional Support Animals in Public Services, Employment and Education The duty to accommodate emotional support animals in public services, employment and education is a developing area of the law. The duty to accommodate a support animal was recognized in one Ontario decision, but it contained little analysis of the medical evidence.

Emotional support animals do not have the same training requirements as a service animal. The prospect of undue interference with the rights of third parties is enhanced. This issue will need to be assessed on a case by case basis to balance the rights of the person with a disability with the rights of businesses, educators and the public.

Footnotes: 1 Niagra North Condominium Corp. No. 46 v. Chassie, 1999 CanLll 15035 2 Strumecki v. Capital Regional Housing Corp., 2005 BCHRT 386 and Simcoe Condominium Corporation No. 89 v. Dominelli, 2015 ONSC 3661 3 Sweet v. 1790907 Ontario Inc. o/a Kanda Sushi 2015 HRTO 233

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SASKATOON OFFICE Sturdy Stone Building 122 – 3rd Avenue North, Saskatoon SK S7K 2H6 PHONE 306-933-5952

TOLL FREE 1-800-667-9249

EMAIL [email protected]

FAX 306-933-7863

WEB www.saskatchewanhumanrights.ca

20141106

Canadian Condominium Institute / Institut canadien des condominiums2800 14th Avenue, Suite 210, Markham, Ontario L3R 0E4 • Website: www.cci.ca Tel: (416) 491-6216 • Fax: (416) 491-1670 • E-mail: [email protected]

DIRECTORS’ CODE OF ETHICS

RE: CONDOMINIUM CORPORATION NO. .

I have consented to act as a Director of the Corporation and I agree to comply with the following Directors’ Code of Ethics throughout my terms as a Director:

Honesty and Good Faith – I will act honestly and in good faith. I will do nothing to violate the trust of the unit owners I serve.

Care, Diligence and Skill – I will exercise the degree of care, diligence and skill of a reasonably prudent person in comparable circumstances. Iwill make a concerted effort to attend all Board and owners’ meetings. I will act responsibly and with due diligence to become familiar with the affairsof the Corporation and to uphold its Declaration, Description Plans, By-Laws, Rules, Resolutions, Policies, Agreements and Requirements of theCondominium Act and other legislation.

Conflict of Interest – I am not currently aware of any actual or potential conflict of interest with respect to any contract, transaction, buildingdeficiency claim, warranty claim, legal action, proceedings or any matter detrimental to the Corporation. If I become aware of any conflict, I willimmediately disclose it to the Board. I will not promote my own interests or those of any owner, resident, family member, friend or contractor to thedetriment of the Corporation. I will not seek any special benefits or privileges as a Director or Officer or accept any compensation either personally oron behalf of any other person except as permitted by a By-Law. I will act only in the best interests of the Condominium Corporation as a whole and I willnot favour the interests of any individual or group of owners or residents.

Confidentiality – I will not disclose to any person (including my spouse) information decided by the Board to be confidential or privileged orwhich reasonably ought to be deemed confidential. When in doubt, I will request determination by a resolution of the Board.

Good Conduct – At all times, I will conduct myself in a professional and businesslike manner at meetings of Directors or Owners. I will approach allBoard issues with an open mind, preparing to make the best decisions on behalf of the Corporation. I will act ethically with integrity and in accordancewith legal criteria. I will comply with rules of good conduct and will deal with others in a respectful manner. I will comply with principles of goodgovernance and procedural rules of order.

Support – I will abide by decisions of the majority of the Directors even though I may disagree, but I reserve the right to express my own views toowners upon non-confidential issues.

Defamation – I will not make erroneous or defamatory statements about the Corporation or any owner, resident, director, officer, manager, staff orcontractor of the Corporation.

Minimize Conflict – I will attempt to prevent or minimize conflict and disruption and will promote good relations amongst persons involved in ourCondominium Community. I will promote a first class image for our Corporation, its units, owners and residents.

Education – recognizing that governance of a Condominium Corporation involves complex and changing requirements, I will continue to educatemyself by reading relevant magazines (such as any publication published by your local CCI Chapter, CM Magazine or Condominium Business Magazine).I will support attendance by one or more Board members at any condominium seminars presented by the Canadian Condominium Institute (CCI),including CCI’s various levels of courses for Directors at the cost of the Corporation.

Agreement – I hereby agree to comply with the provisions set out in this Directors’ Code of Ethics.

Dated at this day of , 20

WITNESS:

SIGNATURE

PRINT NAME OF DIRECTOR UNIT NO.

[You are free to use this Code of Ethics in its current form; if you alter this document in any form, you must note it is modified from the CCI originaldocument.] If your Condominium uses this code, please let CCI know – e-mail: [email protected]


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