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CHANGES ARE COMING TO THE CONDOMINIUM UNIT STANDARD FINISH –ARE YOU PREPARED?
The Alberta Condominium Property Regulations are changing and, effective January 2020, several key updates will come into force addressing how Condo Boards govern themselves – including insurance requirements andmanagement of reserve fund studies.
How will these amendments affect you? Reliance is committed to helping you understand the regulations, seamlessly implement the changes, mitigate problems that Boards may experience and reduce the workload for condominium managers.
KEY FACTORS TO CONSIDER:
- What do I need to act on NOW? While the regulations do not come into effect until 2020, Boards must consider the following THIS YEAR to ensure their bylaws are compliant in time:
- 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)?
- 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
- 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
- Determine what options are open to the Corporation to change existing standards (dependent on their position in the annual update cycle)
- 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 arequirement. Reliance has been the only insurance appraisal provider in Alberta that specifically identified UNIT standard finishes (since before 2000). We’ve done it this way for decades, so corporations and/or unit owners had a clear understanding of the standards/betterments/ improvements and who was to cover them. 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 if an appraisal firm must adhere to professional appraisal standards. We can help put our proven processes in place to create a clear path forward for you.
- How does this affect my older properties? The specifications and Standard Unit Finishes are readily available for new projects, but Boards must have a plan for units that were built, possibly several decades ago, where few or limited specifications are available. You must determine whether your Board is well educated in setting Standard Unit Finishes, and what the condominium managers involvement or lack thereof will be in the process. Most importantly, understand that this is not a time for speculation. With a short timeframe for implementation, our best advice is to rely on our experience – we will eliminate the guesswork and make this an easy transition for existing and new clients.
INSURANCE APPRAISALS • RESERVE FUND STUDIES
- How will costing work? Reliance utilizes several nationally-recognized computerized costing programs which provide accurate funding models for reconstruction purposes. As a result, we’ll analyze these standards even quicker and more accurately because we’ve been reviewing data and collaborating withnew construction builders daily – for decades.
- 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. However, Reliance will continue to request and review the bylaws for items such as roof top mechanicals and other components located in common or exclusive use areas.
- What about Bare Land Bylaws where Standard Finishes are limited to the shell of the Unit building interior? Our costing systems can readily complete this type of analysis. There continues to be varyingopinions based on the definitions included in the bylaws on “shell finishes”. We find these requireclarification 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. We will continue to request bylaws as we have on occasion found wording conflicts between managed and common property as well as coverage stipulated under the insurance clauses.
WHAT IS RELIANCE DOING TO ENSURE A SEAMLESS TRANSITION?
Standard Unit Finishes
We can integrate all new items specified in the Regulations into our reports under Standard Unit Finishes. As noted in Item 2 above, these require a staging based on the timelines noted and we have the process ready to go. EveryBoard’s situation will be slightly different and requires input on an individual basis. Throughout 2019, we want toassist you and your Boards to ensure everyone understands the changes (and their implications), you are comfortable with the process and feel empowered when rolling out the bylaws.
We’re currently working with the legal profession to ensure that drafting of these Standard Unit Finishes in bylaws are going to be reasonable and can easily be understood and adopted by Boards and owners.
Condominium managers have enough of a workload and there’s no need to get involved in this process. With over 45 years experience, we will educate and assist your Boards with simple implementation and costing processes.You don’t want to be involved in a Board discussion trying to mix and match betterments into unit standardfinishes – let us assist as we carry out these costing tasks daily.
Reserve Fund Study Changes to the Regulations
Reserve fund study changes will come into effect in July 2019; however, we have already implemented all the necessary changes including moving the funding horizon from 25 to 30 years. Reliance has been implementing all other changes noted in the regulations over the years so no other changes are required on our part.
The annual update of the reserve fund study by Reliance continues to be a well received and utilized by Boards on an increasing basis.
WHO NEEDS TO KNOW ABOUT THESE CHANGES?
It is imperative that all Boards become educated about these changes over the next several months. Disregarding early planning may result in a poor rollout of the Standard Unit Finishes and unnecessary revisions/changes once it goes to the owners for their approval. Eliminate future stressors – start planning now.
WHERE CAN I GO TO LEARN MORE?
The upcoming changes will affect every Board and unit differently. It’s important to have a customized plan built and in place prior to January 2020. Contact us to schedule a town hall meeting with your Board, teleconference, webinar or lunch and learn to have your questions answered and gain a clear path forward.
The 91-page document defining the regulations can be found in full here > https://www.alberta.ca/condominium- consultation.aspx
FOR ANY MORE INFORMATION PLEASE CONTACT:
Harold Weidman, President – email@example.com
Cori West, Reserve Fund Study Manager – firstname.lastname@example.org
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