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The Depreciation Report:

depreciation report provides important insights for buyers looking to buy into a strata corporation. It not only speaks about the current condition of the physical components (as long as the report is recent), but also the financial state of the strata corporation. Some of the most important information in a depreciation report can be found in the following two sections:

  • The evaluation of the strata’s physical components

  • The financial analysis and forecasting

Omitted Components:

One issue we often come across when reviewing depreciation reports is omitted components. Oftentimes this is due to the strata council directing the author of the report to omit certain items, which is a significant concern because excluding some items from the report leads to an underreporting of future capital expenses.

In simple terms, by excluding some items from the report, it appears as though the strata will have less to spend on future capital projects, than in reality. If not caught, this practice can be extremely misleading to potential buyers.

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The current strata insurance situation in BC has been difficult to say the least. Many strata corporations have seen premium increases from 20% to 50%, with some high value/high risk stratas seeing increases in the 200% to 400% range.

While the narrative around this problem has focused predominantly on premium increases, the lesser mentioned factor is that some strata corporations are also seeing their deductible amounts skyrocketing to levels not covered by most personal insurance policies.

For example, if a strata has a $500,000 water damage deductible and an owner can only get $100,000 of coverage, that owner could be on the hook for $400,000 if there is a loss from within their unit. This is a scary reality, so it’s important that consumers are made aware of these figures and advised to seek advice from a qualified insurance broker.

Are your clients looking at newer stratas? Next week we’ll discuss new home warranties in strata corporations. If you have any suggestions for topics you’d like us to cover, please let us know at info@bchomegroup.ca

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Contracts and claims

One of the most important services trading licensees provide to their clients is the ability to draft a legally enforceable contract.

In the case of Russell V Wispinski [1] the judge stated:

“A real estate agent in this province must be qualified and licensed. He and his brethren have a statutory monopoly with all the advantages and burdens that that status bestows. He, in my view, holds himself out as having some special skills and not the least of this is some ability to draft legally enforceable documents relating to his business.”

Reviewing a contract

There are, of course, limits on what is expected of licensees in drafting contracts. Drafting some clauses may be beyond the standard of care of a reasonably prudent licensee, but once a licensee takes on the task, they must do it properly[2].

The key is in knowing when something is beyond your expertise and referring your client to the appropriate expert, likely a lawyer, to draft the clause or contract or generally offer legal advice.


This issue of the Risk Report features Scott Twining’s article, The pitfalls of the poorly drafted contract. He offers several loss-prevention tips on how to avoid claims related to negligence in preparing and reviewing contracts.

Claims for negligence relating to contracts of purchase and sale make up 19% of (now closed) claims that have been reported to E&O since 2010. Watch for these top five problem areas:

  1. Subject clauses
  2. Taxes/GST
  3. Deposits
  4. Strata documentation
  5. Parties to a contract… tied with… fixtures/chattels

Here are some examples of the types of claims made against licensees in each of these categories.

Subject clauses

  • Failing to explain the risks of a subject-free offer
  • Failing to remove subject clauses on time
  • Failing to recommend appropriate subject clauses
  • Drafting unenforceable or ambiguous subject clauses

Taxes/GST

  • Misrepresenting who will pay the GST on the transaction
  • Misrepresenting that GST or other taxes are not applicable on the transaction
  • Misrepresenting the amount of taxes payable
  • Failing to ensure the contract sets out who will pay GST
  • Failing to advise a client that the foreign buyer’s tax applies

Deposits

  • Advising a buyer that their only risk if they failed to complete would be losing the deposit
  • Representing that a deposit had been received when this was untrue
  • Losing a deposit cheque or bank draft
  • Paying out deposit funds without instructions or proper authority

Strata documentation

  • Failing to obtain Form B
  • Failing to provide the complete set of strata documents requested by the buyer
  • Failing to provide minutes or other documents that contain key information such as an upcoming assessment or engineering report
  • Failing to discover and disclose information that makes the strata unsuitable for the buyer (e.g. age or pet restrictions)

Parties to a contract

  • Failing to ensure you as licensee were dealing with a properly authorized person
  • Failing to ensure the instructing party had a valid power of attorney
  • Drafting a contract with the incorrect name for the seller
  • Forging a signature to a contract

Fixtures/chattels

  • Failing to ensure a hot tub or other items are included in the sale
  • Wrongfully removing fixtures
  • Misrepresenting a heat pump as an air conditioner
  • Misrepresenting the age or condition of appliances.
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In this blog I share five tips for the Best Father’s Day Gift.


Tip number one! Buy your dad an appreciation card. Although Dad‘s do not admit it. They really appreciate receiving a card with kind words and a few reasons why you appreciate them so much. Give examples of what they have done in your life that made you so thankful for them.

 

 Tip number two! Quiet time. Fathers are always working to attending to your family’s need but they also do crave some time to themselves. A time where they can just sit back, quiet time to relax and do the things they enjoy the most e.g. watching TV, watching a movie. A note that this quiet time has to be uninterrupted. Quiet time for themselves to enjoy being alone and having space for themselves.


Tip number three! Food. Steak Dinner. They say the way to a man’s heart is through his stomach, well it is true for dad‘s. They really enjoy certain meals that they  do not get all the time so why not make that special meal for them on that special day. It could be bacon and eggs for breakfast or it could be steak dinner or a barbecue. Make sure though that this time they do not have to do any of the work. You make sure, you have everything ready and you and the kids can barbecue and take care of all the cooking details dad usually takes care of. It will show how much you value him for what he does to help the family.


Tip number four! An electronic tape measure. This is a gift that is not very expensive and it’s around $30 on Amazon. The measuring tape is something that dad’s are always using and it’s a tool that is a small, accurate and they can always can keep handy in their truck or even pocket. They will love their new tech measuring tape.


Tip number five! Why don’t you and your kids do a cute video message choreographed with simple words of five reasons why you love him as a dad. These little video clips are the best because he can keep it forever and the message is coming from his loved one of words he does not hear everyday. To create the video message, you can use TikTok or any another video editing app to put the video clips together. Once the video is complete, you can text it to him on Father’s Day and he will really appreciate you and be thankful for your love.


I hope you these tips help you and you all have a wonderful Father’s day with your families!


Best Wishes Always!


Shirin Purewal

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