The Editor, Sir:

There are several matters related to the management of strata corporations that are negatively affecting property values and rights of individual owners. A collective gasp of relief went up when apartment owners learnt that legislative amendments were in train that would overhaul the decrepit and ineffective Strata Act. Proprietors were further emboldened when they learnt that the prime minister himself had taken the lead on the matter in Parliament. However, it is now apparent that the main plank of the 'rescue plan' is the establishment of a commission. While well intentioned, this emphasis has some challenges that need to be overcome. For example:

Provision for the application of fees to cover administrative expenses of the commission. If this is to be funded by the owners, this may serve to exacerbate the problem.

Provision of procedures to be followed where a proprietor fails, neglects or refuses to pay contributions to the corporation. Beyond a procedure, how will this actually help the strata to recover from delinquents?

Appeals tribunal

Establishment of an appeals tribunal. This would be good if the action is swift and fair and allows for redress against delinquent owners. There would be a $1-million fine for failure to carry through on the ruling of the appeals tribunal. But is there a real prospect of payment if the same troublesome owner is already delinquent in fees owed?

To allow a power of sale to be exercised by a strata corporation for non-payment of contributions to the corporation by a proprietor, and to provide for the application of proceeds of such sale. Good, as long as this meets the standards of natural justice.

The commission is able to also apply to the court regarding the appointment of an administrator for a strata property. Is such a power appropriate to the commission, and how costly could this be for the strata?

In a bind

It is acknowledged that the corporations are in a bind due mainly to widespread delinquency in payment of maintenance contributions, and insurance coverage. It does appear that too much hope for improvement is vested in the creation and role of a commission.

I would suggest that innovation and reform in the insurance market is one of the keys to improving the lot of strata owners. The present act works hardship as it requires insurance for the full replacement value. In today's world, the market value is often much less than the replacement value. With the executive committee for the strata driven mainly by market values, it is clear that it will not be able to afford insurance for the full value.

And if the strata is underinsured, the average clause comes into effect allowing the insurer to estimate the damage, and make a payout in proportion to the actual amount insured for. Hence, the dilemma - why incur the expense of insurance anyway if the chances of getting a payout are remote?

Strata owners are happy that amendments are on offer. The commission may help, but it seems that a sure shot for improvement is related to insurance. Maybe, it is all about the insurance!

I am, etc.,

CHRISTOPHER PRYCE

christopherjmpryce@yahoo.com

Kingston 10