Condo nightmare: buyer beware of leaky, rotten condos

If youre buying a condo, you might think theres a government agency, regulatory body or some mechanism out there to ensure youre protected from shoddy workmanship, poor design or lack of maintenance. Or at the very least that the market knows about and prices these substandard condo developments accordingly.

Think again. In my last column, I talked about Fred and Ethyl, a couple who thought theyd done all the right things and still ended up with a $100,000 assessment within months of buying their condo [their share of the cost to rainscreen their leaky condo development].

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How can you avoid being caught in a financial pickle like this?

Start with the basics. Make an informed decision. If you make a bad decision, theres no easy way to recoup your losses. In fact, some court decisions have found against the buyer for not doing adequate research.

The highest risk developments are those with exterior walls that are face sealed, or sealed with products designed to make them impervious to water, such as stucco or EIFS [pronounced e-fiss: a waterproof synthetic stucco]. They can be low-rise or high-rise. The high-rise buildings have concrete floor slabs supported by concrete pillars with an exterior wall system. These developments were built from the mid-80s until the late 90s during a period when governments mandated that buildings be made airtight to save energy.

At the same time, in a race to the bottom, B.C. architects were designing buildings with complex designs and roofing styles and overhangs that were more suitable for Southern California than the rainy West Coast. That was bad enough, but the housing boom meant there werent enough qualified builders, so shoddy construction played a part in the leaky condo crisis as well.

The confluence of poor design, substandard construction and ill-conceived regulations resulted in a massive failure of building envelopes that allowed moisture to enter walls and cause leaks, mould and rot. Thousands of B.C. homeowners paid huge assessments while living under tarps and skirting with bankruptcy. Many lost their life savings. You can too.

In order to protect yourself and your investment, conventional wisdom recommends that before you buy a condo, you read the Form B Information Certificate, the Sellers Property Disclosure Statement and the last two years of minutes from Strata Council Meetings and AGMs. While thats good advice, theres no guarantee that potential problems will be evident in any of these documents.

And just because a building hasnt leaked yet, doesnt mean it wont in the future. If the building was constructed in the 80s or 90s, its imperative that you request any building envelope or engineering reports that have been done as well.

In my experience, some strata councils are reluctant to put anything on the record that could potentially have an impact on the current valuation of the property. While this is shortsighted management, its becoming the norm in a lot of developments where everyone has a vested interest in keeping property values as high as possible.

So, read the minutes and the Property Disclosure Statement and the Form B. Look for any references to water ingress, mould or rot. And find a reputable home inspector who will inspect your condo as well as all of the common areas.

I talked to Wayne DeJong of Pillar to Post Inspections. His inspectors routinely look at the common areas of every condo they inspect. Some clients have to be convinced that we should look at those areas even though its included in the fee, he said. Although a home inspection is not a substitute for a building envelope study or engineering report, it may save you a lot of grief in the future.

A CMHC study reports that in many cases, buyers of leaky condos have had many warning signs in home inspection reports and other documentation that was provided, but did not understand the implications of the comments.

DeJongs inspectors will help you understand your strata minutes and building envelope or engineering reports. If a buyer wants a detailed interpretation of those documents, we can provide that as well for an hourly rate. Other building inspectors offer similar options. In the end, make sure you have a clear understanding of any potential problems and the cost of remediation in the future.

If the property has been rainscreened, find out what kind of wall system was used and discuss the pros and cons with your home inspector. Check out the reputation of the contractors and the warranty.

One of the biggest red flags that Ive encountered as a real estate agent is lack of transparency. If the documentation is incomplete and not made available in a timely manner, move on. In an era of all cash, no subject offers, not seeing the appropriate documentation creates an unacceptable level of risk for any buyer.

Dont let a pretty building with nice tile in the foyer and a great view fool you. Its estimated that more than $3 billion has been spent repairing leaky condos, yet the problem still exists.

Next column: Leaky condos arent the only nightmare for condo buyers.

Deb Abbey is a real estate agent at Royal LePage City Centre in Vancouver. She is the author of two best-selling books on Sustainable Investment. You can contact Abbey through her website: www.abbeypartners.ca or e-mail any questions or comments to: deb@abbeypartners.ca

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