Condo-buying rule: Be Wary

Sunday, March 9th, 2003

Old fears are alive and well despite new warranty rules

Susan Lazaruk

CREDIT: Arlen Redekop, The Province Tracy Anderson worries about her as-yet-unbuilt Yaletown condo.

When Tracy Anderson and Jordan Doell finally took the plunge to buy a home, they were haunted by leaky condo nightmares from previous building booms.

“I was quite paranoid, it’s very scary,” said Anderson, 32, a graphic designer who, with fiance Doell, bought an as-yet-unbuilt Yaletown two-bedroom suite for more than $250,000.

“What with all those owners having a lot of problems, I don’t have a lot of faith that the same thing wouldn’t happen to us.”

Before choosing, the couple compared the quality of fixtures in display suites and warranties available and researched developers’ and architects’ reputations as best they could.

The couple is happy with their choice, but Anderson says she’s nagged by that feeling that as a layperson she couldn’t independently assess the information she received.

“There has to be a [government] watchdog overseeing these developers,” she said. “My parents are looking for a condominium in the Coquitlam area and some of the new buildings are already having problems.”

The building industry and B.C.’s Homeowner Protection Office say self-regulation protects consumers.

Victoria’s tough new mandatory warranty provision, that came into law since the Barrett Commission’s report detailing the industry’s shortcomings, puts new buildings and repairs through rigourous scrutiny and provides a healthy reserve for any leaks.

The warranties — a minimum two years for materials and workmanship, five years for the building envelope and 10 years for structural defects — provide peace of mind, they say.

“The system is working very well,” said HPO registrar Bob Maling. “Insurance companies have to underwrite the new buildings and have to guarantee any claims, and they don’t write them loosely or lightly.”

But, said CMHC senior consultant Allan Dobie: “We think that the issue is not dead yet. It’s still a quality control issue, and the quality control rests with the builder. There is no 100-per-cent guarantee, that’s for sure.

“The insurance companies aren’t going to like me saying this, but quite frankly, most warranties don’t offer coverage beyond five or 10 years and the kind of crises that we’ve seen really happen after that,” said Dobie.

“A leaky window is going to show up pretty quickly, but if you’ve got a small leak that goes into the structure, it could be 10 to 15 years before you see the effects,” he said.

As in the mid-90s boom, presale condos are being snapped up in record time, sometimes solely on glossy pamphlets and a browse through stylish display suites.

One such pamphlet lists 50 largely cosmetic features. Only three discuss construction details.

In the popular pre-sales, homebuyers may be purchasing without a real-estate agent who acts on their behalf.

They may agree to a sales agreement that doesn’t include a “subject to inspection” clause, standard elsewhere in real estate.

Leaky condo advocate and realtor Carmen Maretic said it’s not certain homebuyers are better protected in this condo boom.

She says it’s worrying that the Municipal Insurance Association is urging its members, B.C. city halls, to pass bylaws that would shift liability for inspections to engineers and architects to avoid huge lawsuits, for instance.

But Maling said the MIA is “closing the door after all the cows have got out,” because it’s basing its fears on what’s happened in the past. Construction and materials have improved duringthe past decade and most condos are now built with rainscreens, designed to allow water to escape if it does penetrate the building’s outer shell.

More reputable developers may be beefing up quality, but that doesn’t mean all will, warns Maretic. And Dobie points out there is still a shortage of skilled labour and a rainscreen is only as good as its construction.

A Yaletown highrise built with a rainscreen in 1996 was inspected by an inspector hired by The Province. He found more than half of the weep holes visible from one balcony plugged with caulking. Six years later, its cladding is stained in several places with black-and-green mould icicles, a warning sign for possible leaks.

“There’s got to be a real understanding of the design by both the builders and the inspectors on the importance of these things,” said Dobie. “And the builders are still trying to maximize their profits and they’re going to do things as cheaply as possible. That’s the nature of the business.”

Regular maintenance and inspections — by independent professional engineers or inspectors — are essential and this is an area that appears to have been improved upon since the last boom.

Some developers provide homeowners’ manuals similar to those buyers might get with a new car so they can follow the schedule and not miss any warranty deadlines.

Maretic said it’s important not to rely on the developer and warranty provider to handle maintenance in the crucial first five years because she’s heard of instances where they apply Band-Aid solutions on a serious problem until it’s too late to make a claim.

© Copyright 2003  The Province

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