Leaky Condo

The term 'leaky condo' refers colloquially to strata buildings constructed primarily in the 1980s and 1990s in British Columbia that suffered systemic building envelope failures, allowing water to penetrate walls and cause extensive structural damage, including rot, mould, and compromised structural integrity. These failures were linked to design and construction practices of that era, such as flat roofs, face-sealed stucco cladding, and minimal overhangs. The resulting remediation programs were often extremely costly, with expenses typically assessed against individual strata lot owners through special levies under the Strata Property Act (SBC 1998, c. 43). The Barrett Commission of Inquiry (1998) formally investigated and reported on the crisis in BC.

Under the Strata Property Act (SBC 1998, c. 43), a buyer or their agent should request the Form B Information Certificate, which discloses the strata corporation's finances including any outstanding or anticipated special levies, as well as minutes of strata council meetings and general meetings for the past two years. Depreciation reports, engineering reports, building envelope assessments, and records of any remediation work completed are also critical documents to obtain and review. The contingency reserve fund balance disclosed in the Form B can indicate whether the strata corporation has adequately reserved for future repairs. Buyers should review all available records before the expiry of any subject-to conditions in their Contract of Purchase and Sale.

In BC, real estate licensees are governed by the Real Estate Services Act (RESA) and BCFSA, which require licensees to disclose all known material latent defects — including known building envelope failures or water ingress problems — that are not discoverable through a reasonable inspection. A seller who knowingly conceals a material latent defect may face legal liability independent of any licensee obligations. Buyers are strongly encouraged to conduct their own due diligence, including obtaining strata documents and commissioning a building inspection.

A building envelope assessment is an engineering inspection that evaluates the exterior components of a building — including cladding, windows, roofing, and flashings — to assess their condition and susceptibility to water ingress. For strata buildings of the era associated with leaky condos, such assessments can confirm whether remediation has been completed, is ongoing, or is still required. Buyers should request copies of any existing building envelope reports from the strata corporation, as these may form part of the records the strata corporation is required to maintain under the Strata Property Act (SBC 1998, c. 43). If no assessment has been done, a buyer may wish to commission one as a condition of purchase.

Remediation costs in a BC strata corporation are typically funded through the contingency reserve fund, special levies assessed against strata lot owners, or a combination of both, under the framework of the Strata Property Act (SBC 1998, c. 43). A special levy requires approval by a three-quarters vote of strata owners at a general meeting, and each owner's share is generally calculated in accordance with their unit entitlement as set out in the strata plan. If the contingency reserve fund is insufficient, owners may face significant out-of-pocket costs, and some strata corporations have arranged financing to allow owners to pay their share over time. The Form B Information Certificate will disclose any approved special levies that remain unpaid at the time of a sale.

The remediation status of a building does not directly alter how Property Transfer Tax (PTT) is calculated under the BC Property Transfer Tax Act, as PTT is assessed on the fair market value of the property at the time of transfer. The PTT tiers are 1% on the first $200,000 of fair market value, 2% on the portion between $200,000 and $2,000,000, 3% on the portion between $2,000,000 and $3,000,000, and an additional 2% on any residential value exceeding $3,000,000. A lower market value resulting from an unremediated building envelope may reduce the total PTT payable, but buyers should consult the BC Ministry of Finance for current thresholds and applicable exemptions.

Yes, a depreciation report — required for most strata corporations under the Strata Property Act (SBC 1998, c. 43) and its Regulation — provides a long-term plan for the repair and replacement of common property and common assets, and must be prepared by a qualified professional. A depreciation report for a building of the relevant era should address the condition of the building envelope and forecast any remediation or maintenance costs over a 30-year period. Reviewing the most recent depreciation report, along with any building envelope engineering reports referenced within it, is a standard part of pre-purchase due diligence for strata properties in BC. Strata corporations that have waived the depreciation report requirement by three-quarters vote should be viewed with additional scrutiny by prospective buyers.

The Form B Information Certificate, issued by the strata corporation under the Strata Property Act (SBC 1998, c. 43), discloses key financial and legal information about the strata corporation at a specific point in time, including the balance of the contingency reserve fund, any approved but unpaid special levies, and any unresolved legal proceedings involving the strata corporation. For a leaky condo building, the Form B may reveal special levies that have been approved to fund remediation or that remain outstanding against the unit being purchased. Under the Strata Property Act, a buyer who purchases a strata lot takes on any unpaid strata fees and levies, making the Form B an essential pre-purchase document. Buyers should ensure the Form B is current and carefully reviewed before removing any subject-to conditions.

A fully remediated strata building — where a qualified engineer has confirmed that the building envelope has been repaired to current standards and a warranty or certification is in place — is generally considered to have addressed the structural water ingress risks associated with the original construction defect. However, the quality and completeness of remediation can vary significantly, and not all remediation work is equal in scope or durability. Buyers should obtain and review the remediation engineering report, confirm the scope of work completed, check for any remaining warranty coverage, and assess whether the strata corporation's contingency reserve fund has been rebuilt since the remediation. This information is educational only and does not constitute a recommendation regarding any specific purchasing decision.

The Strata Property Act (SBC 1998, c. 43) governs how special levies may be imposed and provides procedural protections, including the requirement for owner approval by a three-quarters vote at a properly called general meeting and clear disclosure of each owner's individual levy amount. Owners who dispute the conduct of the strata corporation or strata council in relation to remediation decisions may apply to the Civil Resolution Tribunal (CRT), which has jurisdiction over strata disputes in BC up to certain monetary thresholds, with matters above that threshold proceeding to the BC Supreme Court. Owners may also seek relief under the Strata Property Act if the strata corporation has acted in a significantly unfair manner with respect to the owner. Licensees and buyers should note that unpaid special levies and strata fee arrears attach to the strata lot under the Act and become the responsibility of a new owner upon purchase.