A recent letter to Condo Smarts highlights a growing issue for bareland and townhouse stratas: aging underground infrastructure and insufficient reserve funds. Owners in a 150-unit bareland development in the B.C. Interior discovered that their mandatory minimum contingency contribution of 10 percent of the annual budget is far from adequate. Recent repairs to in-ground sanitary and water systems cost over $250,000, completely depleting their reserve fund.
Misunderstanding of Responsibilities
Many owners are surprised to learn they are responsible for the maintenance and repair of these systems. One owner asked, "You mean we pay taxes but the city is not responsible for the repairs of our water and sewers?" This confusion is common among buyers who do not fully understand the liabilities of a bareland strata.
Depreciation Reports Now Mandatory
Tony Gioventu, executive director of the Condominium Home Owners Association, explains that depreciation reports are now mandatory for every strata of five units or more. In Metro Vancouver, Fraser Valley, and the Capital Regional District, these reports are due by June 30, 2026. All other areas have until 2028. Reports are valid for five years and must include all common property and assets, which would have captured in-ground services.
Gioventu warns that several bareland stratas are currently experiencing serious costs and shutdowns due to infrastructure failures. Depending on location, repair costs can easily reach $5,000 to $10,000 per metre of excavated and repaired assets.
Preparing for Catastrophic Failure
To address potential catastrophic failures, Gioventu recommends that owners and strata councils review their insurance policies to cover loss of use or evacuation due to mechanical failures, landslides, earthquakes, or infrastructure failure. While owners may not approve higher funding for reserve fund renewals, a "war chest" is essential for immediate repairs. Weather events often cause failures that require urgent response to ensure the community remains safe to occupy.
If a catastrophic failure occurs, the strata must implement repairs. Emergency repairs to ensure safety and occupancy may be funded from the reserve fund without owner approval. However, if funds are insufficient and a special levy is not approved, court applications may be necessary, adding cost and delays.
Advice for Owners
Gioventu encourages bareland and townhouse strata owners and councils to proactively plan for infrastructure renewal. Understanding the full scope of common property assets and funding adequate reserves can prevent financial crises and ensure community safety.
