Leaky Condos - Questions & Answers

This is a British Columbia problem, which I believe, is unknown in the rest of Canada.

The problem is that new building techniques were used where the building walls were sealed so well that no air was allowed into the walls. However water was sucked into the walls, did not evaporated, and started to rot the wood frame construction. In order to repair the problem the walls have to be opened up, the rotten wood replaced and the building reclad.

It is not uncommon for each condo owner to have to pay $30,000 for repairs. This does not end the problem however because the building is now known to the public as a "LEAKY CONDO"! Prospective purchasers will not consider buying the condo or will demand a very a large discount!

1. Can I sue the Builder?

Yes! Seek legal advice and make sure you know at least the following:

Is he at fault?
How difficult and costly will it be to prove he is at fault?
Did he follow the building code?
Did the municipality properly inspect the work?
Does the builder have any money or assets?

2. Can I sue the Municipality?

Maybe, but only with the greatest of difficulty and after a huge legal bill. Must be done within 6 months after problem becomes known. Seek legal advice for the answer to this question.

3. Should I pay the Assessment?

That is a question only you can answer, since only you know your finances and the extent of the repairs involved.

4. What if I can't afford to pay the Assessment?

A Condo Act Charge can be placed on your condo for the value of the Assessment. This Charge will usually rank ahead of other charges, including the mortgage.

5. What if I chose not to make my mortgage payments? (This question assumes the mortgage is CMHC approved.)

After a period (usually 90 days) of default, the bank holding the mortgage will demand payment of the entire mortgage balance and foreclose, and seek Conduct of Sale (permission from the Court to list the property for sale).

When Conduct of Sale is received, the property will be listed for sale with a real estate agent for a period of 90 days.

If the property has not sold after 90 days, CMHC will usually offer to purchase the property for the most recent appraisal price.

After the Court approves the sale, CMHC will pay the bank holding the mortgage the sale price.

The bank holding the mortgage will apply to CMHC for payment of their mortgage shortfall.

CMHC will be assigned the judgement the bank obtained in the foreclosure and will seek payment of the deficiency from the property owner.

6. What if I just "Walk Away"?

See answer #5.

7. Will CMHC accept a settlement from me of less than the full amount owed?

I don't think so, but why don't you ask them.

8. How do I contact CMHC?

Canada Mortgage and Housing Corporation

British Columbia and Yukon Regional Business Centre
#400 - 2600 Granville Street
Vancouver, B.C.
V6H 3V7
Phone: (604) 731-5733

9. I have heard about a "Quit Claim". Can I do this?

A "Quit Claim" is the signing over of your property to the bank holding the mortgage. The bank will not accept your Quit Claim because that would violate the terms of the CMHC Mortgage Insurance and void the coverage.

10. How can I get more information?

We have listed a number of web sites below which will give you more information:

www.MyLeakyCondo.com A site run by Leaky Condo Owners.
www.TheCondoAdvocate.com An excellent site for condo owners looking for help with the leaky condo crises.
www.BCCondos.ca An association of leaky condo owners, disseminating information on all aspects of the leaky condo crisis to allow consumers to make the best choices.
Homeowner Protection Office.
Information on Bankruptcy.
Information on Proposals.

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