North Vancouver, BC, Canada
Musings of chief inspector and president of SENWI House Inspections

Tuesday, January 31, 2012

Additional tips when purchasing a Condo

Some final points of advice when looking to purchase in a Multi-Family building


1) Like mentioned in the Vancouver Courier articles (Condo Pitfalls & Condo Nightmares) that inspired these blog entries, any lack of documentation is an automatic Red Flag! If the building is more than 4 years old, and does not have a extensive building envelope review completed in the last 5 years, you should think twice about continuing with the purchase.

Fortunately the lack of report should become a rarer situation going forward now that Bill 8 of the Strata Property Act has been enacted requiring all Strata’s in BC to commission a ’depreciation report’ within the next 2 years.

Note: On a side comment, it is important for Condo owners to realize that the implementation of these studies will most likely culminate in significant Strata Fee hikes as the full cost of maintaining a multi-family-building is better understood by Strata’s.

2) Never allow yourself to be pressured into a purchase. Subject removal dates are arbitrarily defined periods of time with no relation to a logical time period required to properly vet your purchase. They often can represent hype the agents impart into the process to make purchasers feel they need to ‘act fast’ or loose their buying opportunity. This is far too big of a decision, with far too large a potential liability, to be rushed into without due diligence. Take the time to due it right. If it falls through, it probably is for the best. Any vendor who is seriously interested in selling will ensure the buyer has ample time to vet the purchase as they do not want the buyer coming at them later. In markets where there is a buying frenzy, do not be pressured to buy without subjects, you are already buying at what is often the top of the market and can usually ill afford to take on the additional responsibility of unknown liability.

3) At the lower end of the liability scale is a fully rain-screened dwelling. In general, these buildings are more tolerable of faults in the design of the primary water shedding surface and will usually represent a much lower level of potential liability. At the upper end of the liability scale is a face-sealed stucco building without any significant overhangs and a complicated exterior design with lots of penetrations and architectural ‘features’. For a discussion on these two exterior styles see this HPO bulletin.

4) Remember that just because a building is not leaking now does not mean it will not leak down the road. There is a reason that a face sealed building is no longer allowed by code. It does not work! It is usually not a matter of if problems will develop but a matter of when. There is also the issue where many older buildings (pre-1990) are now looking at energy upgrades to the building to reduce the cost of heating bills as energy costs rise. This is often having a negative and unanticipated impact on the building’s health because as more and more of the interior heat is blocked from reaching the exterior sheathing and cladding, that wall assembly’s ability to survive infrequent wetting is substantially reduced. So as the general housing stock is updated to be more energy efficient, it will be increasing more important to ensure that the walls have a continuous water shedding capability.

I hope these entries have helped. I would be happy to discuss these issues further with you at any time. As some final guidance for you, when purchasing a Condo, I recommend you review this bulletin I send all my Condo clients as part of my inspection process.

Tuesday, January 17, 2012

What kind of inspection report should you insist on?

OK, I have advised that to try to lower your potential liability in buying into multi-family-dwellings as much as possible you need to:


1) Make sure you have the Condo inspected

2) Make sure you choose an inspector who takes the time to perform a thorough evaluation of not just the purchase unit, but also the building envelope/exterior, roof, parkade, and all common mechanical areas.

3) Most important of all, look for an inspector who’s ‘process’ includes a detailed review of all engineering reports commissioned by the Strata in the last 5-10 years.

I would like to now talk about the type of report the buyer should ensure their chosen inspector provides.

By far the most common form of report used by home inspectors North America wide is the ‘Check List’ report. This takes on many different flavours and can even be included in a fancy publication like the Home Reference Manual which looks impressive but at its core is only a 9 page check-list-format report. The rest of the binder is boiler plate text that may or may not be relevant for the home you are purchasing and often does not describe a given defect with enough information to be truly informative in my view.

The fundamental problem with checklist style reports is that they have been designed to be of as little effort as possible for the inspector to fill out while at the same time protecting the INSPECTOR from liability. They typically do not go out of their way to inform you the PURCHASER and ensure YOU are protected from liability. There is physically not enough room to do so on most of these styles of reports as they often have limited opportunity to add enough commentary to fully describe a defect or deficiency. Inspectors often like this style of report because it takes very little skill, thought, or time to fill them out. Because you do not have to explain the deficiency, you can rush through the home with the only purpose being of identifying what may be a problem on the checklist and then state ‘further evaluation recommended’. Now of course most purchasers follow that advice- right? The reality is that very few purchases take additional steps, beyond the home inspection, to determine the current condition of the dwelling.

The final fundamental problem with checklist style reports in my view is that they never contain photos. Photos are the single most important tool that a good inspector has of portraying information to their client. Yet for a majority of the industry, they are not part of an inspector’s process. How can they be? When the average inspector provides a carbon copy checklist report on site and then never sees the purchaser again, how can photos be included? The answer is they can’t and typically aren't. Those that do will often just provide the client with a memory card or CD/DVD of raw unedited photos with no commentary. There is also a whole segment (significant) of the inspection industry where the inspector is scared to provide photos. A regular topic of discussion on inspector forums and at association meetings is around the concept that an inspector could be found liable for a defect shown in a photo but not referenced in the inspectors report.

Computer generated ‘checklist style’ reports are a slight step up from a hand written checklist as they can allow more extensive commentary and the addition of narrated photos, BUT only if the inspector is willing to put in the hours of time to modify the out of the box software template and then the extra time required on a per inspection basis to create the report at site or back in their office. Unfortunately, many don’t.

You can see that I am not a fan of checklist reports. I wish I was, they are much faster and easier than the reports I utilize in my business. Not many inspectors relish the idea of spending a day behind a desk creating a report and I am no exception. I am always looking for ways to decrease the report production time but always ensure that my number 1 priority is informing and protecting the client. In my opinion the best inspection report is a narrative report created specifically for the inspected dwelling that is augmented with lots of annotated photos. This is much the same format used by most engineers. The process is intense in the time frame typically allotted for subject removals and usually takes between 10-15 hours, but this has been the only way I have personally found that allows me to ensure that my client is as fully informed as possible.

Friday, January 13, 2012

How can I reduce the potential liability of buying a Condo

In my last post I was prompted to comment on the liability that can be present when buying multi-family-dwellings after reading two articles from the Vancouver Courier.

I will now try to give provide the reader tools for a thorough due diligence process to hopefully avoid a large portion of the potential liability that exists with these purchases.

My number one piece of advice is to have the unit inspected. This may seem like self serving advice, and in part it may be, but it is imperative that you have a Condo inspected before purchasing if you have any chance of avoiding liability. As this CMHC research report shows, many of the people that ran into financial difficulty after purchasing a Condo, did so because they did not have the Condo first inspected (in the studdy this represented 29 of the 40 case studies!).

The Vancouver Courier articles discussed how you cannot rely on the documents provided by the vendor and I cannot agree more. First of all, the commonly provided 2 years of minutes is not nearly a long enough time frame to properly evaluate the buildings performance. But it also is far too short of a period of time to properly evaluate the performance of the STRATA and PROPERTY MANAGER to ensure they are capable of properly managing the best interests of the building and owners. This is often a much larger area of liability for a potential buyer than that represented by the structure itself and a process that is often overlooked. A poorly managed and maintained building significantly escalates the costs of repairs and often the complexity and duration of those repairs.

Finally, another reason to not rely on minutes or property disclosure statements (PDS) is that they rarely reflect an accurate assessment of the property. A PDS is often not truthful and as I wrote about on another blog entry, there does not seem to be a reasonable way to hold the vendor responsible for what they fill out in the PDS. Likewise, Strata Minutes seldom tell the whole storey. Strata Council are of course owners and are often reluctant to divulge any information in minutes when they know that information could lower the values of the homes they own and make it difficult for them to sell in the future. They participate in the practice of “In Camera” meetings where no official minutes of what is discussed are kept or made available to the public and instead the discussions and resulting actions are “off the record”. This is of course illegal but regularly occurs in Strata’s across the lower mainland.

So, what can a buyer do to reduce their potential liability? I mentioned above that my number one recommendation is to have the unit inspected. Well my second piece of advice is to choose the ‘right’ inspector.

When the average time spent on site by a home inspector for an apartment style Condo is 1.5 hours or less, it is important to realize that this type of inspection will often not be thorough enough to have any meaningful impact on the potential liability you face as a purchaser. Further, the checklist style reports, usually provided by this style of inspector, are often unable to sufficiently inform the purchaser on any deficiencies or liabilities that this brief inspection uncovered.

Instead, a purchaser should look for an inspector that is going to take the time to perform a thorough inspection of not just the unit but also the building envelope/exterior, roof, parkade, and all common mechanical areas. Most important of all, look for an inspector who’s ‘process’ includes a detailed review of all engineering reports commissioned by the Strata in the last 5-10 years.

As home inspectors, we are generalists that if correctly trained are able to usually identify problems or the risk of problems. But we are only performing a visual inspection which has many limitations to defining the true condition of a building. A reputable building envelope firm will go beyond visual inspection and will disassemble components or perform some destructive testing to determine the full condition of the building enclosure. By including the review of these detailed engineering reports, an inspector can then provide a lot more insight to a potential purchaser to allow them to make a more informed decision.

In my next entry, I will discuss the type of report you should ensure your inspector provides and why that style of report is going to benefit you.

Wednesday, January 11, 2012

Risk associated with the purchase of Multi-Family-Dwellings in Greater Vancouver

I recently came across these Vancouver Courier articles (Condo Pitfalls & Condo Nightmares). They do a fairly accurate and thorough job of discussing the pitfalls that buyers face when buying condo style apartments and townhouses in the Vancouver region.


We have found that too many buyers in the market today do not truly understand the liability they face when buying into multi-family. We often get comments like “That is the Strata’s responsibility; we do not have to worry about that”. We have heard of many people that have gone bankrupt or lost their Condo because of special assessments for unexpected repairs that they could not afford. I have never heard of this happening to buyers of single-family-dwellings.

The facts are that the purchase of any multi-family-dwelling typically represents a significantly higher level of possible liability over the purchase of an average single family home. One of the key reasons for this is the fact that most multi-family-buildings are quite a bit taller and larger than a typical single family house and as such have a much greater exposure to wind driven rain. This higher exposure will then accentuate problems with a water shedding surface with poor design and maintenance.

These articles somewhat suggest that the problem may be behind us or is confined to buildings of the 80’s and 90’s. Nothing could be further from the truth. Many studies, including those by CMHC, state that there has only been an approximate 50% of the buildings that have or will have problems fixed to date. This leaves tens of thousands of units that are still out their in need of remediation.

As the articles discuss, even a fully or partially remediated building does not always significantly lower your liability. Many early attempts at remediation did nothing to change the actual design of the water shedding surfaces and are as such destined to repeat the cycle of repair and the extreme costs to the owners that result from those repairs.

Brand new buildings are also not a guarantee of quality or lower liability. Our inspections have uncovered many buildings 1-5 year old and still under warranty that have water ingress into parkades, roof top decks, poorly detailed and back slopping flashings, etc, the list goes on. Just because a building is constructed post 2000 does not mean you do not have to still be careful in your selection and diligence.

You often can also not rely on the fact that there is a warranty in place. We have come across an alarming number of Strata’s that have not commissioned a full building envelope assessment prior to the 5yr Water Ingress Warranty expiry and as such lost out on the opportunity to claim problems that were present. And those that do file a warranty claim, and are successful in their claim, can often be met with short term repairs done by the developer in order to get past the warranty period. Often these short term repairs saddle the owners with a lifetime of accelerated maintenance and increased cost of ownership going forward.

So it is very important to perform due diligence when purchasing a multi-family-dwellings and I will discuss ways to do so in upcoming blog posts.

Wednesday, January 4, 2012

Property Disclosure Statements

Global TV ran a news story last night (link) regarding a couple that bought a house that had been previously gutted by fire.  The problem was that this had not been disclosed by the previous buyer and the buyer is now saddled with a $200K bill to repair even though it is obvious that the previous vendor would have been aware of this damage.

The problem with property disclosure sheets (PDS) is that they are seldom filled out in an accurate manner.  The vendor may not know or may just lie about the condition of the home.  I have often seen deficiencies in homes that are very visible yet not identified accurately on the PDS.  There also does not seem to be any enforment of the document and limited opportunities for recourse.

SENWI has long advocated to change the laws regarding the PDS.  We feel, that like a car, ALL significant repairs or renovations over $5K should be registered against the property.  A purchaser should be able to receive a report from the land titles office, as part of the purchase conditions, that provides the full history of the home.  Contractors and Municipalities should be required by law to register their activities with the dwelling (like renovations, attendance by fire services for fires, floods, grow ops., storm damage, mechanical damage from vehicles, etc). 

For now however, buyers should not place any faith in a PDS (only pay attention to defects positively identified as being present and ignoring those that are identified as unknown or not present).  Buyers should always hire an independent home inspector (not the one your agent recommends). An independent home inspector will work for you (and only you) and attempt to reduce your liabilities in buying a dwelling that you have no previous knowledge of by means of a thorough and detailed inspection of the dwelling.