Can Alberta fix its leaky condo problem?
Some say new changes by government don't go far enough
by Tim Querengesser
Ryan and Emily Batty bought the two-bedroom, 1,000 square-foot condominium in October 2008. The building, Rossdale Court, was plunked high on a south-facing bank of the North Saskatchewan River and offered the newlywed couple stunning views while still being close to downtown Edmonton. It also had style – a post-modern aesthetic with stucco cladding on the walls, and exposed walkways and balconies dramatically supported by pilings rather than cantilevered into the walls. These features, often referred to as “California style,” became popular with condominium developments in Alberta, beginning in the early 2000s, and they exploded during the 2005-to-present construction expansion. Batty remembers moving in fondly. “There are a lot of condos built in that style and it was something we really fell in love with,” he says. Even though they bought at the height of a hot market, for just less than $400,000, Batty says he and Emily felt they had gotten a steal.
Unfortunately, the purchase soon became an actual steal – Rossdale Court, only seven years old at the time they bought it, was soon found full of leaks that cost the Battys a lot to fix. “It’s a great place, a great location and we’ve had nothing but problems since,” Batty says. “Literally from minute one.” They are far from the only ones, either in Rossdale Court or in Alberta. Since 2009, starts for multi-unit dwellings (which are predominately condos) have grown from just 29 per cent of homes built in Alberta to more than half in 2013, according to data from the Canadian Home Builders’ Association. The rise in condo numbers has, perhaps unsurprisingly, been followed by a rise in owners complaining of problems. However, the explosion of building-envelope issues seems caused by more than just more people in more condos.
Photograph Ryan Girard
In 2008, Alberta Municipal Affairs partnered with the City of Calgary to investigate these building problems, which even by then had reached alarming levels. The investigation into the envelopes, which effectively means walls, roofs and other building elements that keep moisture out, came on the heels of a 2003 consultant study of stucco thickness on condominium walls in Alberta. That study found that only 15 per cent of the buildings it examined met required thickness under the Alberta Building Code. The 2008 study reported even more alarming findings – that a moisture training course and other initiatives put in place by the homebuilding industry after the 2003 report “have not addressed the building-envelope issues …” Indeed, all sites with envelope failures examined in the 2008 study “demonstrated incomplete and deficient construction below the standard required by the Alberta Building Code.” The 2008 report, noting that measuring the scale of the problem was near impossible, nonetheless called for the construction industry to do a better job and government to protect condo buyers through improved enforcement of regulations, better training of contractors and more.
What happened next? The answer, for a long time, was not much. Four years after the study called for change, the Battys and dozens of others at Rossdale Court still fell through large cracks. Problems with water intrusion first emerged at Rossdale Court in 2006 and they were tended to, though superficially, Batty says. Then, in 2011, another inspection of Rossdale’s envelope found a required water membrane was not installed, and resulted in a $600,000 repair estimate. Eventually, however, once each of the more than 60 balconies was removed to allow a proper look in the walls, the estimate swelled to more than $2 million – to be split by 69 owners. “You can do the math on what that cost per unit,” Batty says (it averaged almost $29,000). The building’s developer was nowhere to be found. He had dissolved the numbered company that it used to build Rossdale Court and, legally speaking, that company had no assets. A lawsuit attempt by Rossdale owners was fruitless.
Photograph Ryan Girard
What was worrying was that Rossdale was not an isolated quagmire that year, even in Edmonton. About 30 blocks away, owners at the similarly aged Glenora Gates condos were given a $5-million repair tab for similar building-envelope problems. And about 20 blocks from there, special assessments linked to building-envelope issues at Palisades Park Villas saw more than one owner foreclosed upon by the banks. The situation exposed a protection gap for condo owners in Alberta, says Alice Werenka. She lost her home at Palisades Park Villas, and she blames this, and the protection gap, on homebuilders. “The building envelope, in my opinion, is just the start [of the problems],” she says. “The day I moved [in], I took photos of the huge cracks in my walls, black mould, and the ceiling was actually becoming separated from the wall. It was shoddy workmanship from start to finish and it’s sad a consumer has no leg to stand on, especially with these ‘fly by night’ builders.” At the time, the Alberta government seemed to candidly agree with Werenka’s assessment. “It’s absolutely terrible and awful what people are going through,” said Ivan Moore, assistant deputy minister of Alberta Municipal Affairs, to news reporters in 2011. “The unfortunate thing is we don’t have the tools as yet to provide them with the protection we’re building.” Edmonton MLA Laurie Blakeman, who has called for changes to prevent homebuilding companies from dissolving and leaving customers on the hook for repair costs, told reporters at the time, “What you’re seeing here is a complete failure of the government to provide consumer protection to people that have made the single biggest investment of their lives.”
Of course, this has all happened before. In B.C., thousands of homeowners were left on the hook during the 1990s for billions in repairs for condos that were relatively new but improperly designed for the climate, or just poorly built. The sheer human costs of the leaky condo crisis in B.C. prompted sweeping changes. Those ranged from extended, third-party warranties to building-code revisions that required builders – who are naturally incentivized to cut costs – to gain an independent assessment by a design professional before their building could be sold as condominiums. Some – but not all – of these changes are being introduced in Alberta. Most of them hinge on improvements to home warranty requirements. In February, the Alberta government changed the New Home Buyer Protection Act and the Insurance Act. Together, the two changes require that new home-buyers receive a five-year, third-party warranty covering the building envelope (as well as 10 years’ coverage on the structure), and that the builder gain a building assessment report before they are issued a building permit. If a building is being built in phases, additional assessments are required. But the changes will only cover new homes – whether single-family detached or multi-unit condos – and, critics point out, will not require detailed lists of building materials used in walls, as-built drawings for use down the road by others if there are problems, or change what some see as telltale gaps in inspection requirements between new single-family houses and multi-unit dwellings.
Are the changes sufficient? Many say that they are a good start, and that leaky condos should be less common in Alberta’s future. But some outspoken advocates for consumer protection say the government and builders must do more to shelter consumers from problems. Until then, they say, the leaks and the human toll will continue.
If you see Al King inspecting your condominium’s exterior walls – and that’s likely, because he looks at hundreds of buildings yearly – check your bank balance. King, president of Wade Engineering, in Edmonton, has seen things that should shock people – mushrooms in condo walls only four years old; wood beams so sodden with water he could rip them apart with his hands; balconies so rotten they could just snap off. Yet the engineer sees not only the building suffering but the owners. “When you can’t see something and it’s hidden from view, you can think it’s isolated,” King says. “Then you take the stucco off and it’s everywhere. It’s very difficult sharing that with a condominium board. They go through a huge grieving process. You’ve got 100 people or so that you’re talking to, and there’s a few of them who are going to lose their homes. I am sometimes haunted a bit that I am making money off of somebody else’s pain. But it wasn’t me that caused it. I am the solution.”
Wade Engineering cleans the mess caused by water infiltrating a condo’s building envelope and therefore has insight into what’s causing it. Of the 15 to 20 northern Alberta buildings the company works on each year – this while turning down dozens more – King estimates fully 40 per cent are leaky building-envelope repairs. While it is common for leaky condos to be blamed simply on bad builders, King has a more nuanced view. He says undetailed architectural drawings and lax oversight by architects, a lack of knowledge of building-envelope principles, the absence of money to build or fix issues properly, and the improper phasing of work – linked to Alberta’s infamous construction booms – are the causes of the leaks.
But why are so many condo calamities happening right now? After all, a drive through many Alberta neighbourhoods reveals numerous condos with green netting surrounding them, signalling they are having their envelopes repaired. King says all of the factors came together during Alberta’s most recent building boom and that the leaks are therefore starting to appear in droves. Another reason, he says, is balcony design. Before this recent construction boom, balconies were hung directly off of walls; during and after, many were built with their own supports in the ground, like at Rossdale Court. “I’ve actually coined a phrase – I don’t call them balconies anymore,” King says of these designs. “I call them water collection platforms.” Why do they collect water? The heavy building settles over time – up to an inch – while the light balcony, supported by pilings, does not settle as quickly. As a result, what starts as a balcony with a slope pushing water away from the building becomes one aiming water right at the walls.
So, are the changes Alberta has made going to be enough? King is supportive of the five-year building-envelope warranty, the building inspection reports and other shifts, as well what he sees as a marked increase in municipal inspectors and scrutiny. He says these changes could be profound, estimating they might cut problems to just 10 per cent of what they are now. But he notes it remains unclear if differences in inspection requirements between detached homes and multi-unit dwellings will be addressed in the new building assessment reports. And change will take time. “I see reconstruction of buildings that are failing prematurely to be strong for another 10 years,” King says.
Such talk is why Dave Eggen still wants more consumer protection created. Eggen – currently running to lead the NDP in Alberta – became involved with the issue of leaky condos in 2011, when several examples emerged in his riding. He says inspections can and should be the mechanism that catches the issues that King, Batty, Werenka and others point out, and not the newly introduced building warranties. At the moment, “There’s either just self-inspection or the contractor is hiring an inspecting company to come, so there’s no independence of, say, a provincial inspection agency that would come to look at a structure at critical stages,” Eggen says. “There’s just room for error to take place and that seems to be what is happening. If you can have a set of rules or laws but they’re not enforced, then they don’t mean anything. It’s like having a speed limit with no occasional speed trap.” Eggen adds the quality issues have been “exacerbated considerably by unscrupulous contractors” building condos.
“I’ve talked to condo contractors who have expressed this to me very specifically. They would like to see more regulation too. Everybody would benefit.”
Jim Rivait, president of the Canadian Home Builders’ Association, Alberta chapter, says he and his members welcome more inspections. He notes, repeatedly, that changes to regulations as well as moisture control courses and other measures prove that builders are responding to the issues that many have brought to light. And he points to the introduction of the five-year building-envelope warranty, which can also be extended at extra cost by two years, as a transformative shift. “If there are things – defects – that have to be dealt with, our industry will stand behind [its buildings],” he says. “Now, not everyone’s a member of CHBA, and we always required the warranty as part of the condition of membership. But now everyone will have to [offer it].”
Still, Rivait is quick to distance all homebuilders from ultimate responsibility for Alberta’s leaky condo problems. He says the capabilities of condo boards in keeping a building maintained to a standard are a large but often overlooked factor for building-envelope issues. “I can tell you the majority of the problems and changes being addressed in the Condo Act are not about builders and developers,” Rivait says. “A lot of it has to do with condo boards and people that are ill-equipped and ill-prepared to be managing such an enterprise. It becomes more difficult to know when a defect ends and a maintenance issue starts.”
But surely builders play some sort of role? Rivait says they do – but says those who build bad buildings are the exception and not the rule in Alberta. He adds that bad building practices were exacerbated by Alberta’s building booms. “When you start looking at some of the occurrences, when we had the boom on, and it takes a period of time to show up after that, I mean that was a challenging time for the industry,” Rivait says. “People were going crazy and I guess things were happening.” The period between 2005 and 2007 saw an explosion in building starts, with starts hitting about 49,000 in 2007. Today, the number is around 36,000 starts per year, Rivait says, meaning we’re not at boom-time conditions. “We’re not in that circumstance. So I think that some of the people that are impacted from the issues, unfortunately, got caught in them before some of these other changes occurred.”
Rivait’s most controversial stance, however, is what consumers should do to protect themselves. “It’s not harder to build here than in Vancouver, or Regina, or Toronto, but people probably should do their homework and know they’re getting someone with a good track record. We’ve seen things happen. If people jump in because they’re going to get a good deal and take on the promises that people make, they could be disappointed.”
Anand Sharma, president of the Canadian Condominium Institute, Northern Alberta chapter, rejects Rivait’s premise. “People should have an expectation that a builder knows how to build a building,” Sharma says. “Yes, there is documentation that can be provided. But can [consumers] actually go behind a building and determine if it’s sealed correctly? Is that a reasonable expectation of this association? Absolutely not … So there is a responsibility for developers to get it right. If they don’t get it right, there should be consequences.” Those consequences, Sharma says, are not addressed in the changes to the condominium legislation or taken care of by the new warranties. Indeed, he says relying on warranties rather than strict penalties and fines for non-compliance with regulations is going to leave a protection gap. “We feel at CCI the coverage will not be adequate,” he says, noting that warranties often expire before problems emerge. “Furthermore, we feel there is a role for government to play in protecting the consumer. Leaving it to for-profit companies to determine the consumer protection is problematic.”
Sharma sees the condo problems that have emerged over the past decade in Alberta continuing, and he and the CCI are calling for more to be done. “We’re starting to see a real emergence of issues, over the last couple of years in particular … If somebody puts up a balcony, are they talking to the trades that are putting up the siding? Are they making sure the envelope is preventing water infiltration? Are they meeting code when they put up stucco, for example? These kinds of building construction issues – buildings were slapped up and the reality is some of these contractors were not supervised very carefully, and so we have major, major issues because of it. And they’re going to continue, that’s my prediction. I call it the condominium crisis.”
The CCI is pushing for greater and tougher inspections, holdbacks and significant fines for non-compliance. “The developers who are building well will have no issues. But the ones that aren’t should be caught in the process,” Sharma says. “We haven’t seen the details in the Condominium Property Act for teeth with the developers in that legislation. If they don’t put in that, we’ve got a problem.”
For Batty, the changes to regulations and additional protection offered by longer warranties is encouraging but does little for his own challenges. Many of Rossdale’s residents, he explains, initially planned to live in the building for a short period rather than long term. But now, after having to invest large amounts of money just to save their investments, Batty says he and others feel a bit stuck, financially. “It feels like everybody’s in the same boat. It’s been a really tough situation for people. I love the area, I love living downtown, but I wish I could take all that stuff and trade out a few of the problems. Unfortunately, the problems seem to exist in every building of that style.”