Commission of Inquiry into the Quality of
Condominium Construction in British Columbia
Submitted to the Lieutenant-Governor in Council
Government of British Columbia
by Dave Barrett, Commissioner
June 1998

Chapter One: The Problem

I. Introduction

There have been a number of task forces, committees, and special reports prepared in recent years, related to the structure and function of the residential construction industry in British Columbia. However, prior to the work of this Commission, homeowners -- the people most affected by this tragedy -- had no opportunity to speak out. Throughout the public hearings, homeowners were able to express their concerns, frustrations, lessons, and wisdom regarding the failure of the system and what needs to be done. Their focus was on restructuring to ensure quality residential construction for the future.

"I am 60 years of age and on a fixed income. The portion assessed against my suite to date totals $22,752.59 which monies have been taken from both my savings account and RRSPs. Cashing in the RRSPs caused my income tax for that year to rise extensively which in turn required payment to come from savings. My RRSPs and savings were estimated to last for my lifetime. Now they are being quickly eroded."

L.L. Wright, Condo Owner*

* All quotes are from oral or written submissions to the Commission unless otherwise stated.

This inquiry is also the first opportunity for people who participate in the industry to come forward in a formal, public setting and offer their expertise and insight. Paramount, is the operational improvement of this important sector of the economy. Many professionals came forward to express their concerns -- some to recognize their responsibilities and to offer suggestions for the future. Until the work of this Commission, the deliberations were behind closed doors, and the magnitude of the problem was shrouded in a veil of denial. This veil has been maintained at the expense of an important public trust -- the cost of which is only beginning to be felt.

"Leaky condos are not an act of nature such as the ice storms and the floods that they are being compared to; they are the result of ignorance, greed, lack of moral fortitude, incompetence and gross indifference. This problem was in existence on the south slope of Vancouver 12 years ago and, over time, builders, architects, licensing departments, inspectors, all levels of government, and even workmen closed their eyes to it. That makes it even more reprehensible."

Phyllis Craib, Condo Owner

In addition, policy makers at all three levels of government: municipal, provincial, and federal, need to address their responsibilities. The role cut-backs and downsizing have played in allowing this crisis to occur, also needs to be addressed. The public sector must ensure an appropriate balance between business needs and consumer needs.

"When I buy a carton of milk or a new automobile, I can sleep at night knowing that my government has legislation and regulations in place to ensure these products meet certain health or safety standards. I should have the same sense of security when I am buying a condo. I should know that the developer has been required to follow legislation and regulations that will ensure that my building will not completely rot within a relatively short time after its construction. I should also feel comfortable that municipal officials have adequately inspected and enforced applicable building standards."

Keren Gertsman, Condo Owner

During the Commission's hearings, many homeowners -- the majority of them condominium owners -- testified about their situations. The litany of horrific experiences, personal tragedies, and dashed dreams is a challenge to the integrity of the industry and to the professionalism of those who operate within it. One of the primary tenets of an effective, competitive market system is that consumers have adequate information with which to make decisions. When the industry fails to provide such information, it is government's responsibility to intervene and to ensure the market effectively meets the expectations, not only of the sellers, but also of the buyers. The crisis in residential construction is a symptom of market failure, partly arising out of ineffective delineation of the roles and responsibilities of the various participants in the system.

"I want to turn to what is really, I think important to industry from our point of view. We need to restore consumer confidence ... we need to get our industry going. I can tell you investors ... have been turning off our industry the last little while. It's not only investors. It's very difficult to get project financing from our own Toronto-based banks. We need to solve this problem, and we need to have consumers."

Maureen Enser, Urban Development Institute

The real tragedy, however, is the impact on people's lives. Resident after resident revealed what this situation has done to them -- not only financially, but domestically, emotionally, and medically. Until now, these circumstances have largely gone unrecognized.

"I am a single woman ... one of my dearest dreams was to own my own home. For several years, I worked very hard to save for a down-deposit. Four years ago, my dream was finally realized. But that dream has turned into a nightmare... There is no place to escape this nightmare. The exterior of our building is like a war-zone. The interior is not any better. I cannot even stay home from work when I am sick because of all the noise, dust, and lack of privacy. I have been yelled at by the neighbours who are fed-up with our noise and mess. I have had owners call me in tears when they cannot take it anymore. When I get home from my two jobs at 8:00 at night, I have to deal with condo business: returning phonecalls, organizing meetings, answering owners' questions, following up on repair work. The physical, financial, and emotional stress is devastating. It is almost more than a person can bear."

Diane Martin, Condo Owner

Leaky condos can also cause health problems. Damp walls can stimulate the growth of fungus and mold which, in turn, can cause allergies and respiratory diseases, and can impact immune systems, particularly in the young and the old.

"As a Public Health Inspector since 1971 and part owner of a leaky condo, I am keenly interested in resolving some of the problems. As you are probably aware the incidence of stachybotrus and other toxic molds growing in leaky and otherwise substandard buildings in BC has become a public health crisis."

Cliff Turner, Public Health Inspector

Of particular concern to this Commission, is the impact on the attitudes of people affected -- not only the consumers, but also practitioners in the construction industry. Some consumers have become ashamed. They are afraid to talk about one of the most significant financial crises they will face. They are afraid of appearing foolish or devaluing their asset. Some members of the residential construction industry have become defensive and aggressive in attempting to deflect responsibility. This attitude destroys trust, is divisive and, works to erode the quality of the cultural fabric holding this society together.

"I want to thank you for allowing me to speak today ... I've been waiting about four years, I guess, to be able to speak publicly, because, I felt that it was an embarrassment to say I was an owner of a leaky condo."

Robert Henderson, Condo Owner

"I'm not a fool, I'm not an idiot, I hold two degrees from the University of British Columbia, born and raised in British Columbia. I hold a doctorate from the University of Oregon. I have taught in the public school system, I have taught at UBC, Simon Fraser University and the University of Alberta. I came back to Vancouver to retire, semi-retire. I wanted to do other things than learn about leaky rotten condos. I bought a brand new home with a brand new occupancy permit, it started to leak in two weeks. From that time on, in October-November 1991, we've been living a horror story."

James Balderson, Condo Owner

The Commission wants to point out that a system works only when people are willing to do whatever is required to maintain its integrity. Entrepreneurial freedom -- an important element in innovation, economic growth, and prosperity -- carries with it an implied responsibility and trust that the entrepreneur will pursue continuous improvement in skills and ability, as well as maintain a code of ethics, regardless of the effectiveness or ineffectiveness, of the existing rules and regulations. Entrepreneurial freedom should not run the risk of becoming a euphemism for con-artistry. There is always an ongoing interaction between the system and the people who operate within it.

"Obviously the system under which we design and construct multi-family housing has failed these people."

Michael Audain, Polygon Homes Ltd.

"I think the current system has truly failed."

Eric Martin, UDI and Bosa Developments


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The printed version remains the official version.

Copyright © 1998: Government of the Province of British Columbia