More Than Just Condos: All About Bare Land Stratas

Strata Corporations and Bare Land Strata Corporations – What’s the Difference?

In British Columbia, a conventional strata corporation subdivides a building into separate units, commonly known as strata lots. This allows for individual ownership of a strata lot as defined by a strata plan, with the strata lot usually ending at the center of walls, floors, and ceilings. Any part of the building that, according to the strata plan, is not part of the strata lot is referred to as the common property. These typically include hallways, elevators, recreational amenities, and building exteriorsTogether, all the strata lot owners own the common property as a strata corporation and share the fees and responsibilities associated with maintaining it.


Stratas that divide a larger piece of land into several strata lots are called Bare Land Stratas (or Bare Land Condominiums in Alberta and Common Elements Condominium Corporations in Ontario). As the name suggests, the purchase of a Bare Land Strata lot means exactly that: a bare lotwith no buildings on the strata lotThe key difference between a Bare Land Strata and a conventional strata corporation is that any building constructed on each bare land lot becomes the responsibility of each strata lot owner for maintenance costs and insurance. The strata corporation has no interest in each strata lot owner’s buildings unless these are referenced to in the strata plan or the bylaws.


However, beyond the individual strata lots, there is still common property that the Bare Land Strata Corporation continues to be responsible for. This can include amenity buildings, roadways, walkways, grass, shrubs, trees, septic fields, sewage treatment plans, underground systems services, and more. In most cases of bare land developments you will find single-family dwellings, but this ownership structure can also be utilized for mobile parks, recreational sites, and other property types.

Insuring Bare Land Strata Corporations

At the end of the day, a Bare Land Strata is still a strata corporation, and compliance with the Strata Property Act is expected. The Strata Property Act requires all strata corporations—including Bare Land Corporations—to obtain and maintain property insurance for common property, assets, and buildings shown on the strata plan. Property insurance must be current and cover full replacement cost in the case of a total loss. An annual insurance appraisal determines an appropriate insurable cost for the common assets. 


In our over 20 years of experience, we frequently encounter instances of Bare Land Corporations not carrying sufficient coverage for a total loss. A common omission are the underground site services, such as plumbing and electrical. Other common assets such as retaining walls and fencing are often missed. Determining which elements are common property and which are the responsibility of the homeowners is a complicated process and requires extensive research on the part of the insurance appraiser. It involves reviewing all pertinent documents, then taking a careful inventory of the assets to be included and conducting research to determine specific replacement costs. Following this, a consolidated total is then created for the Total Insurable Value.


Given the highlevel of detail required in both the analysis and reporting for these appraisals, it is not unusual for a bare land appraisal to take longer than a standard appraisal. This is due to the fact that the appraiser must analyze and estimate costs individually for certain components that would have been otherwise included as part of the building or site improvements.

Ignorance is (Not) Bliss

When it comes to bare land developments, it is vital that no common element is missed. In this reported casea bare land gated complex in the Fraser Valley found themselves ill-prepared for a number of water and sewer-system failures that occurred following a heavy winter seasonThe strata owners were oblivious, believing that the single-family homes they lived in within a Bare Land Strata were no different than owning a single-family home on a standard city lot. The assumption was made that the city would be responsible for maintaining these services. In the end, the corporation found themselves underinsured and owed $250,000 – around $5,000 per home.  

Looks can be deceiving. Avoid the guesswork and review the filed strata plan in the Land Title Registry. Strata plans for Bare Land Strata Corporations should be clearly labelled as a “Bare Land” and will not usually show the outlines of houses located on individual strata lots.


For your own peace of mind, continue to educate yourselves and leave the insurance appraising to the experts. 

Reviewing Canada’s Catastrophic 2020

As the hard insurance market ensues into 2021, we take a look at some of the severe weather catastrophes in 2020 that marked Canada’s fourth highest year in insured losses since 1983. On top of the global Covid-19 pandemic, Canada had experienced insured losses to the extent of nearly $2.5 billion. The cyclical nature of the insurance industry means that after a period of severe loss, insurers must increase premiums and impose stricter underwriting guidelines to take on less risk and recoup for losses. The condominium and strata industry in all parts of Canada are at the tail end of it all, with premiums and deductibles on the rise at escalating rates. 

Rain and Snowstorms in Southern Ontario, Quebec, and British Columbia

On January 10, overnight temperatures in Ontario rose to new highs of 10 to 15 degrees Celsius prior to the rainstorm. During the two-day storm, Windsor and London had experienced up to 70 mm of rain and Toronto had recorded 78 mm of rainfall. The Ottawa airport had also experienced 34 mm of rain along with 12 cm of both snow and ice. In Montreal, the rain had begun on January 11, where the city recorded 40 mm of rainfall and 13 cm of ice pellets. On January 31, parts of southern British Columbia had experienced up to 140 mm of rainfall that forced the evacuation of dozens of people. The excessive rain and snowfall had led to overland flooding, seepage, and sewer backups with insured losses totalling nearly $140 million across all three provinces.

Fort McMurray Flooding

On April 26, the Athabasca River saw an alarming escalation in water levels due to a 25-kilometre ice jam, which resulted in major flooding of the downtown Fort McMurray area causing $562 million in insured damageAccording to the Regional Municipality of Wood Buffalo, the flooding had damaged more than 1,200 properties and displaced 13,000 residents by May 3.  At the time of this incident, overland flood coverage had still been relatively new in Canada and was extremely hard to obtain in flood-prone areas. As a result, many homeowners either lacked sufficient coverage or did not have any at all.

Calgary Hailstorm and Central and Southern Alberta Storms
A month after the Fort McMurray flooding, Calgary was now at the center of the fourthlargest insured loss in Canadian history. On June 13, northeast Calgary had experienced hailstones the size of tennis balls at a speed of 80 to 100 kilometres per hour. Over 70,000 properties and vehicles were destroyed by the hailstorm and many are having to deal with high out-of-pocket deductibles to cover for the damage. Between the months of July and August, Central and Southern Alberta had also faced a series of severe weather patterns totalling an additional $221 million. Condominium insurance premiums in Alberta increased by 20% between Q4 2019 and Q4 2020 marking the highest increase across the country. 
Ontario Windstorm
On November 15, a tornado reaching speeds of 135 kilometres per hour had hit Southern and Central Ontario, particularly the Greater Toronto and Hamilton Area, Niagara region, Muskoka region, and the Lake Erie and Lake Ontario shorelines. Pair with heavy downpours that caused lakeside flooding, 540,000 homes reported power outages with debris scattered over cars and buildings. The total insured damage was reported at $87 million, most of which was to personal property. 
Condo and Strata Premiums Remain on the Rise
As local and international catastrophes contribute to the hard market, efforts have been made across the country to make market conditions more attractive for insurers to return to this market, including relief to unit owners themselves. BC’s Finance minister, Selina Robinson, stated that the NDP (New Democratic Party) has started “to chip away at the various component pieces that would help bring insurance rates down … We’ve made a number of changes. There’s more changes coming.” According to the latest “Home Insurance Price Index” released by, from Q4 2019 to Q4 2020, British Columbia had a year-over-year increase of 18%:  

Alberta had a year-over-year increase of 20%: 

Ontario had a year-over-year increase of 8%:

Having Sufficient Coverage and Paying Accurate Premiums

Given the current market conditions, it is critical that your condo or strata corporation is adequately covered in the event of a total loss. We have seen cases where properties have been underinsured, exposing themselves to unnecessary financial risk and liability. At the same time, we have seen properties carrying excessive replacement costs and, as a result, paying too much for insurance. Having an insurance appraisal done by experts trained in local construction costs ensures that you not only have sufficient coverage on your property, but that your premiums are accurate and in line with the market. 

Why We Celebrate Pink Shirt Day

Today, Normac invites you to wear pink and address bullying in an intentional and meaningful way. Leading up to Pink Shirt Day, our staff have been working on a campaign to open the conversation on bullying and help raise funds for programs that counter bullying behaviour. Heres what a few of our team members have to say: 

What is Pink Shirt Day?

Pink Shirt Day is an international movement with Canadian roots. It all started with a small act of kindness. 


Travis Price and Davis Sheppard were high school students in a small town in Nova Scotia when they noticed a Grade 9 student being bullied for wearing a pink shirt. Moved by the incident, the pair decided to take a stand by encouraging other students at their school to wear pink in solidarity with the boy who had been bullied. 


The response they got was remarkable. Out of 1,000 students attending their school, 850 got on board and wore pink. The movement quickly gained media attention and spread to neighbouring schools and well beyond. Fast forward to years later, pink-themed events are celebrated worldwide as part of anti-bullying initiatives. 

Why Should You Care?

While the majority of preventative measures target bullying in schools, bullying continues well into adulthood. According to a 2020 study 57% of English-speaking older adults in Ontario have been bullied in the last 4 months. Another study identified that 40% of Canadian workers experience bullying on a weekly basis. Add in normal-than-average screen times to the mix due to COVID-19 and you the perfect ecosystem for increased cyberbullying.

Bullying is a widespread issue that we can all take some responsibility for. Thankfully, it is also something we can all take part in ending. As we continue to feel the repercussions of isolation from the COVID-19 pandemic, we need to rely on each other more than ever. 


At Normac, workplace wellbeing has long been at the top of our list. While we strive to be the best at what we do through service excellence and quality of performance, we aim to treat our staff just as highly. In a time of remote work, we continue to encourage meaningful interaction and team-building activities within our internal team through various virtual social events. Some of our past events include: a murder mystery escape room, office olympics, and an online Christmas scavenger hunt – including a charcuterie care package sent to all team members across Canada! We also promote self-care among our team through a health & fitness challenge and recently implemented an employee reward and recognition program. This is because we firmly believe that creating a positive, supportive, and healthy work culture can lead to growth opportunities both for our people and our business. 

Team Normac on one of our bi-weekly social Zoom calls celebrating Pink Shirt Day.
Getting Involved on Pink Shirt Day

Join us in taking a stand against bullying. Here are some ways to get you started:  

  • Donate to the Normac Giving Group. Normac is committed to creating an inclusive workplace, and we believe that these skills begin in childhood. 100% of the proceeds go towards charities that cultivate self-esteem and healthy relationships among youth.  
  • Wear pink and share online with the hashtag #PinkShirtDay and #LiftEachOtherUp to help raise awareness.  
  • Buy an official Pink Shirt Day t-shirt at over 80 London Drug stores across Canada. Money made from the sale of Pink Shirt Day t-shirts goes directly to the cause.
  • Above all else, remember to be kind to somebody today. Kindness is always a good place to start, and you just never know what somebody is going through at any given moment.

As we are reminded by the people wearing pink today, a little bit of empathy can go a long way. 

Shared Facilities Agreements: Recent Changes to the Ontario Condo Act

History of Shared Facilities Agreements

When the Ontario Condominium Act was first registered in 1968, it served one main purpose – to provide a set of rules and guidelines for owners of a single condominium to live harmoniouslyHowever, when more than one condominium corporation share assets, this creates a need for different condominiums to get along with each other and can prove to be quite challenging. The recent amendments to the Condominium Act (1998) are meant to provide clarity for these shared assets.

As written:

21.1 Subject to the regulations, if any of the following persons or any combination of them share or are proposed to share in the provision, use, maintenance, repair, insurance, operation or administration of any land, any part of a property or proposed property, any assets of a corporation or any facilities or services, they shall enter into an agreement that meets the prescribed requirements and shall ensure that it is registered in accordance with the regulations. 

This means that for any group of condominiums that share assets, a Shared Facilities Agreement (SFA) must be created. These agreements are designed to provide a framework for determining cost sharing for the assets. 

What is the Root Cause Behind this Recent Change?

Unfair cost allocations have been front and center around what once was a vague iteration of how to split the costs of shared facilities. Previously, under section 113 and 135 of the Act: 

  1. Under Section 113, which states that where a corporation has entered into a SFA prior to the turn-over meeting, then within 12 months following the election of a new board at such turn-over meeting, any party to the SFA may make an application to the courts to amend or terminate the agreement if (a) disclosure of the terms of the SFA was inadequate or (b) the agreement produces a result that is oppressive or unconscionably prejudicial to the corporation or any of the owners;


  2. The more general provision, Section 135, which permits an application for the oppression remedy by an owner, corporation, declarant, or mortgagee of a unit. 

Toronto Standard Condominium Corp No 2130 v York Bremner Developments Ltd, 2016 ONSC 5393[1] (“York Bremner”) brought to the forefront some of the frustrations that many condominium corporations faced when it came to Shared Facilities Agreements.


In this case, the Court found that York Bremner’s conduct rose to the level of oppression due to unclear disclosure of the terms of the Shared Facilities Agreement. It was determined that the declarant had used unfair terms that was self-favouring and that it was not clearly stated who the Common Facilities Manager was – who would have been solely responsible for managing and allocating the costs for the shared facilities. It is interesting to note that prior to this case, there had been no jurisprudence on the interpretation of Section 113, therefore the case had gone on the basis of first principles. The case has been appealed to the Court of Appeal by the declarant since then. 

Determining Replacement Cost for Shared Facilities

Due to the recent change in the Condo Act, we have received many requests to appraise shared facilities and we expect many more as more condominiums realize that their shared assets must have such an agreement. As insurance appraisers, we are called upon to determine a replacement cost estimate for the shared assets because insurance of those assets is one of the requirements.   


We have witnessed a huge variety in the scope and complexity of these Shared Facility Agreements. We have seen simple agreements where two condominiums share a recreational building and the proportionate share of maintenance, repair and so forth is determined by a simple percentage split. We have also completed appraisals on very complex shared facilities where the proportion of responsibility for specific assets such as HVAC systems, pools, amenity rooms, and elevators vary between the corporations but also vary for each asset. As appraisers this means we are tasked with relatively simple jobs in some cases but very complicated jobs in other cases, requiring specific line-item valuations for each asset. 

We have witnessed a huge variety in the scope and complexity of these Shared Facility Agreements.  In some cases, very complicated jobs require specific line-item valuations for each asset. 

The appraiser skill and experience required to do a good job therefore is quite unique for these shared facilities. Before we quote on these jobs, a thorough review of the agreements and other documents must be done to estimate the number of days that will be required. Upon approval, a property inspection takes place and an inventory along with photographs are obtained. Following that, the research into reasonable replacement costs for the assets are done and an appraisal report is created and sent to the client. 


Hiring a qualified insurance appraiser can help you check the insurance requirement off your list. An appraisal will help provide clarity of coverage to the different corporations and will help reduce conflicts that may arise.  

Understanding Total Insurable Value

There are two types of appraisals that measure the value of a property in Canada: a market value appraisal and a replacement cost appraisal. A market value appraisal is useful when applying for a mortgage or selling your home, and it uses a specific valuation approach. A replacement cost appraisal on the other hand, also known as an insurance appraisal, is used for insurance purposes.


With an insurance appraisal, the value of a property is defined as its full replacement cost, known to appraisers and brokers as the Total Insurable Value.

TIV Explained

The Total Insurable Value (TIV) is the single most important figure in expressing the cost to fully replace a property in the event of a total loss and includes the cost of materials, labour and professional fees, bylaw and building code revisions, demolition and removal expenses, taxes, and inflation.


The process of establishing an accurate TIV starts with hiring a professional insurance appraiser from an experienced, third party firm. The appraiser will inspect and assess the property, identify all the physical elements, materials, and systems, review the architectural blueprints, bylaws, declarations, other relevant legal documents, and determine accurate square footage of various sections of the property. After a comprehensive analysis of all available data, an estimate is made, and a report detailing the property and its TIV is created. Insurance appraisers use a valuation method called the Cost Approach to estimate TIV, which determines the cost to reproduce the property or replace it with an equal substitute.


Conversely, market value appraisals use different valuation methods, typically the Income Approach or the Direct Comparison Approach. These market valuation methods consider different things, such as the land value or future income that a property is capable of producing. Using an incorrect valuation method when determining TIV would drastically and negatively impact the estimate for placement of property insurance.


The insurance appraisal is used to place property insurance and ensure sufficient coverage. If appraised too high, a condominium corporation or property owner might find themselves paying excess amounts of insurance premiums. If appraised too low, the asset is at high risk of being underinsured in the unfortunate event of a total loss. An experienced appraiser who specializes in replacement costs will consider many factors to achieve an accurate and reliable TIV for their clients.

Considerations to TIV

When determining TIV, there are many physical components that must be evaluated: the entire building structure and mechanical systems, both the hard and soft landscaping, all common elements such as amenity rooms or swimming pools, and the typical finishes of units. 


In addition to this, there are other critical considerations that will impact the TIV such as type and quality of materials, location, building code and bylaw review, and the cost of demolition.

Structural, Material, and Labour Considerations

Normac relies on our proprietary costing database and local cost guides to assist our team in determining accurate replacement costs. Our costing algorithms are routinely updated to account for material and labour variances from multiple regions across Canada to produce our estimates and valuation updates. As economic conditions fluctuate, so do these variables. Changes to supply and demand, workforce composition, even international trade can all contribute to significant annual construction cost fluctuations.

Our costing algorithms account for material and labour variances from multiple regions across Canada

While land or market value are not considered for TIV, the location of a property can have a substantial impact on the replacement cost.  Many contractors charge more for their services in remote areas than in cities. As access to materials and labour is typically challenging in remote areas, transportation costs are factored into contractor pricing to account for this.

Demolition and Removal

This is another significant contributor to the total insurable value. Not all appraisers include this in their assessment, but it necessary to remove the existing structure before a rebuild can begin. Demolition and removal in urban areas will cost more due to space limitations, traffic restrictions, and permits that may be required. Furthermore, the type of property and frame type has a major impact on demolition costs. As an example, a concrete high-rise would be significantly more expensive on a square foot basis to demolish than a wood-frame low-rise building.

Size of Unit

The size of the units can also impact costs. Although many condo units in downtown apartments are smaller than what you would find elsewhere, smaller apartments still require all the typical amenities and systems such as appliances, plumbing fixtures, electrical fixtures, and HVAC, etc. This compression of expensive components into a smaller space will increase the cost per foot compared to larger units.

Building Code and Bylaw Reviews

Building code and bylaw reviews are an important consideration in determining TIV and require special knowledge of provincial and municipal requirements for building codes. The national building code sets the bare minimum requirements for construction. However, additional requirements vary by each province and each municipality.


Due to these variations, bylaws and building codes must be assessed in detail (on a case-by-case basis or annually) as discrepancies between current standards and older structures can reflect large portions of a building’s full replacement value. In some instances, upgrades can account for up to 20% of the TIV. Major upgrades may include additional handicap access such as ramps or elevators, installation of superior fire protection, and extra parking spaces required for new constructions. The knowledge required to complete these reviews in a competent manner is considerable and should be a top of mind for anyone looking for an insurance appraisal company.

Ask Us

In order to determine a replacement cost that is justifiable, all these factors must be accounted for. Property Owners, Strata and Condominium Corporations, Property Managers, and Insurance Brokers have all come to trust Normac for our comprehensive and detailed replacement cost reports.

Normac’s 2020 Year in Review

This year has truly been an unprecedented time for all of us, calling for changes in the workplace and coping with the strain that COVID-19 has had on our day-to-day lives. The team at Normac remained resilient and continued to offer our clients and partners the same excellent service that our company has grown to be known for. As we countdown the last few days of 2020, here are some highlights from this year.  

Note, you can also view this content as an infographic here.

New Website

To kick off 2020, we launched a new website! The goal was to create something modern and user friendly, that easily communicated who we are and the value we provide. This included new graphics, a simplified layout, and smart forms. We are committed to growth and innovation and therefore are always tweaking the site to improve our client experience.

CCI - South Alberta Luncheon

We were a proud sponsor for the CCI-South Alberta Insurance Luncheon. The seminar covered the current landscape of Alberta’s condo insurance market and best practices for condo corporations to prepare for the hard market. We had been given a few minutes prior to the start of the event to share who we are, and had an amazing time mingling with all attendees!

CCI - Okanagan Evening Educational Seminar

We were a proud presenter for an educational seminar held in the Okanagan region. The seminar covered topics on replacement cost values and the strata property insurance market. As one of the keynote speakers, we had the privilege of speaking to the audience on replacement cost values and the importance of insuring to full replacement cost.

Sandwich Making Event

Our head office banded together to hand out 100 meals in Vancouver’s Downtown Eastside. We spent the day shopping, assembling, and distributing meals to people facing social health and proper housing challenges. It was an eye-opening experience for our team, where we were able to help out and connect with individuals who live with disproportionate levels of poverty and marginalization.

Sandwich Making Event

Our head office banded together to hand out 100 meals in Vancouver’s Downtown Eastside. We spent the day shopping, assembling, and distributing meals to people facing social health and proper housing challenges. It was an eye-opening experience for our team, where we were able to help out and connect with individuals who live with disproportionate levels of poverty and marginalization.

Real Estate Conference in the Sun

We were one of the proud sponsors for the biennial Real Estate Conference in The Sun, this year held in San José del Cabo. A joint PAMA and IREM excursion that hosts property managers and industry partners for educational events, networking, and social activities. A wonderful winter escape from 

the snow!

CCI - Golden Horseshoe Chapter Conference

We were one of the proud sponsors for the CCI-Golden Horseshoe Annual Chapter Conference. The event hosted educational seminars, motivational speakers, and ended with a post reception party at the Courtyard Marriot. We had a great time mingling with industry professionals and thank all those who had dropped by our booth.

CCI - Golden Horseshoe Chapter Conference

We were one of the proud sponsors for the CCI-Golden Horseshoe Annual Chapter Conference. The event hosted educational seminars, motivational speakers, and ended with a post reception party at the Courtyard Marriot. We had a great time mingling with industry professionals and thank all those who had dropped by our booth.

The COVID-19 Pandemic

When it was officially announced that we were in a global pandemic, Normac’s team responded quickly and effectively to ensure no interruption in service to our clients. We enforced strict health and safety protocols for site inspections, moved our teams to work remotely, and set up systems to continue operating business as usual. As an essential service, our biggest priority was maintaining the safety of our clients, staff, and their families, while continuing to deliver exceptional service and reliable valuations.

Virtual Social Events

Pictured here: the Normac team at a virtual murder mystery escape room. 


One thing that hasn’t looked the same is our team’s weekly social gatherings. While we are no longer meeting around the beer fridge, we now connect virtually bi-monthly for cocktails, catch ups, and competitions. Our team is made up of some fierce competitors; from trivia to escape rooms and murder mystery experiences, there is no shortage on smack talk.

Virtual Conferences

In September, we sponsored the CAI Virtual Conference followed by the ACR Virtual conference in November. Both were 2-day events hosting a virtual exhibit hall along with several educational seminars held by industry experts on insurance, communications, and property management. It was a great experience for the team given all in-person events are suspended at this time.

Virtual Seminars

With conferences shifting online, so too did educational seminars. We had sponsored a handful of virtual seminars including the “Riding the Insurance Wave” Seminar held by CCI-Golden Horseshoe, CCI – Vancouver’s seminar on Mental Health, as well an Associa-Vancouver seminar on Complicated Stratas. We had also participated in a virtual escape room with PAMA in November!

Holiday Food & Gift Hamper – Adopt A Family

Normac is proud to announce that this holiday season, a family of three will not be hungry. Through the Surrey Adopt a Family program, the Normac team came together to cover the cost of food for a family, along with holiday gifts for their two daughters. We had a delightful time picking out the gifts. In the famous words of Winston Churchill: “From what we get, we can make a living; what we give however, makes a life.”

Normac Christmas Party

With in-person social gatherings not permitted at this time, Normac had moved our annual Christmas Party online! We kicked off the party with a year-end celebratory message from our President, Cameron Carter, followed by an assortment of fun Christmas activities. The celebrations included a Christmas themed trivia & scavenger hunt along with a Secret Santa gift exchange amongst the staff.

Looking Ahead: Normac’s Vision for 2021

As insurance appraisal specialists, we are continuously improving our internal processes to ensure that no update is missed, and all valuations are delivered on time. Combined with the efforts of our dedicated client services team, we aim to pass on cost savings to our clients without compromising on the quality of our work.

Normac has been recognized as an essential service and will continue to provide our services with little to no disruption to our clients. We have adapted to the new norm – implementing new procedures and abiding by the guidelines set out by public health officials. The safety of our staff and clients is of utmost importance. Learn more about our COVID-19 Response.

We sincerely thank all our clients and partners for your trust in Normac and wish you all a happy holiday!

Do Not Be Underinsured

When people ask us why they need an insurance appraisal done every year, or why they need one at all, the number one thing we tell them is that a current appraisal ensures that they have enough insurance coverage in the case of a loss.


Do not gamble with the biggest asset in your life – your home.

The Consequences of Being Underinsured

In August of 2019, a three-alarm blaze tore through an apartment complex in Chilliwack. Investigations determined smoke materials started the fire on a fourth-floor balcony. The fire quickly breached the attic space and by the time fire crews arrived, there were flames as high as 30 feet shooting in the sky.


Fortunately, no one was injured but 60 families were displaced in the disaster. Over 16 months later, those families are not yet back in their homes, and to make matters worse, they are facing thousands of dollars in special levies. It turns out, the strata was underinsured by $3.2 million. Now, each unit owes between $36,000-$57,000 to make up for the shortfall in coverage.


Read more about this story here:

How Property Insurance Works

When you live in a strata or condominium corporation, a portion of your monthly fees goes towards paying for annual insurance premiums. Insurance policies are valid for a one-year period and the adequacy of the insurance coverage must be reviewed annually. The board must also report on the insurance coverage at each annual general meeting. The strata or condo’s property insurance is intended to cover the structures, common property, landscaping and original standard unit finishes.

Standard unit fixtures and finishes include cabinets and countertops, lighting fixtures, plumbing, natural gas lines, floor, wall, and ceiling coverings among others.

In BC, Alberta, and Ontario it is not a requirement to carry your own personal homeowner’s insurance, only a recommendation. Some corporations may write into their bylaws that owners must carry personal insurance to cover things like high deductibles. Homeowner’s insurance would typically cover your personal, moveable assets and any improvements made to your unit. It is advisable to review your condo’s insurance policy with your insurance broker to determine if additional coverage is required to help protect yourself.

Derek Wubbs, one of the unit owners from the Chilliwack apartment complex, believed that he had sufficient coverage through the strata’s insurance and did not have personal home insurance for his few valuable possessions:

"I was under the belief that paying my strata fees would result in the appropriate building insurance being purchased."

Why You Need an Insurance Appraisal

An insurance appraisal provides an estimate of total replacement cost for a property in the event of a total loss. This is called the Total Insurable Value (TIV) and it is used for placing accurate and sufficient property insurance. All property owners should have an insurance appraisal completed on an annual basis and here are FOUR reasons why:

1. Sufficient Insurance Coverage

An annual insurance appraisal ensures that you have sufficient insurance covered in the case of a loss. The fire in Chilliwack is a worst-case example of what can happen when you are underinsured.

2. Avoid Overpayment on Premiums

We have seen cases of properties carrying excessive replacement costs, and as a result paying too much for insurance. An annual appraisal ensures you are only paying for the insurance you need, not more.

3. Avoid Co-Insurance

When a property does not have a current appraisal, it may be subject to a co-insurance clause that requires the owners to self insure a percentage of the replacement cost. Under this scenario, in addition to the deductible, the owners will be responsible for paying a portion of the reconstruction costs on a total loss or partial loss.

4. Fulfill Your Fiduciary Duty

Finally, an up-to-date appraisal ensures that council or board members are complying with their Strata or Condo Acts, which mandate that the board insure the property for a value equal to total replacement cost. Without an appraisal, the council or board can be found to have failed in their fiduciary duty to the property owners, as was the case in this 2008 Quebec apartment fire. Only an experienced, professional appraiser who specializes in replacement costs should determine the Total Insurable Value.

Hope for the Best, Prepare for the Worst

While we hope that we are never faced with a major disaster, the results of being underinsured can be devastating. There are liability concerns, major financial risk, and significant hardship that can endure for years.


Avoid any gamble: An insurance appraisal gives you peace of mind that you and your assets are protected.

Functional Obsolescence: Why Take it Into Account

If you’ve lost power in your condo, it’s hard to imagine doing anything other than walking over to your utility closet, opening up your electrical panel, and flipping a switch in your circuit breaker. But for others living in older buildings, it may not be so easy to get power back. Some residential buildings built 30+ years ago are still equipped with fuse boxes. Fuse boxes are usually located in a common area, such as a hallway or a meter room. And unlike a circuit, a fuse will blow when overheated and will need to be replaced. Time to get strata to call an electrician! On the other hand, the internal mechanism of a circuit breaker will trip and shut off the power when there is a surge of electricity. Nothing gets burnt, so there’s nothing to replace. To restore power, you can simply reset the circuit breaker by flipping the switch back on. This makes a circuit breaker the preferred choice between the two, as it can be used over and over again. A fuse box is an example of functional obsolescence.

What is Functional Obsolescence?

You may have never heard of the term functional obsolescence, but there is a pretty good chance you might have seen it. Ever been to an apartment unit that has three bedrooms but just one bathroom? The textbook definition of functional obsolescence according to the Dictionary of Real Estate Appraisal is “the impairment of functional capacity of a property according to market tastes and standards.” Another common (and outdated) feature found in older properties is single-paned windows. There’s a slim chance you’ll find these in newer buildings, as double-paned (or even triple-paned) windows are now the norm due to their energy-efficient, noise-cancelling, and long-term cost-savings qualities.

An apartment unit with 3 bedrooms but only 1 bathroom is considered functionally obsolete as it does not meet current market expectations.

Functional Obsolescence and Insurance Appraisals

At Normac, our accredited appraisers use a Cost Approach to determine our replacement costs. Estimates are based on replacing a property with an equally desirable substitute, as close as possible to where the property stands now. In other words, we generally assume a like-for-like replacement of all components of the property. However, we must also consider what has changed since the original property was built. There are some circumstances—such as in the case of fuse boxes—where it is safe to assume that existing components within the property will be replaced with a similar alternative, one that is up to current industry and technology standards. Fuse boxes were not designed to deal with today’s electrical loads—they are considered functionally obsolete—and so replacing them with modern circuit breakers in the case of a total loss is a reasonable assumption.

We take functional obsolescence into consideration in this process because in most cases, it will cause the cost per square footage of the property to go down. During an appraisal, we try to estimate how much it would cost to replace the utility in the building rather than how much it would cost to reproduce the exact property.

Copper vs. PEX Plumbing

Copper pipes are: rigid, fire-resistant, recyclable.
PEX pipes are: low cost, bendable, easy to cut.

To illustrate this point, let’s take a look at copper vs. PEX (plastic) piping. Technology often changes the choice of construction materials. Two decades ago, copper piping was the gold standard of plumbing. It is a time-tested water supply line material with its list of pros, but that doesn’t mean that it’s immune to trouble. For one, copper pipes are more likely to break if the water inside freezes. Copper is also a very rigid material, which means it has to be cut and soldered to size, requiring more connections and thus more installation labour. Then there’s the issue of cost. Copper pipes will cost 58 to 68 per cent more to install than PEX pipes.


Conversely, due to its plastic nature PEX pipes can be installed 30 to 40 per cent faster than copper pipes. PEX is also known for its durability. When adjusted for pressure and temperature ratings, it has a predicted life expectancy of 50 years. It is no surprise then why many prefer PEX over copper. Given the higher labour, material, and maintenance costs associated with copper, it is simply impractical not to go with PEX instead. This shows how vital it is for your appraiser to have insight on current standards of material and design in order to produce the most accurate Total Insurable Value (TIV) for your property.


Qualified appraisers will have the specialized skills and training to determine appropriate costing estimates that take into consideration additional factors such as functional obsolescence, current building practices, and technology improvements. For your peace of mind, leave insurance appraising up to the experts. At Normac, our appraisers keep up to date with construction methods, trends, costs, building codes, bylaw, demolition costs, and provincial Condominium and Property Acts to ensure you are paying for exactly what you need. No more, and no less.

COVID-19 and the Canadian Condo Market

Need More Space

Amidst the COVID-19 pandemic, even the experts could not have predicted the strength of the Canadian real estate market – of which includes record high prices and fierce bidding wars – all in the face of double-digit unemployment across the country. “Our views are changing,” says Robert Hogue, a senior economist with Royal Bank of Canada. “The strength in the summer was quite a bit stronger than we might have thought. Clearly, there was pent-up demand from March and April, but we didn’t think it would pop that much.”

Condo Market Trends Covid


Of course, a major factor in the overall increase in home sales reflects the record-low mortgage rates we are seeing currently. The prime rate this year has gone down to 2.45%, a sharp decline from 3.95% from last year.  Canadians have been able to purchase more expensive homes with the same monthly payments as in the past. Government support programs such as CERB and CEWS have also supported household incomes.



In keeping with supply and demand, the single detached or low-rise market may continue to see price increases, however the big-city condo segment is expected to be most vulnerable to post-COVID volatility. As we see a shift from physical offices to virtual/home offices – the demand for larger spaces have increased. Additional factors such as declining immigration and a softer rental market have also played a role in this trend. In June, this year there were 19,000 permanent residencies granted, a decline from 34,000 from the same time last year.

In the beginning of 2020, we witnessed condo prices outpacing that of detached homes. The first quarter of 2020 showed new condo prices in the Greater Toronto Area (GTA) up 14.6% from last year, and resale prices up 8.5%, according to data from Statistics Canada. In Ottawa, the increase was 22.6% for new condos and 15% for resales. Vancouver however, had experienced slight decreases year-over-year. According to the Real Estate Board of Greater Vancouver, apartment home sales had increased year-over-year in August (1,332 versus 1,095), however the shift to detached homes were up 55.1% in comparison to apartments – a modest 19.4%.


Although we are seeing overall increases in pricing and sales activity, the condo market segment has been trailing behind other home-types since March. “We were seeing stronger sales on the single-detached front,” says Jason Mercer, chief market analyst for the Toronto Regional Real Estate Board (TRREB), “and we’re also seeing more listings coming on for condo apartments, so that’s moving toward a more balanced market.” The shift to suburban locations and preference for more space has also taken a toll on the condo rental market. Rent prices have been declining due to higher vacancy rates and renters are seeing more favourable rent conditions.


The Canadian Mortgage and Housing Corporation (CMHC) has purchased $5.8 billion of insured mortgage pools this year in preparation for COVID-19 related mortgage claims. As of July 1, the CMHC has introduced stricter underwriting criteria – which includes more rigorous credit checks and tighter down payment requirements for insured mortgages. It is safe to say, that for the time being the condo market will continue to see short term uncertainty until a COVID-19 vaccine has been introduced with proven results. The long-term effects of this emerging trend are yet to be determined.

If you are buying into the Canadian condo market, it is imperative that you adequately insure your asset. In fact, most provincial condominium bylaws mandate that all condominiums are insured to their total replacement cost value. 

The only way to determine accurate replacement cost is by obtaining an insurance appraisal by a professional 3rd part firm, like Normac. Doing so means you will always be sufficiently insured in the case of a total loss, that you can receive better terms and insurance rates, and that you fulfill your fiduciary duty set by your provincial condominium bylaws.