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When Sarah Marcinowski bought a Richmond condominium in 2001, she was sure she'd made a sensible decision by investing in the Lower Mainland's booming real estate market.

By the next year, however, she was hearing unsettling reports from neighbours in the four-building complex about leaks and water damage in some units - issues she'd heard nothing about when she bought her home.

This year, after court cases, scores of meetings and thousands of dollars committed to repairs in her own unit, Ms. Marcinowski was confident enough in her condo's condition to sell it to her sister, who purchased it in part because the building's troubled history meant she could buy a bigger home there than in an untainted complex.

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Now, the sisters are feeling queasy again, as falling real estate prices gnaw at the potential value of the repaired unit and make the bitter pill of repair costs harder to swallow.

The $10-million-plus repair contract - amounting to about $30,000 for each unit in the complex - was struck when the real estate market was hot and construction services were at a premium.

"We are now paying the expensive labour costs, and the market is going down," Ms. Marcinowski said.

Her condo journey was emotionally draining and expensive. But she's better off than some players in the latest chapter of B.C.'s leaky-condo saga, who find themselves caught between expensive repair bills and a sagging real estate market.

British Columbia's leaky-condo crisis peaked in the late 1990s, when several factors - including a building boom, shoddy or rushed construction and the Lower Mainland's rainy climate - resulted in widespread "building envelope" failures that left mould sprouting on walls and rendered some buildings uninhabitable.

In 1998, former premier Dave Barrett led a commission of inquiry into residential construction that resulted in the creation that October of a B.C. Homeowner Protection Office to help affected homeowners.

Since then, telltale tarps, or "B.C. flags" as some in the real estate business ruefully call them, have gone up on thousands of buildings to allow crews to rip out and repair soggy walls, balconies and ceilings. The HPO has provided nearly $800-million in loans since its founding, and many of the worst-affected buildings have been repaired.

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But the nightmare isn't over. In the Vancouver Island city of Nanaimo, for example, residents of the 60-unit Millstone Creek townhouse complex are struggling to balance repair bills with the plummeting market value of their homes.

Ken McEachern is one of them. He now lives in Strathmore, near Calgary, having moved there last year when his forestry-related job in Nanaimo no longer seemed secure.

But he still owns, and rents to tenants, his townhouse in Nanaimo, which now feels like a millstone around his neck. He bought his three-bedroom, three-storey unit in 2003 for $128,000, downsizing from an ocean-view home he and his wife had previously purchased into something they thought would be more prudent for a young family. An inspector and a real estate agent assured Mr. McEachern the development had no history of leaks.

But living in the second phase of the two-phase, 60-unit development, the couple in 2004 began hearing rumours about leaks and "moisture intrusion."

At first, there was talk that fixing the problems would cost $10,000 or $20,000 per unit. That estimate ballooned as the extent of damage became evident and now sits at about $150,000 a unit.

Mr. McEachern, 39, has obtained an interest-free loan from the HPO. But the loan is only interest-free until he renews his current mortgage in a few years and will be expected to roll the HPO loan into it, he says. His debt load has soared at the same time the market value of his home has tanked.

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"Once the leaky condo [repairs]got out on it, it was worth $60,000 and I owed $300,000," Mr. McEachern said. "It's nothing but heartache and strife and there have been some people who have lost their homes."

Derek Hahto also lives in the Millstone Creek complex. He and his wife bought their unit 11 years ago for $112,000. Mr. Hahto, 52, expected to have his mortgage paid off by the time he was 60. Now, because of $150,000 in repair costs, his debt has climbed back up over the $200,000 mark and he's chipping away at a bill that at times seems insurmountable.

"I'm going to be paying until I'm in the grave," Mr. Hahto said.

Rising repair costs are also a headache for Renate Leppert, a retiree who bought her Langley town home 11 years ago and says she has since spent more than $10,000 for repairs related to water damage.

Now she's been told that some of those repairs were poorly done and that some materials and structures need to be replaced. Homeowners in the complex have been given estimates of up to $77,000 per unit for necessary repairs to balconies, decks and other structures.

"We have already paid for a five-year Plan A, and now there's a Plan B and a Plan C," she says. "I can't afford it."

As owners of older homes struggle with damage from years past, Lower Mainland high-rises that were built more recently and in which problems may take longer to appear could be part of the next wave of leaky buildings. In its annual report, the HPO said it expects demand for its reconstruction program will remain high "for the next five to 10 years."

If damage is not visible, homeowners can be inclined to put off expensive repairs and take a "patch and pray" approach, said Alan Cadwell, the former owner of a leaky condo who set up the Condo Advocate, a Langley consulting firm that provides advice on condo restoration.

"They just kind of bury their heads in the sand and then they have a full-blown crisis by the time we get called in," Mr. Cadwell said.

Vancouver's climate and pell-mell construction scene of the 1980s and 1990s unleashed a deluge of leaky condos, says Dave Kayll, a principal with the Ottawa office of Morrison Hershfield, an engineering firm that has worked extensively in building envelope restoration.

But Mr. Kayll, who was based in the firm's Vancouver office when the leaky-condo outcry was at its loudest, says cities elsewhere are hardly immune. "We are working on buildings here in Ottawa that are seeing water penetration problems," he said. "The rate of progress of destruction here is slower, because we get winter. Rot is a slower-moving beast here than it is out west."

*****

Water world

Of all the condo apartments built in British Columbia in the 15 years up to 2000, 45 per cent had leak problems. In schools that were built during the same period, the majority leaked.

CONDOS

159,979 apartment strata units were built in B.C. between 1985 and 2000.

72,193 leaky

41,529 yet to be repaired

30,664 repaired so far

87,786 dry

*****

SCHOOLS

Just over 700 schools were built between 1985 and 2000. It's going to cost an estimated $377-million to repair the ones that are leaking.

400 leaky

24 have repair completed

18 have repair in progress

123 in risk-assessment stage

200 in building condition assessment stage

300 dry

Other

THE GLOBE AND MAIL; SOURCE: CANADIAN PRESS, B.C. HOMEOWNER PROTECTION OFFICE

*****

Fixing a leaky system

B.C.'s leaky-condo crisis turned a spotlight on the building industry, triggered scores of court cases and resulted in a commission of inquiry into residential building practices led by former premier Dave Barrett.

Mr. Barrett's first report, The Renewal of Trust in Residential Construction, released in June, 1998, involved public hearings in Vancouver, Surrey, Victoria, Nanaimo and Kelowna and more than 700 written submissions. In it, he referred to a "litany of horrific experiences, personal tragedies, and dashed dreams" endured by homeowners.

In 1999, the commission was reconvened and charged with looking into the collapse of the province's New Home Warranty program, which many homeowners had expected to shield them from problems in their buildings.

Mr. Barrett's initial report resulted in the Homeowner Protection Act, legislation designed to protect consumers from poor construction, and the Home Protection Office, a Crown corporation that is responsible for licensing residential builders and administers a no-interest loan program for homeowners.

Since 1999, builders have been required to be licensed by the HPO and to arrange for third-party home-warranty insurance before getting a building permit.

The leaky-condo crisis spawned millions of dollars worth of repairs. Some homeowners paid for repairs, only to find that their building still leaked or that other structural problems had gone unnoticed.

In 2000, regulations were passed that require repair contractors to be licensed and also call for third-party warranty insurance on repairs.

Wendy Stueck

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