Government gives more time to "top up" reserve funds
Posted on February 23, 2010 at 02:14 PM
John Moher
We have learned that CCI and ACMO successfully negotiated an extension to the requirement found in section 33(2) of O.Reg. 48/01 made under the Condominium Act, 1998 (the “Act”) which provides that condominium corporations registered before May 5, 2001 “top up” reserve funds within 10 years of the date on which an initial reserve fund study is conducted.
The change gives condominium corporations registered before May 5, 2001, 15 years from the date on which an initial reserve fund study is conducted to adequately fund reserve funds in accordance with section 94(8) of the Act, up 5 years from the current 10-year requirement.
According to a CCI/ACMO joint announcement, the government believes this change will give condominium boards more flexibility with their budgets and assist in taking some pressure off the need to increase common expenses, or to specially assess unit owners.
The change should also assist in reducing the impact of HST on pre-new Act condominium corporations, as boards of these condominium corporations will have an additional 5 years to collect any shortfall in revenue required to adequately fund reserve funds in light of the significant impact HST will have on reserve funds in Ontario.
This important change is scheduled to come into force on July 1, 2010. Congratulations to CCI and ACMO on this important legislative achievement!
Reserve Funds
New Mortgage Rules for Homebuyers
Federal finance minister Jim Flaherty announced three important changes to mortgage rules this morning that will affect borrowers in Canada’s real estate market. The purpose of the new rules is to discourage Canadians from taking on unaffordable debt and to put a check on real estate speculators.
The first major change involves insured mortgages. Under the new rules, in order to qualify for an insured mortgage, borrowers must now meet the standards for a new, five year fixed-rate mortgage, even if borrowers choose a mortgage with a lower interest rate and shorter term. Under the current rules, borrowers only have to meet the standards for a new, three year fixed-rate mortgage. The aim of this measure is to help borrowers prepare for future increases in interest rates.
The second major change will affect investors, who will now have to put down 20% of the purchase price in order to qualify for a mortgage.
The third major change will affect those borrowing against the equity they have built up in their homes. Under the new rules, the maximum amount that can be borrowed against one’s home will decrease from 95% to 90%.
The new rules are expected to come into force on April 19, 2010. For further information:
"Government of Canada Takes Action to Strengthen Housing Financing” Ministry of Finance, Feb 16/10.
"Rules Tightened for Home Buyers” The Toronto Star, Feb 16/10. Source: Yourhome.ca
Federal Changes to Mortgage Rules
Are you thinking about purchasing or selling your house or condominium unit?
If you answered yes, or even maybe, you need to know how much it will cost to close the transaction. Fine & Deo is pleased to announce the launch of its residential closing costs calculator. This helpful resource allows you to enter certain features about your transaction (purchase price, geographic location, etc...) and provides an estimate of the closing costs applicable to your particular transaction. Avoid pre-closing headaches and use our calculator to determine a better sense of how much it will cost to close well in advance of the closing date.
In addition to the closing costs calculator, we offer a courtesy half hour consultation to discuss the specifics of your particular transaction. Please contact John Moher by telephone at 905-760-1800, ext. 231 to arrange a consult.
Purchasing a Condo
The City of Toronto has a comprehensive website for developing and improving recycling programs in condominiums. Publications such as signage and handbooks with useful tips are available on the City of Toronto's website along with information for property managers about the city's recycling volunteer ambassador program for residents. If your condominium does not have rules that address owners' recycling obligations, consider implementing some.
Recycling
Mediation/Arbitration Procedures By-Law
Section 132 of the Condominium Act, 1998 mandates that, among other things, any dispute that arises between a condominium corporation and a unit owner with respect to the condominium corporation’s declaration, by-laws and/or rules, may be subject to mediation and/or arbitration. Unfortunately, the legislation does not provide condominium corporations with a set procedure to follow for both the mediation and arbitration process. The establishment of a procedure process has been left up to each condominium corporation to develop and pass by a by-law. If a dispute arises prior to the enactment of a Mediation/Arbitration Procedures By-law, the respective parties will be without a set procedure to follow, and they will be forced to come to some sort of agreement as to the process at that time. It is therefore highly advisable to have this procedure process in place before a dispute develops.
By-Laws
Small Claims Court
On January 1, 2010, the maximum value of a claim in Small Claims Court increased from $10,000.00 to $25,000.00.
Small Claims Court
Revising a Condo Corporation's Organizational By-law
For all condominium corporations created prior to May 5th, 2001, which is the date the Condominium Act, 1998 (the “Act”) came into force, consideration should be given to up-dating their organizational by-law (i.e. By-law No. 1). The provisions contained within their existing organizational by-laws are typically outdated and, in certain areas contradict the new Act requirements. The Act will prevail over any conflicting provisions contained within a condominium corporation’s organizational by-law. Accordingly, until the organizational by-law is updated, its provisions must be compared to the new provisions of the Act each and every time a provision of the by-law is relied upon. When revising this by-law, the board of directors should also consider making other organizational amendments (i.e. increasing the qualification requirements of directors).
organizational by-law
City of Toronto Water Supply By-Law
Many towns and cities have by-laws that require the installation of backflow prevention devices on water lines that connect certain types of properties to the municipal water systems. Multi-residential buildings in Toronto with five or more units are required to comply with Toronto's Water Supply By-law, by installing a backflow prevention device on the building's water supply line branching off of the city's water line. The purpose of this requirement is protect the City's water supply from backflow water from the building. The type of device required depends on the occupancy of the building. The type of business operating in some commercial units may affect which device is required at your building, such as if that commercial business falls into the category of a Severe Hazard Industry (defined in the By-law). The deadlines for compliance with the By-law in Toronto have now passed, therefore if your condominium has not yet installed a backflow prevention device, the issue should be addressed as soon as possible.
Water Supply By-Law
The Impact of HST on Closing Costs: Buyer Beware!
If you are buying a newly constructed or substantially renovated home, you need to consider the impact of the HST, as this new tax and associated transitional rules could have a significant impact on your closing costs. Click here to read more.
HST
Alteration or No Alteration: The implications of the McMahon Hot Tub Case
As previously posted on this BLOG, the Court of Appeal recently rendered its decision in the case of Wentworth Condominium Corporation No. 198 v. McMahon, known as the "hot tub case".
Alterations, McMahon Hot Tub Case
Cap on Closing Adjustments
I recently met with David Pylyp of RE/MAX Realty Specialists Inc. to discuss the problem of surprise closing adjustments and the need for a cap to be negotiated at the beginning of the purchase process. I learned that Mr. Pylyp is one of the select VIP Brokers privy to a cap on closing adjustments for purchasers of a unit in the newest phase of the trendy California Condos project by Camrost-Felcorp located in Etobicoke’s master-planned Mystic Pointe community. By being able to pass on such a cap to his clients, Mr. Pylyp will inevitably save his clients thousands of dollars and a series of painful headaches in the days leading up to final closing. Click here to read more.
Closing Adjustments
Interested in hearing of your successes
Does your board have a problem-solving success story that it would like to share? Did you solve a unique problem in a particularly cost efficient way, or did your board successfully resolve a dispute with a disgruntled resident so that everyone walked away happy? Email your experiences and lessons learned to kbailey@finedeo.com for consideration in a future article.
Success Stories
Mandatory Metropasses for New Toronto Condominiums
Toronto condominium developers will now be required to provide a 12-month Metropass with each residential condominium unit as a condition of obtaining the City of Toronto’s approval. At full price, the cost of a 12-month Metropass is more than $1300, although developers will benefit from a bulk purchase price discount. Importantly, the Metropass by-law does not apply to all new Toronto condominiums. In order to fall within the scope of the new requirement, the proposed condominium building:
1) must have 20 or more residential units; and,
Mandatory Metropasses
The Home Renovation Tax Credit and Common Element Renovations
As part of the Government of Canada's economic action plan, Canadians living in condominiums will be able to claim a home renovation tax credit ("HRTC") for a portion of the costs associated with common element renovations. By way of background, the program provides a 15% non-refundable income tax credit on eligible expenditures for eligible dwellings. An expenditure is eligible if it is incurred in relation to a renovation or alteration of an "eligible dwelling". An "eligible dwelling" must be occupied as a principal residence by the owner, or a family member of the owner, between January 27, 2009 and February 1, 2010. Further, the work performed or goods acquired must be performed or acquired, as the case may be, after January 27, 2009, but before February 1, 2010.
Home Renovation Tax Credit
Court of Appeal Delivers its Decision in the McMahon Hot Tub Case
Click here for the complete decision.
In this case, the Court of Appeal dismissed the condominium corporation’s appeal, and held that a hot tub which had been installed on an exclusive use common element patio was not an “addition, alteration or improvement” under section 98(1) of the Condominium Act, 1998 (the “Act”).
McMahon Hot Tub Case
Snow and Ice Removal - A Warning to Landlords
Speaking to all of the landlords and tenants in Ontario, the recent case of Montgomery v. Van clarifies the duty to remove snow and ice.
Snow Removal
Meetings Code of Conduct
In preparation for an AGM or other owners' meeting, a board and management team may wish to consider developing meeting guidelines or code of conduct to be distributed with the agenda package. This handout could explain things like the meeting procedure, the role of the chairperson, and acceptable and unacceptable conduct when voicing an opinion. Mutual respect amongst neighbours sometimes gets lost in a heated or contentious meeting, however, a preparatory list of easy-to-read guidelines can assist in making a meeting go more smoothly.
Meetings Code of Conduct
Insurance Claims: Second Opinions are Valuable!
When it comes to insurance claims, it is not always the case that the insurance agent or the insurance company knows best. Condominium corporations should always be on guard to protect their interests, and that means it would be prudent to question any decision, whether made by the insurance agent or the insurance company, that results in insurance coverage being denied or limited.
Insurance Claims
Decorating for the Holidays
As the holiday season is upon us, I’m reminded of a story about Christmas decorations in a condominium building’s common element lobby. The friend who told me this story was a resident owner in the condominium building, and she happened to be Jewish. My only source of this story is her, so please keep that in mind as you read along.
holiday decorations
No Smoking Rule
If the government fails to legislate a ban on smoking in multi-unit residential buildings, could a condominium corporation be held liable to a unit owner for a human rights violation regarding a resident's disability in the form of an allergy to second hand smoke?
No Smoking Rule
The Mezuzah Conundrum - Religious Fixtures on Common Element Doorposts
Over the years, there have been several court cases that set out the relationship between human rights and the Condominium Act, 1998. These cases have dealt with accessibility, reasonable accommodation, and surprisingly more than any other issue, pets. However, there has not yet been a reported case about mezuzahs (a mezuzah is a small scroll of Hebrew verses in a decorative case that is required to be affixed to the doorpost of the home under Jewish law).
Many condominium corporations’ rules prohibit any object from being affixed to the common elements, including doors and doorposts, without the prior written consent of the board of directors. These rules are meant to control signs, advertising, and unwanted decoration from accumulating in the hallways. As well, section 98 of the Condominium Act prohibits unit owners from making changes to the common elements unless certain conditions are met. The statutory conditions, while appropriate for a large scale change to the common elements, are excessive when applied to affixing a mezuzah.
From these background facts, a couple of scenarios may arise: First, a unit owner who seeks to follow the proper procedure may request the consent of the board to affix a mezuzah. If this occurs, the board should consent. As well, while the Condo Act does not permit an owner to make changes to the common elements, it appears to allow a condominium corporation to do so on the unit owner’s behalf. Thus, both human rights law and condominium law can be satisfied by having the condominium corporation undertake to do the work.
But what about the second scenario, where a unit owner does not ask for permission, and installs his or her mezuzah without prior approval of the board? Can a board of directors demand that the unit owner take the mezuzah down? If the unit owner refuses, can the board have management take it down without the unit owner’s consent? These issues have not been resolved by the courts. Regardless of the legality of removing a mezuzah, it could be seen as inflammatory to do so. The better response would be to grant permission retroactively, while holding the unit owner responsible for the cost of repairing any damage to the common elements, and simply ask that unit owners to observe the proper procedure in future cases.
Condominium issues that touch on religion often take on a heightened degree of intensity. Accordingly, boards and managers should seek legal counsel before attempting to enforce the Condominium Act, the declaration, the by-laws or rules that would appear to prohibit a particular religious practice.
Religious Decorations
Whose interests does a board have to consider when managing the affairs of the corporation?
Whose interests does a board have to consider when managing the affairs of the corporation? Obviously owners, because much of the Condominium Act addresses protection for owners. "Owners" is most often a present-tense status in the Act. Future owners' interests are addressed in at least two areas. The Act specifies the declarant's obligations to future owners (e.g. disclosure obligations and turnover requirements) and the requirement for a reserve fund study plan to forecast for 30 years suggests that the legislature contemplated protecting the interests of those owners who will arrive far in the future.
But what about the relationship between future owners and the current board's decision making? Does the board have any obligation to consider the interests of future owners? Does that obligation require the board to balance the interests of future owners and current owners, for example when it comes to financial planning decisions. If so, who's interest can or should take priority?
Protecting Owners' Interests
Avoiding Fraud at Condominium Corporations
Unfortunately, many condominium corporations have been defrauded by contractors, employees, property managers and even board members. These condominium corporations had to learn the hard way that stringent internal checks and balances with the goal of preventing fraud must be in place at every condominium corporation.
Fraud
Asbestos – A Thing of the Past? Maybe Not!
It was surprising to hear that asbestos may have been present in commonly used building materials, such as acoustic ceiling tiles, textured finish on ceilings, vinyl floor tiles and/or drywall joint compound to name a few, up to the early 1980’s. Typically, if the material in question is in good condition and remains undisturbed, asbestos is not an immediate concern. That stated, if any remedial work is required to be conducted to an area in close proximity to, or that contains asbestos, then certain steps must be taken. It is clear that asbestos is considered to be a potentially serious health hazard and, accordingly, it is highly regulated, particularly by O. Reg. 278/05 of the Occupational Health and Safety Act, R.S.O. 1990 c. 0.1 among others. An assessment, by a qualified professional (i.e. an accredited engineer), would be required in order to determine the presence of asbestos. If asbestos is found, then the task at hand is not a small one for the board. The presence of asbestos in a condominium building will require the board to adopt both a scheduled asbestos maintenance program, along with a detailed procedure to follow when work is conducted that will or even may disrupt the asbestos. For buildings built up until the early 1980’s, an assessment of building components by the qualified professional is warranted. The board, in consultation with management, its engineers and solicitors, will have to address the matter by implementing a protocol that will protect the building’s residents and comply with the applicable legislation.
Asbestos
Mould - A Growing Issue
Mould remediation is a growing issue for condominium corporations today. There are many different kinds of mould, some of which may be harmless, while others may be hazardous. Any area exposed to a high level of moisture creates the risk of mould development. This may occur as a result of some failure (i.e. improper drainage of a fan coil unit or broken seal), the manner in which a unit owner conducts their day-to-day activities within their unit (i.e. lifestyle), or a combination of the two.
Condominium corporations should take a proactive approach if a mould problem exists by having a qualified professional conduct the required testing, which should include an air quality test. The determination of responsibility will require a number of considerations, such as:
- what caused the mould to develop;
- is the area affected part of the common elements, part of a unit, or both; and,
- who is responsible to maintain/repair these areas.
In order to develop an effective remediation program, a condominium corporation’s board of directors must ensure that a qualified professional is providing guidance and an appropriate course of action. Any effective remediation program must identify, address and remedy the cause of the mould contamination. As mould contamination tends to create a number of issues for a condominium corporation, the board of directors may have to rely on a number of experts, including its mould remediation professional, engineers and solicitors, in order to appropriately address the problem.
Mould
Is your Condo ready for HST?
As a board member or property manager, you NEED to be aware that the federal and provincial governments plan to merge GST and PST to create a single tax called the Harmonized Sales Tax (HST) and that it is scheduled to come into effect on July 1, 2010. It is critically important that boards understand and appreciate that HST will have an enormous impact on condominium corporations. Goods and services currently exempt from GST will be subject to HST and goods and services currently exempt from PST will be subject to HST. The bottom line: condominium corporations must budget for a 7-8% increase in prices for most goods and services under the new HST regime. Many budgets for the period after HST is scheduled to come into effect do not account for HST. This will inevitably lead to a budget deficit requiring corrective action by the board, whether in the form of a significant increase in common expenses or a special assessment. When it comes time to prepare the next budget, remember to account for HST.
HST
Can an Ontario Board of Directors Ban Smoking Inside Condominium Units?
The wave seems to be gathering speed to ban smoking inside individual condo and apartment units. We all can accept by now that smoking is properly banned in all common areas of condominiums. How do we feel about the possibility that smoking in one's own private condominium may no longer be allowed? There is increasing acceptance that smoke does not necessarily remain contained in an owner's suite. For sure, in some condos, the smoker's cloud remains self-contained and does not harm anyone. In this type of condo, it would be difficult to pass a reasonable rule prohibiting residents from smoking in condominiums. But where it is shown that smoke from one or more units infiltrates other units or the common elements, a rule banning smoking inside the units is probably enforceable. However, the rule has to be properly researched and drafted by the corporation's lawyer. The various views on this topic are being hotly debated throughout the GTA and Ontario. Please refer to the recent Toronto Star article that indicates some municipalities are considering the ban. This municipal move may make the job of a board of directors much easier in those municipalities that choose to do so.
Smoking
Policy Regarding Use of Handheld Electronic Devices while Driving
Companies that provide employees with cell phones, or require employees to be available (implicitly or explicitly) by cell phone for work purposes, should ensure that they have a policy in place regarding the use of cell phones while driving. The statistics on collisions caused by distracted cell phone-talking drivers are all over the news these days, as the new ban on using handsets while driving will come into effect this month.
Companies should be familiar with the new law and ensure that they have policies, which they actively enforce, either prohibiting or severely restricting and controlling the use of cell phones by employees while driving in the course of employment. Employers are typically considered in law to be vicariously liable for the negligence of their employees. For example, if a property manager talking on a cell phone driving from one condominium site to another causes a collision and as a result, people are injured, the property management company may become knee-deep in litigation with insurance companies and/or as a defendant in a civil claim. Having a cell phone policy or prohibition will not necessarily change this, but it could assist a company by reducing the likelihood that an employee would cause a collision in the first place, or could assist in a company's defence by showing that it took steps to prevent such an accident by implementing the policy restricting the employee's conduct while driving.
Corporate Policies
Blanket Alteration Agreements - A Good Idea?
Every so often I run into property managers who tout the benefits of a condominium corporation registering a blanket alteration agreement on title to the units which contains a list of pre-approved alterations that the unit owners are permitted to do to the common elements. For example, within a townhouse complex, the agreement would set out a list of typical alterations that the board is prepared to approve in advance (such as deck installations and extensions, tree planting and other landscaping) complete with descriptions and specifications. The agreement would be executed by the corporation and all the unit owners and then registered on title to all the units.
Blanket Alteration Agreements
Insurance Deductibles: Who must pay them?
There is a perception that the unit owners who are "at fault" for causing the insured damage are always responsible to pay the insurance deductible amount. The reality is that, in many cases the "at fault" unit owner may not be responsible for any portion of the insurance deductible amount. How is that possible? Consider the scenario below.
A common situation involves a unit owner blocking a sink or toilet which results in an overflow of water into the unit. The flood however causes either minimal damage or no damage to the unit of the "at fault" owner, but causes damage to the common elements and other units located directly below.
Clearly whether the repair cost is insured against by the corporation's insurance policy or not depends (at least in the first instance) on whether the repair cost is above or below the insurance deductible amount.
If the total cost to repair the flood damage is higher than the corporation’s insurance deductible, then the corporation must apply its insurance to cover the repair cost and may only look to the "at fault" owner to pay the insurance deductible. This is where problems may arise.
The first problem is that, under Section 105 (2) of the Act, the corporation may add to the common expenses payable by the "at fault" unit owner only those costs incurred to repair his or her unit (up to the deductible limit). For example, if the cost to repair the unit of the "at fault" unit owner is less than the amount of the insurance deductible, then only the actual amount incurred to repair the unit can be added to that unit’s common expenses and the remainder of the cost (up to the deductible limit) would have to be absorbed by the corporation. In cases where the unit of the "at fault" owner suffered no damage, the corporation would not be able to collect any portion of the insurance deductible from the "at fault" owner.
The second problem is that Section 105 (2) of the Act requires the corporation to establish that the flood damage was in fact caused by an “act or omission” of the owner. In those cases where the source of the blockage cannot be identified, the corporation would probably not be able to obtain the evidence necessary to prove the "act or omission". If the corporation proceeds in such cases to add the insurance deductible amount to the common expenses payable by the "at fault" owner and then to lien the unit to collect same, the corporation would be taking a risk that the lien may be subsequently invalidated if a legal challenge is mounted. If the lien is invalidated, the corporation would not only be required to absorb the original legal costs to register the lien, but also the legal costs to defend the owner's action and probably the owner's legal costs as well.
There are therefore potential situations where, either because the flood damage did not actually affect the unit of the "at fault" owner or because the corporation is unable to prove the "act or omission" of the "at fault" owner, the corporation will be unable to collect any portion of the insurance deductible amount from the "at fault" owner.
Is there a way to address such potential situations? Yes. The corporation may pass an insurance deductible by-law under Section 105(3) of the Act, which would make the owner of the unit from where the flood originated responsible to pay the entire cost of the flood repair, up to the insurance deductible amount, irrespective of which portion of the building was damaged, as long as the flood was not the result of any act or omission of the corporation. Such insurance deductible by-laws are so useful, it is hard to believe that many condominium corporations still do not have them.
Insurance deductibles
Amend the Condominium Act, 1998 to Avoid the Creation of Tenements
Just as life as we know it started as a “primordial stew”, the Government of Ontario has concocted its own version of a condominium primordial stew which will create tenements and slums akin to the worst parts of Detroit and New York City.
How? By not putting any teeth into the requirements to create and execute a reserve fund funding plan, and to maintain a properly funded reserve fund.
I have said all along that it appears to me that the Condominium Act, 1998 was created by a collection of beaurocrats and industry “leaders” who had this wonderful brainstorming session and came up with all sorts of ideas, but then forgot stages two and three of the process: vetting these ideas to weed out the bad ones, and then honing them so that they make sense and work.
In this regard, the idea of a mandatory reserve fund, reserve fund study and reserve fund funding plan was a glorious and noble piece of paternalistic legislation BUT the legislation did not go far enough because there is no teeth in the legislation – i.e. no consequences for failure to follow these requirements.
This issue came to a head recently when I attended an annual general meeting where the auditor announced that not only was the condominium corporation not following its reserve fund funding plan, the reserve fund accounting entry was not supported by cash. In other words, although the financial statements provided that the reserve fund account had $X in it, the money was not in the bank because it had been borrowed to pay for operations.
From the comments of the unit owners and the board of directors, it was clear to me that the building, which was at least 30 years old, was in dire need of some serious repairs and that the board of directors could not raise the common expenses to pay for these repairs for many reasons, including, that if they did so, they would simply be removed by a group of owners campaigning on the platform that they would not raise common expenses.
It was also clear to me that without assistance, this condominium corporation would never be able raise the necessary funds to properly maintain and repair the building and that consequently, the building would continue its downward slide and fall more and more into a state of disrepair. Eventually it would become a broken down slum tenement building.
So what is the solution?
Put some teeth into the legislation. If the government is going to be paternalistic, then be paternalistic!
Here’s my plan.
Amend the Condominium Act, 1998 to provide something like this (This is my initial draft and I would be interested in comments as to how to improve the wording and make it more workable):
131 a Any auditor who:
a. is of the opinion that a condominium corporation is being managed in a fiscally irresponsible or incompetent way, including but not limited to the failure to pay its bills in a timely manner, or who,
b. determines that
i. a reserve fund funding plan has not been followed in a material manner for a period of at least 13 consecutive months; or that,
ii. there have been materially insufficient funds in a bank account or accounts of the condominium corporation for a period of at least 13 consecutive months to support the amount that should be in the condominium corporation’s reserve fund account,
iii. ??? (I would be interested in comments concerning criteria triggering the auditor’s obligation to seek counsel and apply for an administrator)
shall seek the opinion of a lawyer, at the condominium corporation’s cost, within 30 days of such determination as to whether there are reasonably sufficient grounds for the appointment of an administrator.
131 b. If the lawyer is of the opinion that there are reasonably sufficient grounds for the appointment of an administrator, then the auditor shall retain such lawyer, at the condominium corporation’s cost, to bring an application pursuant to s. 131 of the Act, for an order appointing an administrator.
131 c. for the purposes of this section, a condominium corporation shall be deemed to be being managed in a fiscally irresponsible or incompetent way if:
a. a reserve fund funding plan has not been followed in a material manner for a period of at least 13 consecutive months;
b. there have been materially insufficient funds in a bank account or accounts of the condominium corporation for a period of at least 13 consecutive months to support the amount that should be in the condominium corporation’s reserve fund account,
c. ??? (I would be interested in comments concerning the definition of what is considered to be managing in a fiscally irresponsible or incompetent way)
131 d. Upon such an application, the court shall make the order if the court is satisfied that:
a. a condominium corporation is being managed in a fiscally irresponsible or incompetent way, including but not limited to the failure to pay its bills in a timely manner;
b. a reserve fund funding plan has not been followed in a material manner for a period of at least 6 consecutive months;
c. there have been materially insufficient funds in a bank account or accounts of the condominium corporation for a period of at least 6 consecutive months to support the amount that should be in the condominium corporation’s reserve fund account; or that,
d. ?
Clearly, the appointment of an administrator in such circumstances would result in an increase in common expenses and likely a special assessment which some, if not many, unit owners could not afford. These owners would either have to make the necessary arrangements to borrow the required funds, or sell the unit (which they could not afford). This may seem harsh, but there are many people who live in various priced homes which they cannot afford and are required to sell as a result thereof – homes from lower priced condominium apartments to mansions in Rosedale and Forest Hill. To be able to afford the privilege of owning real estate, it is not sufficient simply to come up with the funds to purchase it - one must also afford to maintain it in a good state of repair. I welcome your comments.
Condominium Act 1998
2009 Condo Conference
We are pleased to be a Premier sponsor of this year’s CCI-T/ACMO Condo Conference to be held Nov 6-7, 2009 at the Hilton Suites Toronto/Markham Conference Centre. I always look forward to the annual conference and will be speaking at Session #1B – Holistic Branding. My partner, Jonathan Fine, will join the panel of experts at the closing session.
Our firm is excited to offer something a little different this year and will be hosting a cappuccino bar in the exhibitors’ hall. We encourage everyone to visit us at booth #91.
To view the complete conference schedule, visit www.condoconference.ca and join us for what will prove to be another successful and informative conference!
Condo Conference
Unions and Condominiums: Think they Can't occupy the same space? Think Again!
Time and again we are met with nothing short of astonishment when, in discussing employment related issues with managers and directors of condominium corporations, we impress upon those individuals the need to be particularly attentive to employee relations and workplace issues in light of the fact that any condominium corporation that directly employs more than one employee, such as cleaning staff or superintendents, is vulnerable to having its workplace and such employees made subject to an application for certification by any one of a number of unions that have taken an interest in certifying bargaining units at condominiums.
It is not unusual to have condominium clients contact us in a panic because they have been served with an application for certification. Invariably, both management and the board are confounded as to how this could happen; how circumstances could arise that would lead to such steps being taken by the employees. After all, the employees are the ones, at the end of the day, who enlist the assistance of a union and ultimately have the final say in approving that union as its representative in negotiating a collective bargaining agreement.
All too often, when some simple, probing questions are asked, there is always an underlying reason – sometimes more than one - to which employee dissatisfaction can be attributed: the most common reasons are failure on the condominium corporation’s part to entertain any kind of pay raise for a period of time or failure to provide employees with any kind of non-monetary security such as group benefits.
To compound the unsettling effects of a certification application, management and condominium boards can find themselves doubly panicked when they learn just how short the timeframes are for responding to and dealing with these types of applications under the governing legislation, the Labour Relations Act. Before directors can catch their breath and get oriented to the process, they find themselves engaged in negotiations for a first collective bargaining agreement, while at the same time struggling to understand fully how they could be embroiled in such a costly process, particularly in situations where the corporation may employ as few as two employees.
When the dust settles on this process, and the parties involved on behalf of the condominium corporation have an opportunity to engage in some honest and objective reflection upon the circumstances that led to these events, they will come to realize that responsibility most often lies with the condominium corporation, as the employer, and management, as its representative in supervising employees, for having neglected to pay more attention to employee relations and, if employees are unhappy, failing to identify the issues that are making them unhappy so that those issues can be addresses in a meaningful way and without undue delay, if only because doing so will ultimately serve the best interest of the condominium corporation.
If the condominium corporation wishes to be pro-active in taking steps to avoid such circumstances, one might start with an examination of which issues are most important to your employees. In that examination, consider what employees stand to gain by enlisting the assistance of a union and by negotiating a collective agreement. Even review a few collective agreements to get an idea what protections, rights or entitlements (monetary and non-monetary) they offer. Then consider implementing some of those elements in your employment relationship with your employees. In doing so, be sensitive and alive to the fact that an issue that may seem insignificant to the employer may nevertheless be of great importance to the employees. Often, employees enlist the assistance of a union because sometimes just one of the many elements that make up an employment relationship is left unaddressed for too long and is allowed to fester into deeply seated discontent.
As but one example, one condominium client found itself negotiating a first collective bargaining agreement because, despite employee requests over a lengthy period of time, the corporation had failed to put employees’ pay on a system of direct deposit, which in turn led to instances where employees’ paycheques were late being issued.
Therefore, a word of warning: pay attention to your employees and their concerns. Failure to do so may lead to unexpected consequences. If the condominium corporation is not prepared to engage in that on-going analysis, or is not interested in either the responsibilities attendant on being an employer or the consequences of failing to address those responsibilities in a manner satisfactory to its employees, then the corporation should consider other options such as engaging independent service providers to provide those services to the condominium.
Unions
Inaugural Blog Posting - Condominium Classification
I’m pleased to post the first entry to our Condo Law BLOG and invite your comments. There are many newsworthy and interesting topics to discuss but the concept of “Condominium Classification” seems to have sparked much interest and response to my recent editorials in CondoVoice. Regardless of one’s position, the topic is clearly gaining attention. A classification system is not new for commercial properties and hotels. The concept of “Condominium Classification” is similar and aims to set standards based on an objective assessment of the following categories:
1. The physical state of the common elements;
2. The financial health of the condominium corporation; and,
3. The quality of the building and the common elements.
The classifications ought to maintain certain standards in order to ensure investment values. The concept does invite discussion over the definition of the standards and issues relating to enforcement and accountability. Click here to read full text of my editorial relating to Condominium Classification.
Condominium Classification
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- Inaugural Blog Posting - Condominium Classification
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