Condo News - Summer 2022 by LS Graphics

VOL. 16, NO.4 | SUMMER 2012

VOL. 12 • SUMMER 2022

Are You Considering a Saltwater Pool for Your Condominium? So, You Want to Make the Attic a Family Room?

Pot of Gold (Chargebacks) – Pre and Post Amlani Purchasing and Selling Condominium Units: The Importance of the Status Certificate

Committee Work the Right Way

Featured Condo... HCC#125 “Where small is beautiful” at 2390 Woodward Ave., Burlington

Investing the Reserve Fund: How to maximize Return and Minimize Risk

Condo Financial Statements... Directors just need to review and ask questions... Follow the money!

FEATURES 7

Are You Considering a Saltwater Pool for Your Condominium?

10 Committee Work the Right Way

14 FEATURE CONDO: HCC #125 2390 Woodward Ave. Burlington 16 Purchasing and Selling Condominium Units: The Importance of the Status Certificate 20 Condo Financial Statements… Directors just need to review and ask questions… Follow the money!

CCI NEWS & EVENTS 5

From the President

13 2022 Conference Sponsorship & Exhibitor Information

27 Investing the Reserve Fund: How to Maximize Return and Minimize Risk

19 Annual General Meeting Registration

33 Pot of Gold (Chargebacks) – Pre and Post Amlani

26 Feature Committee - Governance Committee

37 So, You Want to Make the Attic a Family Room? – Sounds like a Great Idea!!

30 Upcoming Events

25 Tool Talk Video Series

31 Welcome to our Newest Members 36 New LCCI Designation 43 Advertisers Index

27 Condo News – SUMMER 2022

SimpsonWigle LAW LLP

COMMUNICATIONS COMMITTEE

Carole Booth Board Liaison

Bill Clark

Gail Cote

Elaine Edwards

Ed Keenleyside

Tim Van Zwol

Dave Williams

G O L D E N H O R SESHOE CHAPTER OF THE CANADIA N CO N D O MI N I U M I NSTI TUTE

From the President

FROM THE PRESIDENT

Condo News

Sandy Foulds, RCM, B.A.

is produced 4 times per year

GHC-CCI President

Summer Issue (July) Deadline – June 1st

Fall Issue (September) Deadline – August 1st

Winter (January) Deadline – December 1st

Spring (May) Deadline – April 1st Articles of interest to condominium owners and directors are welcome. See details for submissions on page 41.

To advertise contact: Golden Horseshoe Chapter of the Canadian Condominium Institute Box 37, Burlington, Ontario L7R 3X8 Tel: 905-631-0124 | 1-844-631-0124 Fax: 416-491-1670 Email: admin@cci-ghc.ca The authors, the Canadian Condominium Institute, and its representatives will not be held liable in any respect whatsoever for any statement or advice contained herein. Articles should not be relied upon as a professional opinion or as an authoritative or comprehensive answer in any case. Professional advice should be obtained after discussing all particulars applicable in the specific circumstances in order to obtain an opinion or report capable of absolving condominium directors from liability [under s. 37 (3) (b) of the Condominium Act, 1998]. Authors’ views expressed in any article are not necessarily those of the Canadian Condominium Institute. All contributors are deemed to have consented to publication of any information provided by them, including business or personal contact information. Advertisements are paid advertising and do not imply endorsement of or any liability whatsoever on the part of CCI with respect to any product, service or statement.

#LifeIsGolden

ummer is here and with summer this year, we finally have minimal covid restrictions. It’s been a long 28 months, but we have endured these challenges. Although caution still needs to be taken, it is certainly great to be out and about with friends and family again. In person events and gatherings are wonderful to attend, not to mention being able to travel again. Our Board members and volunteers have been very busy this past spring. The Golden Horseshoe chapter continues to hold numerous educational sessions and webinars for our members. We hope that you are enjoying the topics that are being presented and if you have any suggestions for new topics, please let us know. We welcome your input. Remember if you miss any of the sessions, they are recorded and able to view on the CCI Golden Horseshoe website. Our Board of Directors continue to meet monthly to discuss local, provincial, and national condo issues. CCI Ontario is currently working to standardize the education program for CCI members throughout Ontario. We support their endeavour and look forward to these programs being introduced soon. CCI National is also currently working to standardize how chapters across the country operate. All chapters participate in this process which is establishing policies and procedures for each Chapters’ Administrators. Our conference in early March 2020 was one of the last public events that many of us attended before covid took over our lives. We are all now getting very excited about our first post-covid, in person conference. This will be held on September 16th at the OE Conference Centre on Bronte Rd just south of the QEW. The conference committee is busy preparing exciting topics for the days’ sessions. Sponsors are signing up and the booths will be going quickly as well. Please reach out to the conference committee if you want to provide a sponsorship or obtain a booth for a terrific day of networking with our condo boards and property managers. We look forward to seeing you all there. Save the date, more information will be coming out soon! We thank everyone who has followed up on completing their annual CCI membership renewals this spring. If you have not yet renewed your membership, we encourage you to do so. If for some reason, you have not received your renewal information, please reach out to us and we will send you another renewal form. Without your support, CCI and our important education events would not exist. If you know board members in other condos who are not members, please share with them the great value that CCI Golden Horseshoe provides. In closing, I again want to thank my fellow board members, all of our committee members and all of the guest speakers at our events. Without you volunteering your time, our chapter would not be as successful as it is. Thank you and I hope everyone has a safe and wonderful summer! Sandy Foulds, RCM, B.A. President Condo News – SUMMER 2022

Golden Horseshoe Chapter of the Canadian Condominium Institute Box 37, Burlington, Ontario L7R 3X8 Tel: 905-631-0124 | Toll Free 1-844-631-0124 Fax: 416-491-1670 | Email: admin@cci-ghc.ca Website: Website: www.cci-ghc.ca

2021-2022 Board of Directors PRESIDENT

Sandy Foulds, RCM, BA PAST-PRESIDENT

Maria Durdan, B.A., LL.B., ACCI (Member Finance Committee, Member Ron Danks Award Committee) VICE-PRESIDENT

Richard Elia, B.Comm., LL.B, LL.M (ADR) ACCI (Board Liaison Education Committee)

TREASURER Tony Gatto, CPA, CA (Chair Finance Committee) SECRETARY

Gail Cote, RCM (Member Professional & Business Partners Committee, Communications Committee) BOARD OF DIRECTORS

Carole Booth, B.Ed., M.A. (Board Liaison Communications Committee, Member Education Committee, Member External Relations Committee, Member Governance/Policy Committee)

Sally-Anne Dooman, RCM (Member Education Committee)

Joseph (Joe) Gaetan, B.G.S. (Chair External Relations Committee, Member Governance/Policy Committee)

Tom Gallinger, BBA, FCIP (Co-Chair Conference Committee)

Ed Keenleyside, B.A., CCI (Hon's) (Board Liaison/Chair Governance/Policy Committee, Member Education Committee, External Relations Committee)

Thomas F. Nederpel, BSc, PEng (External Relations Committee)

Kevin Shaw, B.Tech (Arch. Sc) (Board Liaison Professional & Business Partners’ Committee)

Stephanie Sutherland, BAS (Hons), LL.B., ACCI (Co-Chair Conference Committee, Member Professional & Business Partners Committee) 6

G O L D E N H O R SESHOE CHAPTER OF THE CANADIA N CO N D O MI N I U M I NSTI TUTE

Are You Considering a Saltwater Pool for Your Condominium?

FEATURE

Are You Considering a Saltwater Pool for Your Condominium? Bill Clark Condo Board of Director, WCC439

n 2009, because of my thirty years working in the Aquatics field, I was asked to investigate the possibility of converting our Condominium Complex pool to salt water. Many of our residents spent their winters in Florida and were exposed to salt water pools and the apparent positive influences on their bodies. After much research, I determined that under no circumstance, should we invest tens of thousands of our residences money on a pool system that was NOT cost effective, NOT easier to maintain and NOT really condusive to long term stability of both mechanical and the physical plant. (cement walls, tiles, ladders, etc.) But that was in 2009, it is now 2022, and the question arises: Are Salt Water Pools any better today? This article will look at the pros and cons of both saltwater and chlorine systems and enlist a few opinions and municipal restrictions that are faced today that did not exist in 2009.

PROS • People like the “feeling” of “salt” water because the concentration of salt (typically 3000-5000 ppm) is closer to that of our own bodies (about 9000 ppm) than normal pool water: as a result there is less irritation of the eyes and skin. People think it feels

Condo News – SU MMER 2022

soft. It will not fade or damage your swimsuit as much as chlorinated water. • Initial conversion is very expensive but should pay for itself over 2-3 years. • You do not need to store as much chlorine (CL2). • Cleaning Safety - Chlorine mixes with sweat, saliva and urine and turns into other chemicals called chloramines. Chlorine kills contaminants in the water, but the chloramines remain and even more Chlorine is needed to remove the chloramines. Chloramines are harmful to your eyes and skin so they require you to add chlorine more frequently. • Salt water pools stay arguably cleaner than chlorine pools. The constant flow of chlorine from the generators kills chloramines faster than Chlorine pools. This results in less harm to your skin and eyes.

CONS • Salt is corrosive. Heat exchangers and pumps can degrade in a matter of months. • Health Departments are still skeptical about accepting salt as a primary sanitizer. Your pool is still sanitized by chlorine. • Salt systems tend to drive up pH, so more acid must be used to control PH levels. • Maintenance costs increase: Salt must be added every day to compensate for salt being lost to backwashing/water replacement • Residual salt will accumulate wherever there is standing pool water present (small leaks around pumps, low areas on decks, etc.) increasing maintenance. 8

• Chlorine pools are better at combating bacteria than salt water pools. • A Chlorine system will clear water within 24-48 hours vs. 3-5 days for a salt water pool. • Salt water pools may not require frequent upkeep but they must be closely monitored to avoid disaster. Although algae levels are much lower with regular monitoring, one slip-up could result in uncontrollable algae growth. • There is a growing body of evidence that salt accelerates the destruction of stone and cement. The electrolysis process has been cited as causing rapid deterioration of metals in the pool, such as heater parts, tile grout, ladders, handrails, light rings and even the metal doors, especially at the bottom of said doors. • Corrosion issues crop up when an existing chlorine pool is retrofitted /converted to a salt water system. If the original construction didn’t account for corrosive materials the effect of continual salt saturation can quickly destroy much of your pool. I spoke to pool companies, a municipal saltwater pool operator and two condominium complexes who switched to saltwater. These are their comments:

quently but that maintenance generally was the same as other municipal pools. The most challenging thing was trying to find materials that accommodated a saltwater pool as opposed to a chlorine pool; • The two Condominium Corporations I talked to took entirely different approaches: The one in Burlington was a retrofit. They removed the lining and exposed the cement sides and they replaced the heater with a better quality one. Maintenance is still the same and they have had no problems with the Health Dept. At this point there appears to be no deterioration of the mechanical or physical plant. The cost was approximately $50,000. • The second Condominium, in Hamilton, completely rebuilt their pool. The original pool was concrete with a vinyl liner. The liner was replaced with the highest quality grout and tiles available. They replaced all mechanical equipment and pipes to accommodate the salt. The job took 18 months and was close to seven figures.

• The pool companies said that there is a slight trend in the business towards salt water pools, but to do it right, it will be expensive because you can only use high end salt resistant materials.

The biggest concern today for salt water pools besides corrosion, is the municipalities who have put restrictions on how to drain your pool. The City’s of Hamilton, Toronto and London have created by-laws that restrict how pools can be drained and where they can be drained. In all municipalities, there are two types of sewer drains:

• An interesting statement made by the representative of one pool company was that there are chemicals available today that will mimic the “softer” feel of a saltwater pool;

i) Sanitary Sewers - This system collects sewage and wastewater from toilets and sinks in your home. This water goes to a water treatment plant where it is treated.

• The municipal operator said that they were replacing ladders more fre-

ii) Storm Sewers - This system collects rainwater, melted snow and surface

G O L D E N H O R SESHOE CHAPTER OF THE CANADIA N CO N D O MI N I U M I NSTI TUTE

water through storm grates that flow directly into the nearest creek, river or lake. This water is NOT treated. The fines are quite hefty, so they are very serious. They even tell the residents how to drain their pools: Chlorine Pools: The water from chlorine pools must be dechlorinated prior to discharging to the storm sewer system, but this should not be done during a rainy day as it will overwhelm the system. Municipalities also prefer that you let the pool sit for at least a week without feeding it chlorine to eliminate as much chlorine as possible, a chlorine reading of 0.0 is recommended before draining. If you do not follow these procedures you will be responsible for killing fish. Salt Water Pools: The water from salt water pools has such high levels of chlorides that it must be carefully discharged to the sanitary system located

on your property or hauled away by a Ministry of the Environment approved Water Hauler. Salt water is harmful to the environment if not properly handled and you can be subject to expensive fines if you take short cuts.

So, Saltwater pool – Yes or No??? In 2022 my personal feelings have not changed. However, as a Board when considering a change to salt water I would recommend that you: 1. Do your research! i) Talk to other Condos who have switched and ask your Property Manager for names within their company and other Condo Management Companies that have dealt with pool conversions; ii) Get references from the pool companies for any saltwater installations;

iii) If you can, find Condos who have switched back to chlorine from saltwater and ask WHY? 2. Are you considering a retrofit or a total rebuilding? 3. How much money are you willing to spend? 4. How long would the pool be down? 5. What are the municipal by-laws pertaining to salt water pools especially about draining the pool? 6. Will there be more maintenance? 7. Talk to your local Health Department about saltwater pools?

I would like to thank the following companies and /or organizations: Buds Pools Leigh Young of the City of Hamilton Condominiums in both Hamilton and Burlington.

Condo News – SU MMER 2022

Committee Work the Right Way FEATURE

Committee Work the Right Way Dave Williams

Let’s talk some more about committee work. Our spring article entitled “Succession Planning for your Condo Board” set out some sound reasons for initiating some committees reporting to the board.

s a reminder some potential committees could include, an annual nominating committee, a communication committee, a safety committee and a gardening committee. Individual condo communities can consider their needs and set up the appropriate committees to help. Here are some benefits of establishing some working committees: 1. Committee work involves volunteer members of your community in ways that can prepare them for future directorship. 2. The CAO appears to be increasing the scope of management practices around condo governance. The suggestion of an annual plan, annual surveying of residents to learn of their concerns are but two examples. 3. Additionally, the CMRAO has identified 79 competencies that will headline future training for property managers. This could mean a lot of things, but higher management costs would be one.

G O L D E N H O R SESHOE CHAPTER OF THE CANADIA N CO N D O MI N I U M I NSTI TUTE

4. This leads us to the next point about Property Managers; that being their workload. Some condo boards just keep downloading more work to their PMs and at some point, something has to give. The answer? Committees can and should do some of this work. 5. The challenges of future boards in terms of replacing maturing assets could require additional expertise. Think also of new requirements such as charging stations, the planning and financing of them. The list goes on, but we need to discuss the ramifications of committee work.

Committee Functions Boards should think of committees as people to do research, data gathering and providing recommendations to the board. They are not decision makers! Their mandate from the board should be clear and they should always meet with a “board liaison” present. The mandate should be written not just verbal. The liaison should never be the PM. In fact, the template, as established by the CCI Golden Horseshoe is excellent. I know our communications committee has a board liaison and I assume all the other committees do as well. Finally, we are talking here of committees “to the board” not “of the board.”

So where are the impediments?

“... should committee members be insured for injury (to themselves) and to others?

to others. This might sound a bit strange but assume the existence of a gardening committee. A volunteer might slip and break an ankle or a volunteer using a whipper snipper could cut a second person’s finger. We spoke with Tom Gallinger of Atrens Counsel Insurance Brokers. Tom was able to provide us with the general insurance scenarios as outlined above. “If the above insurance is not considered for volunteers it could result in unforeseen out-of-pocket costs for the condo or volunteer if an error or accident occurs.” The good news is that it may not be a monumental additional cost. Our suggestion here would certainly be to contact your insurance provider for guidance. According to Maria Durdan, partner at SimpsonWigle Law, it may also be a good idea to deem committee members officers of the Corporation, so that those individuals, as well as the Corporation, are protected by the Corporation’s Directors and Officers Liability Insurance. Condo Corporations can and should check-in with their insurance and legal advisor.

Insurance and legal

Consult with your insurer and legal advisor.

We reached out to experts in both areas. The big question seems to be the insurance issue. Should committee members be insured like the board members (D & O Liability)? Secondly, should committee members be insured for injury (to themselves) and

In our other article this month (Condo Financials), we were extolling the virtues of consulting with your accountant as an advisor. This is a great opportunity to utilize both your legal counsel as an advisor and your insurer as an advisor.

Tom Gallinger’s word of Caution “Do not substitute a volunteer to replace a licensed professional in order to save money.” Think electrical! This could be dangerous, and it might cause your insurer to be grouchy. (Tom didn’t say that I did.)

To Committee or not to Committee This is where the practiced “decisionmaking” corporations will always emerge on the right side. The decision to establish a committee is best guided by a costing-out if you wish of the alternatives. Assume your development employs a landscape company to cut grass and plow snow. Now you want the surrounding gardens to look more attractive. You ask the landscape company for a quote on the garden work. You ask your insurer for a quote to provide the right coverage for a volunteer group. Did someone say the price is right? The answer will be in the lowest cost approach, and I suspect that the committee side will not only be cheaper but will have pride of ownership in their work. The same logic applies to any other committee including those with “nerdier” work. In any community you will be surprised at the expertise that is residing within. I have told the story before that within a few units in either direction of mine, we have no fewer than 5 folks with either corporate executive or government executive experience. continued…

Condo News – SU MMER 2022

Committees as an Investment in the Future Too often, the condo industry drones on and on with the same people on the board. If someone new can get elected, their ideas and expertise are often ignored to the point they give up in frustration. It is a given, that the challenges of “managing the affairs of the corporation” will become greater and more complex in the coming years. There will be a general morphing of activity from controlling to managing, which is what the Condo Act intended in its legislation. Indeed, the notion of change is difficult for many folks to get their minds around. That said, if change isn’t encouraged… ……then it will be mandated in time. The proof of this is in companies like UBER…………they disrupted the taxi

“...foster some committee work to bring in some fresh people with fresh problem-solving ideas.”

business and at the same time provided a whole new approach to fast food delivery. So, a great first step for condo boards is to foster some committee work to bring in some fresh people with fresh problem-solving ideas. If nothing else, the current pop-up round of inflation is a great example of unexpected challenges to be met.

G O L D E N H O R SESHOE CHAPTER OF THE CANADIA N CO N D O MI N I U M I NSTI TUTE

Thanks to: Maria Durdan of Simpson Wigle Law LLP Rod Escayola of Gowling WLG Tom Gallinger of Atrens Counsel Insurance Brokers CAO - Best Practices Bulletin CMRAO – Competency Profile for Condo Managers in Ontario Dave Williams is a graduate of York University and a retired corporate executive. We always appreciate hearing from readers at williamsdavem7@gmail.com.

New Venue! New Vibe! We have clawed our way out of a tough 2 years and we are excited to hose the Golden Horseshoe Chapter Annual Conference.

Over 250 attendees expected! This is a must-attend event for condo industry suppliers. With approximately 250 leaders, influencers and high-level decision-makers in attendance, the conference provides an unmatched opportunity to build and enhance your company’s reputation within the condo sector. Establish your company as a proud partner of a system that continues to shape the Golden Horseshoe’s Condo industry.

In just 5 days after launching... Exhibit Space 50% Sold!

Exhibitor Registration

J&W Condominium Management Ltd Millards Chartered Professional Accountants

Condo News – SU MMER 2022

FEATURE CONDO

FEATURE CONDO: HCC #125 - 2390 Woodward Ave. Burlington

HCC#125 - “Where Small is Beautiful” 2390 Woodward Ave., Burlington

What are the qualities and features of your Condominium? Halton Condominium Corporation No. 125 was established in 1985 with 22 Georgian-style townhouse units built in four separate buildings of between three and seven units each. Lined with mature trees, the property backs onto green and shaded walking space on the north side of Central Park in Burlington, close to where the public library, YMCA and other facilities are located. In summer, the sounds of soccer players mix with the practice of the Burlington Teen Tour Band. In winter, Cardinals, Blue Jays, and Woodpeckers are abundant. While parking is above-ground, each unit has two parking spaces and there is ample Visitor Parking available for family and friends. In addition to the greenspace of Central Park, the property is a short walk to Spencer Smith Park and all the events, shopping,

G O L D E N H O R SESHOE CHAPTER OF THE CANADIA N CO N D O MI N I U M I NSTI TUTE

and fine dining available in downtown Burlington. It is also just a ten-minute walk to the Burlington Shopping Centre.

What are the accomplishments achieved by your Condominium Corporation? The complex is well maintained in terms of infrastructure, including a full replacement of windows and patio sliding doors within the past ten years. Also, within the last decade all concrete steps and unit railings have been replaced, along with a complete resurfacing of the driveways. Since 2020, new skylights, shutters, shingles and eavestroughs have been installed, as well as a refreshed painting of all front doors and an upgraded LED lighting for the parking areas.

or the common areas.

What makes residents proud to live there? In a nutshell: the community. As a small complex, everyone knows most, if not all, of their neighbours, and the result is a place where you can easily find a petsitter, renovation contractor referral, or simply a helping hand. There is only one small mystery: the identity of a Secret Santa who drops a small gift into everyone’s mailbox each Christmas!

Bruce Norgren works in the financial industry in regulatory compliance, is an avid cyclist and a volunteer at the Milton Velodrome. Anne Carr has worked in financial services for over 35 years. Her hobby is wine tasting, and she is looking forward to enjoying a week in the Napa Valley this summer with her best friend. Patrick Dowds is a retired Project Engineer for major utility companies across Canada. For many years, he was a long-distance runner. He now enjoys cycling, walking, and enjoying time with his nine grandchildren.

What is the overall environment like in the Condominium? The environment is very casual, from impromptu sidewalk social gatherings to chatting about life’s events and interests. The formal owners’ meeting is at the Annual General Meeting, but Board members are also approachable on an informal basis, usually in the parking lot

Lined with mature trees, the property backs onto green and shaded walking space.

Condo News – SU MMER 2022

FEATURE

Stephanie Sutherland

Purchasing and Selling Condominium Units: The Importance of the Status Certificate

Cohen Highley LLP

Purchasing and Selling Condominium Units: The Importance of the Status Certificate The purchase and sale of a condominium unit is different from purchasing or selling a non-condominium home. There are specific considerations that need to be taken into account, to make sure that both the buyer and seller are aware of what exactly is being sold and bought, and that the condominium corporation issuing the Status Certificate has done so in accordance with the provisions of the Condominium Act, 1998 (the “Act”). After signing an Agreement of Purchase and Sale, the next step for a purchaser should be to order a Status Certificate. Many sellers will order a Status Certificate when they first place their unit for sale, as a courtesy to prospective buyers. However, it is important to remember that a Status Certificate is only binding as of the date that it is issued. So, if a Status Certificate was provided to the Seller two months prior, then any changes to that information that occurred since will not be included, and the purchaser is only entitled to rely on the information as of the date of that original Status Certificate. Therefore, a purchaser should always make sure to request an up-to-date Status Certificate to have the

G O L D E N H O R SESHOE CHAPTER OF THE CANADIA N CO N D O MI N I U M I NSTI TUTE

most relevant and correct information, while the Board and management must ensure that the same Status Certificate is not just changed to reflect a more recent date, but that the information contained in the Status Certificate is still correct. When requested, the Status Certificate must be provided within 10 days of when the request is received, and the fee is paid. Under the Act, the maximum fee that can be charged by a condominium corporation for the Status Certificate is $100, although an additional fee can potentially be charged if the Status Certificate is required on an urgent or expedited basis. A property management agreement may permit a manager to charge more to the condominium corporation for additional work (e.g. printing versus electronic copies), but $100 plus a possible expedited fee is the most that can be charged to the purchaser requesting the Status Certificate. If the Status Certificate is not provided within the 10-day deadline, then the condominium corporation is deemed to have provided a ‘clean’ Status Certificate, i.e., stating that everything with the unit is in compliance, that there are no anticipated significant increases to the common element fees, no litigation in which the condominium corporation is involved, etc. This means that if the unit was in fact in arrears for common element fees, for example, and the condominium corporation later attempts to collect those arrears from the new owner, that new owner will not be liable for those arrears because the condominium corporation failed to advise the owner of the arrears as required in the Status Certificate. Once the Status Certificate has been received, the purchaser’s lawyer should review the Status Certificate and enclosures, first to ensure that everything has been provided that the Act requires, and second to determine certain information about which a purchaser would be particularly interested. In addition to the information to be

...a purchaser should always make sure to request an up-to-date Status Certificate to have the most relevant and correct information.

included in the Status Certificate form, which is now a mandated government form (and can be found on the Condominium Authority of Ontario’s website), there are certain documents which must be provided as part of the Status Certificate package. The documents to be provided include: - copies of the current declaration, by-laws, and rules; - a copy of the condominium’s budget for the current year; - the most recent audited financial statements and the auditor’s report on those statements; - a list of all current agreements as listed in sections 111, 112, or 113 of the Act and any agreements between the condominium corporation and another condominium corporation (e.g., shared facilities agreements) or agreements between the condominium corporation and the owner of the unit; - a copy of the condominium corporation’s Certificate of Insurance; - a copy of the notice to owners of future funding of the reserve fund, if the condominium corporation has sent out such a notice to the owners;

- a copy of any section 98 agreements in place with respect to the unit; and - a ‘Schedule H’ provided by the Declarant setting out the standard unit definition, if the condominium corporation does not have a standard unit definition in its bylaws. A full list of all the information and documents to be provided is set out in section 76 of the Act and section 18 of the Act’s O. Reg 48/01. When looking at the Status Certificate, the purchaser and their lawyer should make sure that the correct unit has been listed – both the legal description (e.g., Unit 3, Level 2) and the municipal unit number (e.g., Unit 203). Another item that should be noted in when reviewing the Status Certificate, and that is often a source of confusion for purchasers, is how parking and storage (if any) areas are dealt with at the condominium corporation. Both parking spaces and storage lockers can be part of the Unit (e.g., the driveway, for parking), separate legal units, or they can be common elements. If common elements, they can be assigned by the condominium corporation or simply available to any unit owner on a first-come, first-served basis. This information is not part of the government mandated form Status Certificate, but will be provided in the enclosed documents, most particularly the declaration. Perhaps most importantly, if parking or storage are part of the common elements, it is essential for a purchaser to understand that that common element parking space or storage locker is not being purchased as part of the transaction, but is instead ‘owned’ along with all of the other common elements by all unit owners of the condominium corporation according to the percentages set continued…

Condo News – SU MMER 2022

out in the Schedule “D” of the Declaration. I frequently encounter unit owners who are certain that they have purchased ‘their’ parking space, when in fact it is a common element, and that owner has no legal claim to that space. While not an item that is specifically set out in the Status Certificate form, it may make sense for the condominium corporation to have a cover letter that is sent with the Status Certificate that specifically explains parking and storage at the condominium corporation, because those two items are such a common source of confusion and disagreement. The purchaser will want to ensure that the Status Certificate matches what the purchaser believes they are purchasing; if it does not, a conversation with the purchaser’s real estate agent and lawyer is required to confirm what exactly is being purchased, and to confirm that the Agreement of Purchase and Sale accurately reflects that. Some of the other key items in the Status Certificate that the purchaser’s lawyer will look at, and which the purchaser should also consider, include whether the seller is up to date on common element fees, whether the condominium corporation has any knowledge that the common element fees may rise in the next year, are there any legal proceedings with which the condominium corporation is involved, and whether there are any section 98 (alteration/indemnity) agreements in place on title to the unit. Again, if these items are not listed correctly and accurately by the condominium corporation, the new owner may have some claim against the condominium corporation when they suddenly become aware of financial or other obligations that they have that the Status Certificate did not properly address. The reason the Status Certificate is so important is that when a condominium unit is purchased, the new owner takes on all the rights and responsibilities as18

I frequently encounter unit owners who are certain that they

about, they should ask their lawyer to look through the Status Certificate package for provisions in the declaration, bylaws, and/or rules that might regulate or restrict those activities.

In summary:

have purchased ‘their’

DO request an up-to-date Status Certificate (purchaser);

parking space, when

DO ensure that the Status Certificate is accurate and up-to-date (condominium corporation);

DO provide the Status Certificate within the required timeline (condominium corporation);

to that space.

DO review the Status Certificate and enclosed documents to make sure that all the legally required information has been included (purchaser);

sociated with that unit. If the previous unit owner owed common element fees, the fees go with the unit and not with the specific owner, so the new owner will be responsible to pay off those arrears. If the previous owner entered into a section 98 agreement with the condominium corporation, the new owner is bound by the terms of that agreement. The importance to the condominium corporation of providing an accurate Status Certificate, and to the purchaser of obtaining and carefully reviewing the Status Certificate, cannot be overstated. Finally, in addition to the legal and financial aspects of the Status Certificate package, there are also lifestyle considerations that every purchaser will have. A purchaser’s lawyer cannot carefully review the documents for those issues unless the purchaser identifies specific items to look for, because every purchaser will have different priorities. Some people want to ensure that they can smoke in their unit, others want to be able to bring in their pets, and still others will want to be able to plant flowers in the front garden. If there are specific items that a purchaser is concerned

DO NOT assume that a real estate lawyer will review the documents for specific lifestyle issues unless requested (purchaser); and

DO NOT underestimate the importance of carefully reviewing the Status Certificate package and its enclosures (purchaser)!

in fact it is a common element, and that owner has no legal claim

G O L D E N H O R SESHOE CHAPTER OF THE CANADIA N CO N D O MI N I U M I NSTI TUTE

Stephanie Sutherland is a condominium lawyer at the Kitchener office of Cohen Highley LLP. Stephanie assists condominium boards, unit owners, and managers with day-to-day governance matters, compliance issues, drafting and registration of new and amended condo governance documents, court and CAT proceedings, and mediations and arbitrations. She sits on several Grand River, Golden Horseshoe, provincial, and national CCI committees, and is on the Golden Horseshoe Board. Stephanie also regularly speaks at CCI events, and contributes articles to condo industry.

We can’t wait to see you at this year’s Annual General Meeting! Royal Botanical Gardens – Great Room 680 Plains Rd W, Burlington, ON L7T 4H4 2022 Annual General Meeting – 7pm Wine & Cheese Reception – 6pm – 9pm

Attendance is free, but Registration is required.

Sponsorship: $300 + HST Includes: Tabletop Display (6' Draped Table), and Company logo on all promotion!

Sponsorship Registration

This year, there are four (4) terms expiring on the Board of Directors of the Golden Horseshoe Chapter of the Canadian Condominium Institute. If you wish to put your name forward as a Director, please email or fax a brief bio and photo, and a short letter explaining why you want to be on the Board. Your bio will be included with the Agenda package, which will be sent to all members in September. As a volunteer director, you will be responsible to: • Adhere to the Director Code of Ethics as posted in the members-only section of the CCI-GHC website at https://cci-ghc.ca/membership/members-only/code-of-ethics • Attend approximately 10 board meetings per year via Zoom • Attend National events • Participate in one or more chapter and/or national committee[s] • Participate as a speaker or helper for weekend/weekday seminars and con-ferences • Be a promoter of Golden Horseshoe Chapter events

Email: admin@cci-ghc.ca or fax 416-491-1670 Deadline for submissions is August 26, 2022.

Condo News – SU MMER 2022

Condo Financial Statements… Directors just need to review and ask questions… Follow the money!

FEATURE

Dave Williams

Condo Financial Statements… Directors just need to review and ask questions… Follow the money!

any years ago, I was posted to Cleveland, Ohio and my boss and mentor there was a man by the name of Jack Breen………… a brilliant business guy. If there was one thing I learned (and there were many: things that is), it was this……. don’t ever show up at a monthly meeting for your division if you don’t know your metrics. Translation…… financial statements. Fast forward to today, I marvel at the meetings I go to where the monthly financials are not thoroughly reviewed. They are merely passed by motions to adopt. Once a user of financials gets used to them, and it is not hard, they tell a story. In this case directors would be the main users, but informed resident owners should also be reviewing.

G O L D E N H O R SESHOE CHAPTER OF THE CANADIA N CO N D O MI N I U M I NSTI TUTE

Role of Financial Statements The financials are a guide to looking for mistakes, early warning systems for asset failure, costs in certain areas rising too fast or not fast enough. A road map to continuously measure the financial health of the corporation. They must be accurate, and this is on the Property Management company if they are the provider. Directors need to remember that most property management companies carry a portfolio of properties and mistakes can happen. So, consistency of reporting is important. Now you are probably asking yourself what costs could and should be rising faster? In this case, potentially a cost to the resident. Directors need to be certain that fees are where they should be. It is great to say we have the lowest fees in our class of community but if they are not keeping pace with proper funding of the reserve and yearly operations……….. there is a big problem. So, if you are a director, you need to watch the fee structure and make sure it is where it should be. Only by monitoring the financials will you know.

Role of the accountant (auditor) These folks are professionals……. Chartered Professional Accountants. They know the laws, the tax protocols, they can often see where money can be saved. Yet, too often they are never asked. When it is too late to right a mistake, they are too often asked to make things look good for year-end statements. If you ask any company CEO, he/she will tell you they hardly go to lunch without talking to their accountants. In the condo world, this frequency is not necessary, but I would say that every 6 months should feature a sit down with the auditor to review operations. It is money well spent.

Role of the Property Management Company They are the providers of the monthly financials. They pay the invoices for services and collate the expenses according to line items. It is basically a data entry task so mistakes can happen. I remember one instance where an accounts payable number showed up on the monthly balance sheet for many months without the number changing. Not good. The property manager should be continually looking at the Reserve Fund and comparing the numbers there to the Reserve Fund Study. This requires looking ahead to anticipate if the “study numbers” will be met. This is also where the directors need to be vigilant. If the numbers seem to be falling short, then decisions must be made. Did I hear someone say, “you can pay me now or pay me later”? I am an advocate of properly funding the reserve. In doing

so, the balance earns interest which in the long run saves the residents money. There are instances where assessments are necessary but………………

Role of Directors So often I fear that condo directors do not feel comfortable reviewing financials. They may tend to hope that the property manager has the tiller. Oops! Directors are responsible for “managing the affairs of the corporation;” period………full stop. As such they have a responsibility to understand the monthly financials at least on a working basis. They do not have to be accountants. What does this entail. Review the statements before the meeting. Make comparisons with previous periods and years. Compare to budget numbers. Make notes and be ready to ask questions at the next meeting. Don’t be afraid to invite the accountant to the next meeting to explain something that doesn’t look right or to ask his/her advice about the numbers you are concerned about. Finally, communicate, communicate, communicate! So often, I worry that residents/owners assume when they don’t hear anything their assumption is “all is good.” This is where semi-annual town-hall meetings come into play. These meetings can be a great opportunity to receive input on all subjects; upcoming projects, safety issues, and most of all simple “power point” financial presentations(updates) to the resident owners. It is true that not everyone will show up but over time, you will be surprised at how knowledgeable these same folks will become and in sync with decisions to be made.

Some Sample Financials Most financial statements provide two years of data TY vs LY. Sometimes there is a budget column. So, the best course of action is to compare years, look for major changes, determine if there is a number that is consistently rising or falling without explanation. If need be, look back yet another year to see if the trend is longer. This would give three years of data. It may take a few monthly statements to get used to doing this, but I guarantee the practice will make you comfortable.

Balance Sheet/Statement of Financial Position This statement is a snapshot of assets (what the corporation owns) and liabilities (what is owed). There is also a “Reserve Fund Line” that provides annual contribution to the reserve and the balance in the reserve. Sometimes there will be columns for both Reserve and Operating. In our example below we will just show one total column for purposes of brevity. continued…

Condo News – SUMMER 2022

there will always be a difference because prices go up and timing can change. The second is to watch for big differences…… ..this is when questions should be asked.

So, cash is cash and receivables are monies owed to the corporation. These could be late fees, chargebacks not yet received but deemed owing. Most condo corps do not carry inventories but if you are self-managed you could have some rock salt or garden soil or whatever. The same could apply to equipment that is owned. On the liability side, accounts payable, which are monies owed to suppliers of goods and services and not yet paid for. Periodically you may see some accruals which are usually goods or services received for which an invoice has not been received. Then there is usually a position on the Reserve both at month end and year to date. • Interest receivable is income from investments for the reserve. This is something that directors can verify. There should always be a list of the investments and the accompanying interest rates. These interest rates usually vary from 1% to say 3%. We used an average of 2% for our example. The point here is, if you saw a figure of interest receivable of say 25,000. in our example, that should generate a question. Don’t laugh, I have seen it happen all too often. Comment: So there is no great cause for concern here. Cash is down a bit from year earlier but that could be one or more expenses that were up in the period. I would ask for an explanation if it is a 10% difference but not serious. Receivables are up a bit so are there some arrears in fees accumulating? There is little in the payables to worry about they are just marginally changed and that will always be. These numbers are made up and do not represent a known corporation. The objective was to show two things. The first is 22

This chart is abbreviated to save space and time. There are some big questions here. There is a substantial drop in cash year over year. What is that all about? There is also a noticeable increase in Accounts payable. Yikes! Give or take the difference in both is almost the same. So, what happened here? Comment: So, this corporation is about to borrow $5m to finance a major renovation. The work started in one fiscal year and would continue in the next. Someone decided that to save interest, the loan would not be initiated until the next fiscal and the corporation would use the cash reserves to pay the initial phase. Possibly a good strategy to save interest. However, would the corporation have been better served to initiate the loan in year one if the lower interest rates could have been locked in? Did they have to delay payment to normal suppliers to make the payment out of cash reserves. If so, does that damage the reputation of the corporation? If this was discussed and debated at board level, then the decision might be good. The financial institution should have been consulted for input on future interest rates. Another consideration for discussion; in these times of strange weather events, is the corporation now cash strapped if an event happens that would not be covered by insurance or that is covered but would raise rates to real expensive levels. In many cases, financial statement scrutiny can generate not only tactical questions but strategic considerations as well. Therefore, boards need to have healthy discussions around the numbers.

G O L D E N H O R SESHOE CHAPTER OF THE CANADIA N CO N D O MI N I U M I NSTI TUTE

Income Statement (Statement of Operations) So, think of this statement as incoming money (monthly fees) and outgoing money (payments for goods and services) and transfers to the “Reserve Fund.” Like your own household, it is always good to have more coming in than going out. There should be three columns and sometimes four. The three should include the annual budget, expenses this year and expenses last year. The fourth column would be for Reserve expenses and income. It would be appropriate to have the four-column report but personally I like to see a separate 3 column report for both operations and reserve. This statement is important for several reasons. It is a way to check spending to make sure it is within budget and that it compares favorably to the previous year. It is also a measure of various expense line items. Did any item jump unreasonably over budget or last year? If there was a major deviation, it could be an early warning that an item is requiring attention. For example, consider “building repairs.” If suddenly ‘eaves-troughing repairs were to increase dramatically, it could indicate a serious problem. These gutters save major damage to roofing and other building parts. So, a signal like this should not be ignored. It is important that line items be compared not only to budget but also the previous year and even previous two years. When the annual cost of repairs becomes too frequent and expensive, it may be time to replace the original equipment. Let’s look at an example:

It is worthy to note that there seems to be some disagreement at times about what constitutes reserve expenses as opposed to operational expenses. For example, in the above, I would think painting is more operational than major repair/replacement. Our purpose here is not to engage in that argument but rather to pay attention to the expense levels. So, on the revenue side, the money comes from fees and from interest earned on existing Reserve Investments. Readers should always do a quick mental calculation on the interest income. The investments and their yields should always accompany the statements. The rates will always be 1% to 3% approximately depending on the Bank of Canada rates. So, it is easy for directors to do a quick multiplication to determine if interest is about right. Sometimes it can be overstated. My proof-reader George Radchenko wanted me to remind readers of the importance of pushing their banks for the best possible rate of return for Reserve Investments. Only certain investment instruments are allowable, but directors need to get involved with their banking institution to ensure maximization of returns. On the expense side, two items should catch the reader’s attention those being garage floor and roof repairs. These expenses for 2021 are out of sync with both budget and last year. Question? Is it time to check both assets more closely with a view to either better budgeting or even early replacement? These are two good examples of discussions that need to take place. Future fee structures will be affected, and it may be time to consult with professionals in both areas for advice.

Uh Oh! A look at the reserve contribution. Let’s use the 2021 column. The reader will agree that the expected contribution to the reserve was to be (200,000. + 20,000. = 220,000.). In fact, the net contribution was only $185,000. The engineering study (Reserve Fund Study) usually outlines the level of anticipated repairs each year. These should be budgeted for to ensure that the contribution to the reserve meets the study’s expectations. So, in our example, the study expected a $220,000. (Interest included) contribution and only got $185,000. Also wanted to point out that the budgeting was a bit suspect. Projected spends are usually outlined in the reserve fund study. In managing the corporation, directors need to be aware not only of the numbers in the Reserve but also the condition of the assets under management. Some will be deteriorating more quickly than others. Generating a shortfall each year for say 10 years, will cause a significant money shortage for future. Further, in times of high Condo News – SUMMER 2022

and unexpected inflation the shortfall can be exacerbated. So, condo boards need to be very careful to budget correctly and to pay particular attention to inflation rates as well as assets that may be deteriorating quicker than expected. If you are communicating regularly with residents and providing updates on financial affairs, they will be prepared for additional costs and even accepting them as normal. It is also a good reason to fund for contingency purposes. There will always be surprises. The other major financial instrument is the Reserve Fund Chart as prepared by the engineering firm. It is impossible in a magazine article to show this chart. It is basically a 30-year snapshot of longer-term assets that shows their useful life and when condo corporations can reasonably be expected to replace them. The study also shows annual maintenance expectations (costs) and then calculations by year of contributions to the reserve, and interest earned.

Bottom Line Our objective here was to demonstrate a few things: - The importance of financials and of reviewing them in monthly meetings - With a bit of patience and practice, directors can come to use them in their decision-making process. - Financials should be reviewed semi-annually with resident/owners. Keeping them informed will make their acceptance of reserve funding or assessment levying easier - Do not view accountants as a cost but rather as a worthwhile investment in advice and guidance Our charts are very abbreviated. They are hopefully a demonstration of our points without taking up too much space. The numbers are also made up. The issues outlined in Chart B are real, but the numbers are changed. Dave Williams is a graduate of York University and a retired corporate executive. We are always happy to hear comments from our readers at williamsdavem7@gmail.com.

G O L D E N H O R SESHOE CHAPTER OF THE CANADIA N CO N D O MI N I U M I NSTI TUTE

Tool Talk Video Series Leak Repair

View Tool Talk Video - Leak Repair

Presented by Justin Deboer, Skyline Contracting The Tool Talk series of videos provides some behind the scenes views of our professionals to highlight a few of the many services our experts provide to their condo clients. The idea is for these short videos (3 to 4 minutes each), to give our membership a behind the scenes look at our experts at work. Many of these clips will be a view of activities/operations which may never have been seen/witnessed by our members before. As always, the committee welcomes input from our members. If anyone has a suggestion for one of our videos, please feel free to reach out to us at admin@cci-ghc.ca.

Condo News – SUMMER 2022

Feature Committee - Governance Committee

FEATURE COMMITTEE:

Governance Committee There are two main responsibilities of this chapter committee. Both of these duties focus on keeping our governing documents in line with the Ontario Condo Act including any other pertinent government legislation. This group of dedicated volunteers also ensures the GHC complies with CCI National directives, and current good operating principles to ensure smooth and efficient operation of the Golden Horseshoe Chapter. The first function is to review and recommend amendments to the GHC By-laws on a regular basis. Under normal circumstances this review is carried out every five years. However, if and when a more immediate change is warranted, this committee will act accordingly. Following a review, one or more amendments will be presented to the GHC Board of Directors for approval. But in order for amendments to become law, they are presented to the GHC membership at an Annual General Meeting for ratification. The second function of the Governance Committee is to review the GHC Policies and Procedures. This review normally is carried out every two years, but in similar fashion to the review of by-laws, if a change is needed sooner, it will be made by this committee. Since CCI chapters are not directly governed by the Ontario Condominium Act, or by a Declaration or other normal condominium restrictions, there needs to be legal documents that fulfil a similar purpose…. hence the development of By-laws and Policies & Procedures. By-laws are the most important and therefore have to pass through a membership ratification process. On the other hand, Policies & Procedures are of less importance and can be put into effect simply by a vote of Directors at a Board meeting. This committee by its very nature is not as active on a day-to-day basis as many other committees. Never-the-less our small group takes their responsibilities seriously. Current Governance Committee membership includes: Stephanie Sutherland, Carole Booth, Joe Gaetan and Ed Keenleyside.

G O L D E N H O R SESHOE CHAPTER OF THE CANADIA N CO N D O MI N I U M I NSTI TUTE

Investing the Reserve Fund: How to Maximize Return and Minimize Risk

FEATURE

Investing the Reserve Fund: How to Maximize Return and Minimize Risk Will MacKay, CFP, CIM The MacKay Financial Group CIBC Wood Gundy

his time last year many boards were decrying investing in GICs and citing low returns. With the rise in recent volatility and pullbacks in everything from stocks, bonds, gold, and even potentially real estate, boards can feel confident that the reserve funds are protected. Eligible investments as defined by the Condominium Act, 1998, S.O. 1998, c. 19.: The Board may invest operating and reserve funds only in “eligible securities”, defined in Section 115(5), as bonds, debentures, guaranteed investment certificates, deposit receipts, certificates of deposit, term deposits or similar instruments that: • Are issued or guaranteed by the Government of Canada or the government of any province of Canada; or • Are issued by an institution located in Ontario insured by the Canada Deposit Insurance Corporation or the Deposit Insurance Corporation of Ontario; or • Are securities of a prescribed class (currently there are no securities of a prescribed class). When we are assisting our boards in developing an investment strategy, we have them focus on what we consider to be the three most important areas for boards to consider : i. Principal protection of investments and adherence to the Condominium Act. ii. Liquidity of funds and how to meet expenditure requirements with effective planning. iii. Maximizing investment returns. continued…

Condo News – SUMMER 2022

I always say there are only three ways to get money into the reserve fund. Special assessments, raise fees, or invest better. I know where I like to start. Having an investment plan is required prior to engaging in investing the reserve fund, as defined by the Condominium Act, 1998, S.O. 1998, c. 19. An example would be that a board has $1,000,000 in the reserve fund and is doing a roof replacement next year for $250,000. What do they do with the remaining funds? The board could keep the funds in the bank account, create a simple laddering strategy of 1-3 years or 15 years, or they can develop a detailed plan that takes into consideration requirements of the reserve fund study and the cash flow needs of the corporation over multiple periods. An effective plan would have components of all strategies. First, you could invest the funds earmarked for specific capital projects; in this case, a new roof. To satisfy this objective you could buy GICs timed to mature when the required payments are due to the roofing contractors. An alternative is a high-interest savings account. Next, you could allocate the balance of the $1,000,000 into GICs in equal amounts and build a ladder of GICs. (i.e. a staggered portfolio of GICs going forward five years, with $150,000 in GICs maturing in one year, another $150,000 maturing in two years, a third $150,000 maturing in three years, a fourth $150,000 maturing in four years and the last $150,000 in the fifth year). At the end of one year, assuming there's no need for the funds at the time of maturity and that there are no planned capital projects, you could simply reinvest those funds out another five years, thus maintaining the five year ladder. As a result, your portfolio would always have 20% of your reserve funds due one year in the future, thereby dealing with the issue of liquidity. Boards would be well served by creating an Investment plan that is reflective 28

I always say there are only three ways to get money into the reserve fund. Special assessments, raise fees, or invest better. I know where I like to start. of the current finances and budget, forecasted expenditures from the reserve fund study and the available investments. This will assist them in creating a plan that has the most amount of flexibility with the best possible return. When selecting GICs, board members should keep in mind that there is a limit of $100,000 of Canadian Deposit Insurance Corporation (CDIC) coverage per member institution and $250,000 per Deposit Insurance Corporation of Ontario (DICO) that insures most deposits in credit unions or caisses populaires in Ontario. CIBC Wood Gundy can provide one investor with GICs from several different member institutions, therefore keeping your funds fully insured. In addition, GICs made available by brokerage firms often carry higher interest rates than those purchased directly at the bank. In effect, by purchasing GICs through a brokerage firm, a board may be able to obtain higher rates and maximum CDIC insurance protection, thereby providing a better alternative to the traditional bank branch offerings. While interest rates have risen as expected, the Central Banks are trying to walk a fine line of increases without slowing down the economy. Much of the rate increases are already reflected in the current investment rates offered.

G O L D E N H O R SESHOE CHAPTER OF THE CANADIA N CO N D O MI N I U M I NSTI TUTE

Many of our boards have asked about rising rates and if they should wait to invest. We have spoken about the cost of waiting to invest, and how much interest rates would have to rise to make up for waiting for those higher rates while getting a lower return. Typically, it is in the boards interest to implement a plan that is tailored to their cash flow needs rather than timing interest rate changes. Working with an investment partner that can review this for the board is valuable. You do not have to lock in for 5 years to get a great rate as the difference between 3, 4, and 5-year GICs are minimal. If you feel that rates have peaked and may come back down in the future to support growth again, a 5-year makes sense. If not, 3-year would be an effective duration. Regardless of whether you use a 3- or 5-year ladder, there will be of opportunity to benefit from higher rates in the next 1 to 2 years. With laddering, you take the proceeds of a maturing GIC and invest it in a new GIC of 3 or 5 years - whichever you’re using as the maximum term in your ladder. If rates are higher in a year, you benefit reinvesting at a higher rate. If rates are lower, you are protected with only a portion of your funds rolling over at the lower rate. The rest stays invested at higher rates. In either scenario it would be in the best interest to engage with a qualified professional to support the board with the investment process. Will MacKay, CFP, CIM Investment Advisor, Portfolio Manager The MacKay Financial Group CIBC Wood Gundy CIBC Private Wealth consists of services provided by CIBC and certain of its subsidiaries, including CIBC Wood Gundy, a division of CIBC World Markets Inc. The CIBC logo and “CIBC Private Wealth” are trademarks of CIBC, used under license. “Wood Gundy” is a registered trademark of CIBC World Markets Inc. This

information, including any opinion, is based on various sources believed to be reliable, but its accuracy cannot be guaranteed and is subject to change. CIBC and CIBC World Markets Inc., their affiliates, directors, officers and employees may buy, sell, or hold a position in securities of a company mentioned herein, its affiliates or subsidiaries, and may also perform financial advisory services, investment banking or other services for, or have lending or other

credit relationships with the same. CIBC World Markets Inc. and its representatives will receive sales commissions and/or a spread between bid and ask prices if you purchase, sell or hold the securities referred to above. © CIBC World Markets Inc. 2022. For GIC terms of one year or less, simple interest is paid at maturity. For GIC terms of greater than one year simple interest is paid annually or compound interest is calculated annually and paid at

maturity. For more information about this product, please contact your Investment Advisor. Will MacKay is an Investment Advisor with CIBC Wood Gundy in Mississauga. The views of Will MacKay do not necessarily reflect those of CIBC World Markets Inc. Yields/rates are as of May 17, 2022 and are subject to availability and change without notification. Minimum investment amounts may apply.

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Condo News – SU MMER 2022

Upcoming Events

2022 April 11th - November 14th | 7:00 pm - 9:00 pm

G O L D E N H O R SESHOE CHAPTER OF THE CANADIA N CO N D O MI N I U M I NSTI TUTE

Welcome to our Newest Members

to our Newest Members: BUSINESS PARTNERS Paul Davis GTA West Group Burlington, ON

Time to Renew

Please be sure to renew your membership before September 30, 2022, to be eligible to vote at the Annual General Meeting being held on Wednesday, October 19, 2022, at the Royal Botanical Gardens in Burlington, ON. The notice of AGM will be sent to all members mid-August 2022. Second notices will be going out in mid-July.

Detail Roofing & Sheet Metal Mississauga, ON Golden Horseshoe Chapter

Condo News – SU MMER 2022

G O L D E N H O R SESHOE CHAPTER OF THE CANADIA N CO N D O MI N I U M I NSTI TUTE

FEATURE

Pot of Gold (Chargebacks) – Pre and Post Amlani

Pot of Gold (Chargebacks) – Pre and Post Amlani Maria Durdan, B.A., LL.B, ACCI (Law) Simpson Wigle LAW LLP

Based on a live streamed webcast on March 22, 2022 with panelists Michelle Joy and Stephanie Sutherland and moderated by Maria Durdan. https://cci-ghc.ca/events/2022/03/22/pot-of-gold-chargebacks

Bad facts make bad law.

Richard Elia, B. Comm., LL.B., LL.M. (ADR), A.C.C.I. Elia Associates

Rarely is this adage so clearly depicted as in the 2020 decision of Amlani v. YCC 473. The case centred around an attempt by YCC 473 to recover legal compliance costs based solely on an indemnification provision in its Declaration. The catch though, was that the indemnification provision did not speak to the recovery of legal compliance costs – it related to property damage. The court recognized this. The court also pointed out that the legal costs in question were incurred after the cause of the “nuisance” (unit owner smoking) had voluntarily removed himself the condominium. In the end, the facts making up the decision are not as important as how the actions of the condominium corporation were received by the court: “In my view, it is worthwhile to send a message to both condominium corporations and condominium residents that there are often easy, cost-effective solutions that are far preferable to litigation. Parties who ignore cost-effective solutions in favour of litigation must pay the price if they fail in the litigation.” continued…

Condo News – SU MMER 2022

“Under the business judgement rule, the Board is presumed to act in good faith. However, the Board’s refusal to meet, refusal to negotiate, retaining an expert to determine if Mr. Amlani’s unit could be hermetically sealed rather than to determine if the problem could be diminished to the point of no longer bothering the neighbours and its behaviour in walking out of the mediation for another appointment even though the Corporation unilaterally selected the mediation dated lead me to conclude that the Corporation and its Board were not acting in good faith.” The question of bad law in this case arises over the courts statement that legal costs incurred in enforcing compliance can only be recovered via a court order, and the application of section 134(5) of the Condominium Act, 1998 (the “Act”). Section 134(5) of the Act allows a condominium corporation to recover “any additional actual costs to the corporation in obtaining the order” and provides that these are “added to the common expenses for the unit”; however, it does not state that this is the only way that a condominium can secure a demand for costs using a condominium lien. Earlier cases expressly permitted costs to be recovered via a lien provided the correct and applicable indemnity provision could be found in the Declaration. Consider NNCC 6 v. Temedio (2017 - Ontario Superior Court) where the Corporation incurred legal costs in dealing with an excessive noise situation, or Italiano v. TSCC 1507 (2008 – Ontario Superior Court) where a cost award in arbitration was upheld based on the wording of an indemnity clause in the Declaration. Neither of these decisions were considered by the court in its analysis of Amlani. Further, decisions subsequent to Amlani that relied on indemnification provisions in condominium corporations’ Declarations to recover via a condominium lien, may also be considered to 34

be flawed in their analysis. Consider O’Regan v. CCC 169 (2021 – Ontario Superior Court) and TSCC 1724 v. Evdassin (2021 – Ontario Superior Court). In O’Regan, the court dealt with a lien registered to recover an insurance deductible (section 105(2) of the Act), but justified the lien using the indemnity provision in the Declaration (and without mentioning section 105(2) of the Act). In Evdassin, the court upheld the use of the indemnification clause in the Declaration as authority to lien…but did not specifically reference or distinguish Amlani. It all becomes very confusing. Our thoughts are that a condominium corporation can charge back certain amounts and secure payment through the condominium lien process as follows: 1. If you can find authority in the Act: a. Section 57 – Occupancy Standards b. Section 85 – Failure to pay common expenses / special assessments c. Section 92 – Maintenance or Repair carried out for Owner d. Section 98 – Alteration to Common Elements e. Section 105 – Insurance Deductible f. Section 134 – Court Application – Compliance 2. Notwithstanding the confusion created through Amlani, you should be on solid ground by relying on an applicable and correctly worded indemnity provision in your Declaration. Note that there is no consistency with respect to: a. whether a Declaration has any indemnity; and b. the wording of an indemnity provision. 3. Subject to a proposed change to

G O L D E N H O R SESHOE CHAPTER OF THE CANADIA N CO N D O MI N I U M I NSTI TUTE

the Act, if you rely on an insurance deductible recovery provision in a by-law. If you are uncertain whether a particular cost can be charged back and secured by way of a condominium lien, ask for a legal opinion up-front – proactively. The cost of the opinion may not be recoverable; however, you may save considerable legal costs by avoiding a possible (costly) dispute. Consider having your Declaration reviewed by your legal counsel to determine what the indemnity language (if any) entitles the Corporation to recover and lien for. Consider augmenting your indemnity provisions: 1. Property damage; 2. Insurance Deductible Recovery (on a strict liability basis) – There is a proposal to require this provision to be enshrined in the Declaration, requiring 90% approval of unit owners. It can be amended currently with 80% approval; 3. Compliance costs (legal, management, etcetera) incurred to effect compliance with the Act, Declaration, By-laws and Rules, including costs incurred before a court, tribunal, arbitration or mediation; and 4. Successful Defense costs.

Best Practices from Management (Top 10!): 1. If you expect to charge back something to an owner, but don’t have specific information/invoices, send a preliminary letter outlining facts, dates, possibility of responsibility, and authority; 2. When sending a demand for indemnity, include a deadline for payment that coincides with regular monthly

common expense payments (usually the 1st of the month). Include detail concerning the amount to the paid, copy of invoice, why the amount is being charged back, authority for the chargeback, timeline to make payment, consequences if payment is not forthcoming; 3. Don’t make the time to pay too short, this goes to reasonableness; 4. Do not entertain payment plans as an alternative to registering a lien as they may take you outside the time to register a lien; 5. If you are uncertain about the condominium corporation’s ability to charge back and lien, get an opinion from legal counsel; 6. Send “courtesy” reminders for outstanding amounts; 7. Update the Status Certificate – even

if you don’t know details of a definitive amount or have a copy of the invoice;

b. Ensure that the condominium corporation has been charged and has paid the extra amount;

8. Be proactive – update the Corporation’s indemnities (in the Declaration);

c. Check the indemnity language in your Declaration;

9. Remember and respect that not everything can be charged back; and 10. Budget for a legal dispute or maintain a healthy operating surplus.

Q&A: 1. Can you charge back additional management costs: a. Check your management agreement to see if the management company can charge additional costs (this is expected for time needed for litigation support or large construction projects);

d. NOTE: Section 104(5) “together with any additional actual costs to the corporation in obtaining the order” leaves the door open to recovering litigation support costs on a compliance application. 2. What is Statutory Authority in relation to chargebacks and lien rights? a. Statutory Authority relates to authority found within the Act (e.g. Section 92 or 105); b. Non-Statutory Authority relates to authority found elsewhere (e.g. Declaration Indemnity provisions).

Condo News – SU MMER 2022

New LCCI Designation

APPLICATIONS FOR THE LCCI DESIGNATION ARE NOW OPEN

CCI’s new designation, to recognize its members from any profession or trade who have and continue to contribute knowledge and expertise to CCI and the condominium industry.

Apply now!

LCCI Designation The LCCI designation is open to any CCI member who provides goods and/or services, through annual employment time and volunteer time, to or within the condominium/strata/copropriété industry. The designation is open to any particular profession or trade.

LCCI Application Process Step 1 – Apply: Gather the information for the registration form (eligibility criteria): A. An individual or professional member of CCI in good standing; B. Minimum of three (3) years as an individual or professional member of CCI immediately prior to the date of application; C. Minimum of three (3) years’ service to the condominium industry immediately prior to the date of application. This criterion will be satisfied where an individual shows that they have provided goods and/or services, through annual employment time and volunteer time to or within the condominium industry; D. Provide at least two (2) letters of reference/endorsement from a CCI member having at least five (5) years of membership in CCI; and E. Provide an executed declaration that the candidate will comply with the CCI Code of Ethics.

G O L D E N H O R SESHOE CHAPTER OF THE CANADIA N CO N D O MI N I U M I NSTI TUTE

So, You Want to Make the Attic a Family Room? – Sounds like a Great Idea!!

FEATURE

So, You Want to Make the Attic a Family Room? – Sounds like a Great Idea! Patricia Elia, B.Comm., LL.B., A.T.C. Elia Associates PC

ot surprisingly, it is quite common for unit owners to want to modify their condominium unit space. We find that the desire to modify is more prevalent in townhomes, especially as townhomes age. The desire to renovate the kitchen, the bathroom, the attic and the bedrooms is normal. HGTV inspires! The challenge presented by this goal is that many renovations impact directly, or indirectly, the common elements as condominium units do not stand in isolation of other condominium units and the common elements. Common elements are owned as tenantsin-common by every single unit owner. This is why Section 97 of the Condominium Act is relevant. In order to make a modification to the common elements, a vote is often required by unit owners. Section 98 specifically contemplates modifications made by unit owners to the common elements all to ensure either that Section 98 is complied with or Section 98 does not apply. Renovations should be vetted by the Corporation. The Corporation’s Board of Directors would be prudent to put in place a set of protocols and a process to analyze renovations

Condo News – SU MMER 2022

and make the review systematic for ease of the Board and unit owners. To the extent that a renovation is exclusively with respect to the unit and creates no impact to the structure or the common elements of the Corporation, then it's easy to allow renovation to proceed. Renovations should also be inspected post-renovation to ensure that they comply with what was presented to the Board. Unit owner files of the Corporation should retain all data presented. Where the renovation impacts the common elements, the Corporation needs to look closely at compliance with Section 98. Section 98 breaks down changes made by owners into two categories: those that affect the common elements and those that affect the exclusive use common elements. Where an owner wishes to make a common elements modification, the Board needs to approve that modifica-

Where an owner wishes to make a common elements modification, the Board needs to approve that modification by resolution. tion by resolution. So before a resolution is passed, the Board needs to collate information and effectively evaluate the same in order for the Board to fulfill its duty under Section 37 for due diligence purposes. Accordingly, a corporate due diligence checklist should include: drawings by a qualified party (not unit owner

G O L D E N H O R SESHOE CHAPTER OF THE CANADIA N CO N D O MI N I U M I NSTI TUTE

sketches) (drawings should be stamped drawings if there are structural, electrical or plumbing changes); there should be building permit applications, as applicable, that are issued by the municipality however, it must be abundantly clear that the municipality should not be permitted to issue building permits without the consent of the Board. In our experience, municipalities often ignore the parameters of the Condominium Act. This can escalate disputes amongst the parties. So while the town or the municipality controls the issuance of building permits, municipalities should be much more aware of the compliance requirements under the Condominium Act and the requirement of consent by the Board. Just because you have a building permit, it does not mean that you do not have to comply with the Condominium Act or have the right to change the common elements.

Before the modification can proceed, an agreement must be designed to allocate the risks associated with the modification to the common elements back to the unit owner. Other unit owners do not benefit from the modification and should not bear the risk of the same. The total cost of repair, maintenance and insurance should be borne by the unit owner who wishes changes. If the modification is to a regular common element (not exclusive), Section 97 also must be complied with, which means in certain cases, a vote of unit owners will be required to approve that modification because that modification to the common elements impacts the common elements that are owned by everybody. So be nice to your neighbours! Where the modification is to exclusive use common elements, you do not have to deal with the requirements under Section 98 (1) (c) and (d), however the criteria for the Board is very clear and, in my opinion, these criteria should be not exclusively applied to exclusive use common elements amendments because the statutory criteria contains an assessment that should be used for all common element modifications for the purpose of assessing risk. The Board of Directors should be digesting the constating documents and assess the common element modification in each of these baskets. One of the key ones that I think is important to think about is what is the impact of the modification of the common element to the reserve fund and whether or not that gives rise to costs. As well, does the modification to the common elements also give rise to increased insurance premiums to the Corporation. One of the challenges we are seeing with Section 98 modifications is the insurance obligations being borne by the unit owner under their own policy. As you are aware, condominium unit owners and the Corporation insure together under one policy to

… what is the impact of the modification of the common element to the reserve fund and whether or not that gives rise to costs?

ensure that there is adequate insurance. But what happens when a unit owner changes that risk profile by creating a modification? Some may argue, “well, there is no change to the risk of the condo”. I would strongly disagree with the absoluteness of that statement. Each modification must be considered individually. This is why, if you take out a structural wall, there is going to be an impact unless the modification is somehow countered by the appropriate structural modification to adjust for the structural wall removal. If you undertake plumbing in the basement, and you have to break through the common element concrete floor, there is an increased risk to the Corporation because there is water there that wasn't there before and we all know that water is a risk for condos. Therefore, it is very important that the allocation of risk be addressed in the Section 98 agreement. Finally, a Section 98 agreement and the modification is only valid once the agreement is registered on title. Don't make the mistake of relying on the premise of a lone board member walking down the street and promising you that you can modify your attic by putting in a family room. All legal and binding decisions must be made by the Board of Directors at a duly constituted meeting; everything must be put in writing and

then registered on title. Where a unit owner vote is required, the Act must be complied with as well. Section 98 agreements are not simplistic agreements. Quick sidenote, they cannot be done by bylaw and comply with the Condominium Act. Where there are multiple modifications overtime, there are ways to address that too. Bulk Section 98 agreements can be a cost-effective methodology of approving modifications that nobody knew about. Getting everybody on board is key so that future unit owners are bound to the same standards. Failure to put in place a registered Section 98 is negligent, so, please ensure that you speak to counsel and get those Section 98 agreements in place in advance.

Patricia Elia is a senior lawyer with Elia Associates and has practiced law for over 25 years in the areas of condominium law and corporate law, in large, medium and the boutique specialty law firm of Elia Associates. Patricia is intrigued by the interplay of economics, the law and critical thinking models in condominiums and she likes to understand people. As a trained mediator, she understands the value of early and creative dispute resolution opportunities. As an active industry participant, she believes that the sharing of knowledge has the potential to empower Boards of Directors. Patricia’s commitment to condominiums has been in leadership roles such as the President of CCI Huronia, Co-Chair of CCI’s National Council, a member of CCI National Executive and a member of all 5 Ontario chapters. She has also sat as Vice-Chair of CCI National’s Government Relations Committee and Governance Committee. She is a founder of Women in Condos. She has been a Condominium Director for the last 19 years and a Unit Owner of a condominium. Patricia is passionate about the condominium industry because of the important role condominiums play in the lives of real people.

Condo News – SU MMER 2022

The Golden Horseshoe Chapter of the Canadian Condominium Institute would like to give your Condominium $500. Tell us why your Condominium is worthy of winning the “Condo of the Year” award? We are all proud of our homes, you just need to highlight the following points in your article that describes your condominium: l

What are the qualities and features of your Condominium?

What are the accomplishments achieved by your Condominium Corporation?

What is the overall environment like in the Condominium?

What makes residents proud to live there?

Each entry will be featured in one of the upcoming issues of the “Condo News” magazine. There are four issues per year: Spring

Article deadline March 1st

Summer

Article deadline June 1st

Fall

Article deadline August 1st

Winter

Article deadline December 1st

You can either send an article or we can interview you via phone and write an article about your condo for you! Don’t forget to include photos of your condominium. Interested applicants should submit their articles or contact information for an interview to: by mail CCI-Golden Horseshoe Chapter, PO Box 37 Burlington, ON L7R 3X8

by email admin@cci-ghc.ca

The Condominium will be selected by the GHC-CCI Communications Committee and will be announced at the Annual General Meeting in the fall.

G O L D E N H O R SESHOE CHAPTER OF THE CANADIA N CO N D O MI N I U M I NSTI TUTE

Are you still stressing over holding your Annual General Meeting virtually? Can’t find a service provider to host your meeting? Are you a member of Golden Horseshoe Chapter – Canadian Condominium Institute?

Yes! THEN WE CAN HELP!! The GHC-CCI will offer our technical Golden Horseshoe Chapter will supply expertise and the use of our Zoom the following: platform to host your AGM. You will • Zoom Pro platform (including polling still be required to prepare everything through Zoom) needed for your AGM: • Conference call number for those not • Powerpoint able to connect through zoom • Script • Any confidential voting requirements • Host through an online survey link • Collection of proxies • A technician to run the event in the • Minute taker background who will: • Polling/voting questions and choice of - set Up link and any recording answers requirements • Distribution of your AGM package - set Up polls • Provide GH with name/emails of partici- launch Polls and surveys pants - provide tech help/troubleshooting

This service is available for smaller condo’s as follows: 1-19 Units - $250 + HST 20 – 49 Units - $350 + HST 50 – 80 Units - $450 + HST This service is only being offered to small condominium units that are members of GHC-CCI and is on a first come, first served basis. If you are interested in using our services please email us at admin@ghc-cci.ca with the date and time of your AGM, and we will get back to you with our availability.

Thank you for being a member of GHC-CCI! Condo News – SU MMER 2022

Do you have an article for the Condo News?

• • • • • •

Send a high-resolution headshot and a brief bio of three or four lines. Include your credentials next to your name. Confirm article subject approval before writing. No word limit. Email article in Word format. Write for an audience that includes condominium owners and directors. Avoid technical language.

• If using pictures or graphs within the article, limit to three or fewer. • No self-promoting content within article. • Editors will approach authors about any major edits, but may insert minor changes (e.g. grammar, spelling, etc.) without notice.

• Cite any content taken from another source. • Email to admin@cci-ghc.ca CCI - Golden Horseshoe Chapter Box 37 Burlington, ON Canada L7R 3X8 Tel: 905-631-0124 or 1-844-631-0124 • Fax 416-491-1670

A DVE R T I S E

In the new Condo News Digital Edition!

ADVERTISERS INDEX Advertisers Index

T hank you to our Advertiser’s! Without you, this publication would not be possible!

ACMO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 Atrens-Counsel Insurance Brokers . . . . . . . . . . .2 Brown & Beattie . . . . . . . . . . . . . . . . . . . . . . .12 Cion Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . .38 J&W Condominium Management Ltd . . . . . . . .13 Larlyn Property Management Ltd. . . . . . . . . . . .6 Lionheart Property Management . . . . . . . . . . .24 Maple Hill Tree Services . . . . . . . . . . . . . . . . . .25 Millards Chartered Professional Accountants . .13 Normac . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 Precision Management Services . . . . . . . . . . . .35 RJC Engineers . . . . . . . . . . . . . . . . . . . . . . . . .31 SimpsonWigle LAW LLP . . . . . . . . . . . . . . . . . . .4 Wilson Blanchard Management . . . . . . . . . . . . .9

If you service the Condominium Industry and are not listed in this issue YOU ARE MISSING OUT!

Elia Associates . . . . . . . . . . . . . . . . . . . . .Website

Advertise now at admin@cci-ghc.ca

Condo News – SU MMER 2022

Connect with us…

VISIT OUR WEBSITE www.cci-ghc.ca

Golden Horseshoe Chapter

GOLDEN HORSESHOE CHAPTER OF THE CANADIAN CONDOMINIUM INSTITUTE Box 37, Burlington, Ontario L7R 3X8 Tel: 905-631-0124 / Toll Free 1-844-631-0124 Fax: 416-491-1670 • Email: admin@cci-ghc.ca

Condo News - Summer 2022

Articles inside

New LCCI Designation

So, You Want to Make the Attic a Family Room? – Sounds like a Great Idea!!

Pot of Gold (Chargebacks) – Pre and Post Amlani

Investing the Reserve Fund: How to Maximize Return and Minimize Risk

Committee Work the Right Way

Tool Talk Video Series

FEATURE CONDO: HCC #125 2390 Woodward Ave. Burlington

Are You Considering a Saltwater Pool for Your Condominium?

Purchasing and Selling Condominium Units: The Importance of the Status Certificate

Annual General Meeting Registration

Condo Financial Statements… Directors just need to review and ask questions… Follow the money!

Feature Committee - Governance Committee