CondoVoice - Fall 2010

www.ccitoronto.org

VOL. 15, NO.1 • FALL 2010

P U B L I C AT I O N O F T H E C A N A D I A N C O N D O M I N I U M I N S T I T U T E - T O R O N T O & A R E A C H A P T E R P U B L I C AT I O N D E L’ I N S T I T U T C A N A D I E N D E S C O N D O M I N I U M S - C H A P I T R E D E T O R O N T O E T R É G I O N

2010 Condominium of the Year

Quarter Finalist

Plus: ■ ■ ■ ■

Mentally Incompetent Directors Condominium Short Cuts – Don’t Go There!

How to Pay for Retrofits Newsletter Legalities

■ ■ ■

What Does Standard of Care Really Mean?

Tarion/Warranty Claims Municipal Election

… and more PM #40047055

Canadian Condominium Institute / Institut canadien des condominiums Toronto & Area Chapter 2175 Sheppard Ave. E., Suite 310, Toronto, ON M2J 1W8 Tel.: (416) 491-6216 Fax: (416) 491-1670 E-mail: ccitoronto@taylorenterprises.com Website: www.ccitoronto.org

2009/2010 Board of Directors PRESIDENT Armand Conant, B.Eng., LL.B., D.E.S.S. (Co-Chair, Legislative Committee, Co-Chair, Conference Committee) Heenan Blaikie LLP

VICE-PRESIDENTS Mario Deo, LL.B. (Member, Public Relations Committee Member, Conference Committee) Fine & Deo LLP Bill Thompson, BA, RCM, ACCI (Vice -Chair Membership Committee and Chair Education Committee) Malvern Condominium Property Management

SECRETARY/TREASURER Bob Girard, B.Comm, RCM, ACCI, FCCI (Chair: Special Projects Committee, CAI Liaison) AA Property Management & Associates

PAST PRESIDENT John Warren, C.A. (Member, Education Committee Member, Legislative Committee) Adams & Miles LLP

Contents Features

9 12 15 18 23 29 39 42

Non-Emotional Budgeting – A Possibility

by Laura Lee

Condominium Short Cuts – Don’t Go There!

by John M. Warren

What Does the Standard of Care Really Mean? - Part One

by Michael Gwynne

The Board of Directors: It’s Just a Few Hours Per Week Right?

by Brian Horlick

How to Pay for Retrofits

by David M. Morrison

New Tarion Warranty Resolution Process for Common Elements

by Sally Thompson & Kevin Brodie

Mentally Incompetent Directors

by Rhonda Shirreff & Andrew Bourns

Condominiums Have Come of Age and Need to Flex Their Political Muscle!

by Gordon J. Chong

BOARD MEMBERS Gordon Chong, DDS (Member, Legislative Committee) MTCC # 0620 Brian Horlick, B.Comm., B.C.L., LL.B., ACCI (Co-Chair, Legislative Committee, Member, Conference Committee) Horlick Levitt Di Lella LLP Jeff Jeffcoatt - P.Eng, RCM (Member, Education Committee) Construction Control Inc. Lisa Kay, BA (Member, Public Relations Committee and Conference Committee) Morrison Financial Limited Julian McNabb, BA (Chair, Public Relations Committee and Member, Membership Committee) Simerra Property Management Ltd. Vic Persaud, BA (Chair, Membership Committee, Member Special Projects Committee) Suncorp Valuations Ltd. Sally Thompson, P.Eng. (Member, Education Committee Member, Legislative Committee) Halsall Associates Ltd.

OPERATIONS MANAGER - Lynn Morrovat ADMINISTRATOR - Maria Galati EDUCATION COORDINATOR - Josee Lefebvre

52

Here Comes the Sun: Is Solar PV a Good FIT for Your Condominium?

by Tim Stoate and Bryan Purcell

55

Newsletters & Websites: Communication, Caution, and Common Sense

by Mario Deo & Kristen Bailey

CCI News 5 8 34 45 46 51 65

President’s Message From the Editor Condo of the Year - 1st Quarter Finalist ACCI Member Profile - Sue Bottrell In Memorium - Doug Dempsey New Members Upcoming Events

Cover photo – Condo of the Year 1st Quarter finalist, MTCC #1053, Palace Place

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President’s Message he heat has definitely been on this past summer, and we at the CCI-T Board are doing our part to keep it on in appropriate places. The activity over the past three months has been intense, and we expect it will shortly start to bear fruit for the condominium community. If you’ve shopped for fruit this summer, you know we expect a bumper crop!

T

It is said that a single group or person can only accomplish so much without help; it’s much better to be able to work with a larger group of like-minded people. To that end, I’m happy to announce the Ontario CCI Caucus has once again become active. The Caucus is composed of representatives from all seven of the Ontario CCI Chapters to address issues of importance to our members across the Province. We’ve shown in the past how effective a coordinated approach to government can be, and we, as a group, expect that level of success will continue. We may not win every battle, but we will definitely be heard. As the Chair of the Caucus, I’m looking forward to working with my colleagues from other Chapters to advance our issues.

One of those issues, and one of the first we are addressing, is the inequity in municipal property taxation of condominiums. A condominium unit owner is taxed on the same basis as the owner of a single family dwelling. This, in spite of the fact that condominiums use dramatically less municipal services (sidewalks, sewers, lighting, etc.) than a comparable number of single-family homes. The Golden Horseshoe Chapter started the initiative and now the Caucus is taking it province-wide. We have sent a letter to Premier McGuinty, with copies to members of Cabinet, asking them to introduce legislation so that municipalities can create a separate condominium class for municipal tax purposes, allowing them to set a lower rate for our members. This will better reflect our municipal and ecological footprint. I’ll keep you posted on the progress of this important initiative.

Locally, we have invited all the major Toronto Mayoral candidates to a forum on condominium issues to be held September 30th. This will give them a chance to hear and respond to condominium issues. Condominiums account for about 12% of all housing in Toronto, and the number of condos is growing dramatically (over 35% between the last two censuses) – this gives us a considerable amount of clout as a voting bloc. We expect a healthy discussion, while making sure all candidates are aware of condominium issues. There is a notice of the forum on page 49 of this issue.

We are also spearheading an investigation of how condominium corporations can increase the yield on their Reserve Funds. If, by permitting a wider range of investments for the funds, corporations can increase their yield, it will hopefully help condos offset the effects of the HST and other rising costs. Ultimately, making this change will require legislative changes to the Act, so we are looking at arriving at a definitive answer to the question. Like municipal taxation, this is a bread-and-butter issue for our members, and I will report on our progress in the Winter 2010 issue of Condo Voice.

We are working closely with our colleagues at ACMO on the upcoming 14th Annual ACMO/ CCI-T Conference, being held November 5-6th at the Hilton Suites hotel in Markham. This year’s theme, Directions for a New Decade: Staying Ahead of the Curve, looks at emerging issues such as Digital Communities, High Performance Buildings and the Rapid Pace of Legislative Change – all topics of concern for us as the 21st century progresses. We will also be honoured by a speech by Maj. Gen. Lewis MacKenzie, former head of Canada’s armed forces and one of the world’s leading peacekeepers. More information on the Conference is in this issue on page 47, or you can check the Continued on page 66

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Contributors “TheCondoVoice” is published 4 times per year – Spring, Summer, Fall and Winter, by Taylor Enterprises Ltd. on behalf of the Canadian Condominium Institute Toronto & Area Chapter.

EDITOR: Mario Deo MAGAZINE DIRECTORS: Gordon Chong, Lisa Kay, Julian McNabb ADVERTISING: Marie McNamee COPY EDITOR: Ruth Max COMPOSITION: E-Graphics All advertising enquiries should be directed to Marie McNamee at (905) 852-2802 or marie@mcnamee.ca

If you are interested in writing articles for TheCondoVoice magazine, please contact Marie McNamee at (905) 852-2802 or at marie@mcnamee.ca. Article topics must be on issues of interest to Condominium Directors and must be informative rather than commercial in nature.

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.

Consider supporting the advertisers and service providers referred to in this magazine, recognizing that they have been supporters of CCI.

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.

Publications Mail Agreement #40047055 Return undeliverable Canadian addresses to Circulation Dept. 2175 Sheppard Ave. E., Suite 310, Toronto, ON M2J 1W8

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KRISTEN BAILEY, B.A. HONS., B. ARCH.SC., LL.B & MARIO DEO LL.B.,

(Newsletters & Websites, page 55) Kristen joined Fine & Deo in 2007.

She practices in all areas of condominium law and litigation, as well as employment law. Kristen completed her LL.B. at Queen's University. Kristen is a member of the Canadian Condominium Institute.

Mario is a partner with the law firm of Fine & Deo, which focuses its practice on condominium law and real estate matters. Called to the bar in 1988, Marioís practice has centred on condominiums and real restate; he advises condominium corporations, developers, unit owners and purchasers and vendors of units. Mario, a popular presenter and lecturer, currently sits on the CCI Toronto Board of Directors.

GORDON J. CHONG, DDS, (Condominiums Have Come of Age, page 42.) is Founding Chairman [ret’d] SHSC & SHSCFI; Current Condo Corporation President.

MICHAEL GWYNNE, B.A., M.B.A., C.G.A., LL.B., LL.M. (Tax), (What Does the Standard of Care Really Mean?, page 15) practices with the Condominium and Real Estate Law Group at Miller Thomson LLP. Prior to joining Miller Thomson, Michael was an associate at another condominium law firm and practiced in the areas of condominium law, civil litigation, corporate and commercial law and mediation. Michael has acted for clients in various shareholder disputes, tax matters, securities law matters, share purchase transactions, mediations, contract reviews, by-law and contract drafting, enforcement matters and construction deficiency litigation.

BRIAN HORLICK, B.COMM., B.C.L., LL.B., ACCI (The Board of Direc-

tors: It’s Just a Few Hours Per Week Right?, page 18). Brian has been successfully engaged in the practice of law for 25 years. He is a senior partner with the law firm of Horlick Levitt Di Lella LLP and is an expert in the area of condominium law. He is a director of CCI, Co-Chair of the CCI Legislative Committee, Chair of the ACMO Associates Executive Communications Committee.

Laura Lee, RCM, ACCI, (Non NonEmotional Budgeting, A Possibility, page 9) is a frequent instructor of college level industry related courses and is a regular speaker at a variety of condominium seminars and conferences including the National Annual Conference, CCI Directors courses and ACMO.

DAVID M. MORRISON, B.A., LL.B, (How to Pay for Retrofits, page 23) is a non-practicing lawyer and president of Morrison Financial Services Limited, a company which, through its CondoCorp Term Financing product, has for over 18 years been providing financing to corporations to assist them in meeting unplanned major expenditures.

RHONDA SHIREFF, J.D., BED., M.A., & ANDREW BOURNS, (Mentally Incompetent Directors, page 39) Rhonda is a lawyer with the firm Heenan Blaikie LLP where her practice is focused exclusively on management-side labour and employment law. Rhonda writes and speaks regularly on issues related to workplace privacy, cross-border employment, human rights and employment standards. As an advocate, Rhonda represents employers at mediations, grievance arbitrations, human rights proceedings and various industry Boards.

LL.B.,

Andrew Bourns is an associate in Heenan Blaikie's Toronto Litigation Group. The focus of Andrew’s practice is on commercial, constitutional, administrative and regulatory matters. While in law school, Andrew was a student case worker at Parkdale Community Legal Services. providing advice on a wide range of employment-related matters. He also represented clients before the Workplace Safety and Insurance Appeals Tribunal and the Canada Pension Plan Review Tribunal.

TIM STOATE & BRYAN PURCELL, (Here Comes the Sun, page 50) Tim Stoate is Director, Mandate-related Finance for the Toronto Atmospheric Fund, which has developed the TowerWise high-rise energy efficiency program.

Bryan Purcell has worked extensively in the field of sustainability, most recently coordinating energy conservation programs with the University of Toronto Sustainability Office. He currently manages the TowerWise and LightSavers programs for the Toronto Atmospheric Fund.

SALLY THOMPSON, P.ENG, & KEVIN BRODIE, (New Tarion Warranty Resolution Process, page 29). Sally is currently the Practice Leader for Halsall’s Building Audit service, but also fulfills a Project Principal role and has participated in the preparation of Reserve Fund Studies and/or Performance Audits for several hundred corporations. Sally is currently a member of the Board of Directors of the Canadian Condominium Institutes Toronto Chapter.

Kevin Brodie is the Director of Condominium Common Element Claims in the Claims department of Tarion Warranty Corporation. In that role, he has sat on the Condominium Committee, which is tasked with developing a common element claims process and closing the gap between performance audits and Builder Bulletin 19 final reports. Mr. Brodie is a member of the Canadian Institute of Chartered Accountants, as well as the Institute of Chartered Accountants of Ontario (ICAO).

JOHN M. WARREN, C.A., (Condominium Short Cuts – Don’t Go There!, page 12) is a partner with Adam & Miles LLP, Chartered Accountants who provide audit and financial services to over 200 condominiums. He is past President of The Canadian Condominium Institute – Toronto and Area Chapter and a past member of several committees of the Association of Condominium Managers on Ontario. He writes regularly on financial matters in condominiums and is a frequent speaker at condominium conferences and seminars.

From the Editor he amendments to the Condominium Act in 2001 improved, to a significant and positive extent, the disclosure requirements a declarant owes to potential purchasers. However, life with the Condominium Act has progressed and, as expected, new methods to deal with the disclosure requirements have been introduced by declarants. By nature, we all get smarter over time.

Market forces demand that declarants push the envelope to find new innovative ways to sell their product. Is it time to consider changes to the disclosure requirements?

T

The concept of disclosure is simple. Provide information to the purchaser. Once provided, the purchaser can make an informed decision about the purchase of a condominium unit and the characteristics and expenses of the project that the unit is in. However, the changes in the last set of amendments to the Condominium Act acknowledged that disclosure on its own is not always enough. One of the most significant legislative changes included a requirement to produce a chart at the front of the disclosure package summarizing information and highlighting important aspects of the project that were normally contained in the extensive body (or fine print) of the disclosure documentation.

This information was always disclosed under the pre-2001 Condominium Act, but the legislature realized that something more was needed to assist purchasers in getting certain information up front.

Hence, the chart and other improvements to the disclosure provisions were introduced.

Even prior to the last legislative amendments, all declarants were (and remain) responsible for the first year budget deficiency; clearly it was recognized that disclosure alone for this issue was not enough. Similarly, disclosure alone is not enough for many new project aspects that are presently being disclosed, but not fully understood by purchasers. One may say that the purchaser should get advice. True, but the cost for proper advice is in most cases prohibitive to most purchasers. Proper advice on disclosure documents costs about $2,500.00 for a review of simple disclosure documents and up to $5,000.00 for more complicated ones. That’s about 5 to 10 times more than some advertised rates to close a typical purchase of a condominium unit. Not even 1% of purchasers opt to obtain this expensive, but necessary advice. So we then have two options: 1. Stop feeling sorry for the ignorant purchasers that are naive enough not to get advice - they get what they deserve; and,

2. Level the playing field for purchasers and declarants.

The answer has to be the latter. When I leased my last car, I discovered that the applicable legislation recognizes that it is unrealistic for a purchaser or lessee to fully understand the terms of a purchase or lease if one leaves the format of those terms totally up to car dealers. So when you lease a car, a dealer is obligated to tell you in a short, understandable form, exactly what your monthly cost will be, the date you return the car, and the financing costs, to the penny. All of this is on two pages!

Granted, it’s a car, not a condo, but one can easily understand it. I think it is fair to say that even some lawyers are now no longer able to fully understand and explain some disclosure documents and charge a reasonable fee structure. It’s also fair to say that the declarants that have a lower goodwill rating in the marketplace will take advantage of the well-known fact that a good percentage of purchasers remain uninformed about what disclosure actually means and uninformed about the present and ongoing costs of their new condominium.

It must be stated, with great emphasis, that there are a few high quality developers, large and small, for whom no amendments are required, as they do not take advantage of the matters that are addressed below. If all of the developers behaved in the same way, there would be fewer issues to consider, both in the short and long term. It should, therefore, also be noted that the legislation would not only protect purchasers, but it would level the playing field between the “good” developers on the one hand Continued on page 67

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Non-Emotional Budgeting – A Possibility

BY LAURA LEE, RCM, ACCI ENHANCED MANAGEMENT SERVICES AND TRAININGWHEEL

s a director or manager at budget time you face several challenges or expectations by your home owners. Through this article I will provide some tips on dealing with these inherent inconsistencies and give you the tools to build a fiscally responsible budget.

A

Condominium budgeting has its challenges. To name a few:

• No one wants a maintenance fee increase

• Many are living on a restrictive budget or income • Establishing fees which remain competitive with other Condominiums

• Being fiscally responsible

• Funding to eliminate carry forward deficits

• Maintaining and increasing property value • Impact of the HST or other factors beyond your control

• Annual utility increases

• Impact of reserve contribution and any required top ups

All of these elements put pressure on boards to make emotional decisions.

My experience is that the most successful boards are those that can step away

and approach the budget from a non emotional business approach.

To have a truly successful budget process it takes a mindset of running a business and making decisions with clear perspective and logical rationale.

It requires an open mind and remembering that it’s not about you but your responsibility to the homeowners and “standards of care”.

Responsible budgeting starts with a clear vision. People’s homes, for most, are their single largest investment and it is critical that they maintain or increase in value. Know and understand the

building and what it takes to maintain upkeep and enhancement to ensure competitive marketability and sound financial foundation.

Bearing the above challenges in mind, it is critical to start early and analyze your year to date expenditures, project your year end figures and then work on your proposed budget. A good rule of thumb is 90 days in advance with presentation to the board at 60 days and to the owners at 30 days prior to the yearend.

Building a sound budget includes ensuring the revenues you collect Fall 2010

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match the expenses you expect to put out. Provide for a small contingency to cover the unexpected. Do not use your surpluses from prior years to offset the budget as this will catch up with you. Instead, use these funds to continually improve or enhance the building, fund capital projects or take advantage of energy efficient projects to reduce future utility costs. Ensure you are properly funding your reserve for realistic future expenditures.

Things to bear in mind when establishing your budget include but are not limited to the following:

• Ask yourself “Is there a deficit?”

Take steps to be proactive to replenish the lost funds by budgeting the recovery.

• Establish legal ways to generate income, as any income generated for the Corporation will offset your maintenance fees. These could include but would not be

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limited to vending machines, party room, guest suite, lock boxes for real estate agents etc....

• Review, tender and renegotiate contracts with valued suppliers to ensure you are getting the best service for the building. Bear in mind things like long term fixed rate contracts, whether they are preventative or all inclusive, and the schedule of maintenance as all of these factors affect maintaining the value and minimizing extras to the contract.

• Staffing is a large part of the budget. You need to establish your needs for a super, concierge and cleaner. With so many opportunities you want to retain quality staff and may want to consider motivating them through a bonus plan.

• Utilities in most condominium budgets cover 30-50% of the budget – it is most important that

you keep an open mind to energy projects which will reduce your consumption. Rates, as you know, continue to increase each year anywhere from 8-12% depending on the utility company. Consider bulk purchasing agreements with lower locked in rates as this will help you budget. Analyze your consumption and cost figures over several years as this will help you project future costs more effectively.

Energy Retrofits also can offer significant savings.

• Repairs and Maintenance: this is the category that affects property value the most and can sometimes be difficult to control. It is a good idea to review and establish budgets to include service frequency and reasonable costs.

Consider training for your staff and utilizing handymen to do things that do not require specific expertise or licensing.

•

Another large contributor to the building’s budget is the insurance policy. Review your rates with your broker and establish anything that can be done to reduce the rates. Carefully consider each claim and its impact on your premium.

• Finally, there is the reserve fund contribution, which in most condominiums is between 16-25% of the overall operating budget.

Ensure proper funding and utilize these funds with caution.

With all of this in mind you are ready to get started by reviewing and analyzing your year to date numbers and projecting year end numbers. This will clarify how close you were to your current budget, any unforeseen expenses, maintenance still to be done and whether you will likely end the year in a surplus or deficit position.

From this point you prepare your new budget considering contract, staff, and administration, utility, repair and maintenance costs. You need to determine the other potential revenue and the required contribution to reserve. Once all of these items are included you should have a good handle on the costs of operating your condominium and the fees required to effectively run.

Now for the hard part, dealing with the challenges identified at the beginning of the article. Reality is that increases in maintenance fees are inevitable. You cannot expect to own a home and maintain its value without investing in it.

There are many factors beyond our control that affect both condominium and single family homeowner alike. The only difference is you answer to the community that elected you, so it is critical to establish a reasonable and realistic budget and clearly communicate the reasons for it.

property value.

Through effective budgeting and management of the property you can rest assured that you have done a good job and for the most part your resident’s value and appreciate all that you do.

Five years ago we were introduced to a client who was continually running a deficit in their budget and although over 25 years old they had a reserve fund of less than $75,000. We took the approach of looking at the building as a whole and carried out a full analysis of each component of the building and developed a plan in each area to get them back on track. Today they have over $300,000 in their reserve fund and a preventative maintenance plan in the building which maintains cleanliness, repair and maintenance. They have seen an increase in market value of over 30%.

We have a client whom we have managed from registration. They have a budget of just over $3,000,000 dollars with utilities absorbing approximately 40% of that number. With this in mind we jumped on looking for cost saving initiatives and finding ways to generate income to offset their budget. We introduced an energy audit in the 2nd year of operation which retrofitted or replaced equipment which reduced the utilities significantly. Without financing or borrowing from the reserve we were able to complete each initiative, realize the savings and have the project repay itself within 2.5 years.

A word from the wise...don’t budget based on emotion, rather base your decision on preventative maintenance and building fiscally sound budgets.

The little things make the difference so look and be open to opportunities. ■

Remain competitive with other condominiums by creating great curb appeal, the right first impression, ensuring proper maintenance, proper funding of your reserve and capital improvements.

All of these factors will increase your Fall 2010

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Condominium Short Cuts – Don’t Go There!

JOHN WARREN, C.A., ADAMS & MILES LLP. ondominium short cuts are those actions Directors take to limit fee increases without considering the long term consequences to the condominium and while these short term actions may provide a little relief to today’s owners it is always, always at the expense of future owners. The basic short cut is when Directors decide on the percentage budget increase before the budget is prepared – “We can only increase by inflation” – “We can’t afford an increase this year”. From this

C

dards have been set. We don’t have a problem with this equation in our personal lives. We understand why a Mercedes costs more than a Chevrolet, that top quality steak costs more than stewing beef, that you can buy furnaces, refrigerators and stoves in a range of qualities and prices and that there is a reason that quality home renovations cost more than those by fly by night operators who don’t do the work well and who don’t finish the job properly or at all. We also understand in our

leading term because its not about fees, its only about costs. Condominium fees are just each owner’s share of the costs to operate the condominium community and all the same quality, service and price considerations that we use to make purchases in our personal lives are relevant to the purchases made in a condominium. There is no landlord and no outrageous profit margin that can be reduced. The owners are the landlord and there is no profit margin at all.

‘In condominiums there is a disconnect as most owners don’t look at their condominium fees the same way that they look at their personal purchases.’ attitude all bad things flow; it always, always leads to deterioration in building standards, a process called deferred maintenance. Deferred maintenance happens because Directors have limited ability to reduce most costs other than in four ways: to reduce the number of hours people are employed; to reduce the wage levels paid to them; to reduce maintenance standards and to defer repair and maintenance projects as long as possible.

Before discussing short cuts, we should spend a few moments on price. Price is a function of quality and service and the “lowest price” can only be determined after quality and service stan12

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personal lives that price can usefully be the prime determinant when buying such things as sugar, salt and household supplies where there is not a lot of difference in the products available and the lowest price is the way to go. In our personal lives we easily differentiate those purchases where quality is needed and worth paying for and those purchases where price should be the prime consideration.

In condominiums there is a disconnect as most owners don’t look at their condominium fees the same way that they look at their personal purchases.

Contributing to the confusion is the term itself; condominium fees is a mis-

There are only 5 cost groups in Condominiums; reserve funds, utilities, administration, people costs and repairs and maintenance. The reserve fund has to be funded in accordance with the reserve fund study. Utilities are a function of price and consumption and Directors can only influence price through fixed price contracts and can influence consumption only in the common areas by spending money on energy efficiency measures. The rest of the consumption is beyond the control of the Board. There are mandated standards in the common areas and residents use water, turn lights on and off and set their heat and air conditioning levels to suit their personal needs.

Administration costs are small and some, like insurance, are mandatory.

There is no potential for significant savings in these three areas and for the typical condominium these, and other relatively fixed costs, can total up to 70% or 75% of total costs. Thus, people costs and repair and maintenance costs are the only areas where Directors can substantially reduce costs and this is where most short cuts are taken.

that cost more now but which last longer. For instance, looks aside, it is not a good decision to continue making asphalt repairs of $10,000 a year when repaving, which will last 15 or 20 years, costs $100,000. Not keeping the windows clean, the landscaping neat; sidewalks in good repair and not replacing carpets until they are threadbare, besides being potentially dangerous,

penalizes owners who wish to sell their units as poor conditions around the building and in the common areas reduces curb appeal.

A common short cut is to reduce the budget for items not easily quantified.

For example, pin hole leaks in the copper plumbing pipes are common in older buildings and it is easy to reduce

People costs can be reduced in only two ways, reducing the number of hours or paying less for each hour. For instance, the board could decide to reduce security hours from 24/7 to 12/7 or 10/5; reduce cleaning from everyday to every other day or only wash windows every other year. Changes in service levels such as these, if significant, likely require a vote of owners and even where these reductions do not trigger a vote, owners are likely to resist because while they do not want to pay more they also do not want to get less. So the most common way to cut costs is to hire the lowest price service providers.

Unfortunately, personnel from the lowest price providers tend to turn over more quickly, not to show up for work more often, are not as well trained, make more mistakes and provide less service than more skilled personnel.

Experience has shown that more skilled people also tend to prevent problems from happening and are more likely to deal with problems before they become major, saving money in the long run.

Better suppliers will also have in place all the measures necessary to minimize liability to the corporation such as paying Workplace Safety Insurance premiums for their employees and training them in hazardous materials handling.

Repair and maintenance costs can only be reduced by making cheap repairs and then only when absolutely necessary. The result is that the condominium begins to look tired in a few years and there may be greater safety hazards as such things as carpets and sidewalks fall into disrepair. Further, cheap repairs have to be repeated more often and often cost more in total than repairs Fall 2010

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the budget for this cost because it is not possible to know how many of these leaks will occur each year. This, unfortunately, does not stop leaks from occurring, the problem generally only gets worse until the pipes are replaced and the result is a cost overrun. Cost overruns also happen when non contract costs for landscaping and snow removal, elevator and fire inspection repairs and the like are not adequately budgeted and ultimately result in deficits that have to be corrected by larger fee increases in the future.

Another common short cut is to put all contracts and repairs out to bid every time and to change suppliers when the current supplier’s price is even a little bit higher than the low bid. The problem is that this practice becomes known to condominium suppliers and the best suppliers become reluctant to quote.

Any new customer requires an investment of money and effort that is only recovered over time and if suppliers know that next year or on the next project they can lose out for as little as $50, they are not motivated to go the extra step in their day-to-day service, let alone in emergencies when a swift response can save many dollars. If a condominium has a good supplier that they are happy with, they should not make a change for small amounts.

Deferring maintenance and pursuing the lowest price without regard to quality is the road downhill. While it is tempting to do so because the degradation year over year is small - the building is almost as clean as last year, the landscaping is almost as nice, the security is almost as good, etc., after 10 or 15 years the compound effect is quite noticeable - the building becomes run down, it is not as nice a place to live in as it once was and market values suffer.

The standard of care contained in the Condominium Act implies that Directors have to do the best they can for all owners, present and future, and taking short cuts to benefit current owners does not, to my mind, meet that standard. ■

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What Does the Standard of Care Really Mean? – PART ONE

BY MICHAEL GWYNNE, B.A., M.B.A., C.G.A., LL.B., LL.M. (TAX) MILLER THOMSON LLP

One of the main questions that is commonly asked by both directors and officers who are new to a board and those who are incumbent directors and/or officers, is what is the standard of care they need to exercise as directors and/or officers? his article is the first of two articles. The purpose of this article is to provide the reader with an overview of that standard of care in accordance with section 37 of the Condominium Act, 1998, c. 19 (the “Act”) and the indemnification provided to directors or officers under section 38 of the Act. The second article will deal with the legal interpretation of the exercise of care, diligence and skill.

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Given space constraints, this article does not attempt to address the hierarchy of decision making, the reasonableness of by-laws or rules, or all of the

obligations of directors and/or officers as set out in the Act. However directors and officers should also, at a minimum, review these sections of the Act [section 7], by-laws [sections 21, 56, 57 and 59] and rules [sections 58 and 59].

Overview of section 37 and 38 of the Act

The standard of care and indemnification provisions are set out in s. 37 and s. 38 of the Act and provide as follows:

Standard of care 37. (1) Every director and every officer of a corporation in exercising the powers and discharging the duties of office shall, (a) act honestly and in good faith; and (b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

1998, c. 19, s. 37 (1).

Validity of acts (2) The acts of a director or officer are valid despite any defect that may afterwards be discovered in the person’s election, appointment or qualifications. 1998, c. 19, s. 37 (2).

Liability of directors (3) A director shall not be found

liable for a breach of a duty mentioned in subsection (1) if the breach arises as a result of the director’s relying in good faith upon,

(a) financial statements of the corporation that the auditor in a written report, an officer of the corporation or a manager under an agreement for the management of the property represents to the director as presenting fairly the financial position of the corporation in accordance with generally accepted accounting principles; or

(b) a report or opinion of a lawyer, public accountant, engineer, appraiser or other person whose profession lends credibility to the report or opinion. 1998, c. 19, s. 37 (3); 2004, c. 8, s. 47 (1).

Indemnification 38. (1) Subject to subsection (2), the by-laws of a corporation may provide that every director and every officer of the corporation and the person’s heirs, executors, administrators, estate trustees and other legal personal representatives may from time to time be indemnified and saved harmless by the corporation from and against, (a) any liability and all costs, charges and expenses that the Fall 2010

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director or officer sustains or incurs in respect of any action, suit or proceeding that is proposed or commenced against the person for or in respect of anything that the person has done, omitted to do or permitted in respect of the execution of the duties of office; and

(b) all other costs, charges and expenses that the person sustains or incurs in respect of the affairs of the corporation.

1998, c. 19, s. 38 (1).

Not for breach of duty (2) No director or officer of a corporation shall be indemnified by the corporation in respect of any liability, costs, charges or expenses that the person sustains or incurs in or about an action, suit or other proceeding as a result of which the person is adjudged to be in breach of the duty to act honestly and in good faith. 1998, c. 19, s. 38 (2).

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So What Does This All Mean?

There are two statutory duties set out in section 37 of the Act. The first is the duty of honesty and good faith [section 37(1)(a)] and the second is the duty of care, diligence and skill [section 37(1)(b)].

In simple terms the standard of care under the Act requires that every director and every officer of a corporation in exercising the powers and discharging the duties of his/her office, shall act honestly and in good faith and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. (It should also be remembered that there is a third statutory duty to disclose a conflict of interest [sections 40 and 41] and other obligations set out in the Act which affect directors and officers).

Directors and officers are reminded that, subject to the indemnification provisions [section 38] and insurance pro-

tection, they are subject to varied and numerous duties and obligations. These include, but are not limited to, disclosure of conflict of interest in a material contract or transaction [sections 40 and 41], enforcement duties, compliance with a Directors’ Code of Ethics, other statutory duties under the Employment Standards Act, Occupational Health and Safety Act, Environmental Protection Act, Waste Management Act, Income Tax Act, Criminal Code, and Human Rights Code, among others, as well common law duties.

Directors and officers are further reminded that non-compliance with these other statutory requirements can result in personal liability of directors and officers as can non-compliance with common law duties relating to negligence, libel and slander, and breach of contract, among others.

So far, this all sounds pretty onerous for directors and officers, especially for

those directors and officers not yet savvy in condominium operations.

Fortunately for directors, section 37(3) of the Act (detailed above), provides directors with protection from liability from the standard of care except in those circumstances where they are in breach of the duty to act honestly and in good faith.

In short, a director will not be liable if the breach arises as a result of the directors relying in good faith upon financial statements of the corporation that an auditor in a written report, an officer of the corporation or a manager under an agreement for the management of the property represents to the director as presenting fairly the financial position of the corporation in accordance with generally accepted accounting principles. Or relying in good faith upon a report or opinion of a lawyer, public accountant, engineer, appraiser or other person whose profession lends credibility to the report or opinion.

In Summary Directors and officers are subject to a statutory standard of care to act honestly and in good faith, and to exercise the care, diligence and skill that a reasonably prudent person would in similar circumstances. Protection is given to directors and officers, if they relied in good faith on a written auditor’s report,

an opinion of a lawyer, public accountant, engineer, appraiser or other person whose profession lends credibility to the report or opinion.

The bottom line is this; if any director or officer is unsure about his/her duty and/or obligations, consult and listen to your experts! ■

This means that directors must seek the appropriate professional advice for the issues being considered. Relying on management for answers, which are outside management’s scope and expertise will not meet the standard of care.

Directors and officers should note that section 37(3) of the Act provides some protection for directors from liability but no such protection is given to persons acting solely in their capacity as an officer. Accordingly, it is recommended that officers ensure their decisions are approved by a resolution of the board of directors. As well, both directors and officers should ensure that they are protected by directors’ and officers’ errors and omissions insurance and an indemnification by-law provision [pursuant to section 38(1)].

Most importantly, directors and officers should note that, as indicated above, no director or officer of a corporation shall be indemnified by the corporation if the person is adjudged to be in breach of the duty to act honestly and in good faith [section 38(2)].

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THE BOARD OF DIRECTORS:

It’s Just a Few Hours Per Week, Right?

BY BRIAN HORLICK, B.COMM., B.CL., LL.B., ACCI HORLICK LEVITT DI LELLA LLP ne of the most important roles in the functioning of a condominium is that of a director on the board of directors. The Condominium Act, 1998 (the “Act”) makes the board of directors responsible for managing the affairs of the corporation.

This article will help shed some light on the ins and outs of being a director, and on what the board of directors can and cannot do.

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When is a Director Not a Director?

Many new directors agree to be elected or appointed to the board with the understanding that the time commitment involved in being a director is no more than “a few hours per week”.

Unfortunately for those directors, this is not always the case.

However, even though being a director of a condominium corporation can sometimes feel like a full-time job, it is not. Directors, and unit owners, must understand that when a director is not at a board meeting or meeting of owners, he or she is just another unit owner or resident. Specifically, section 32 of the Act states that the board of a corporation shall not transact any business of the corporation except at a meeting of directors. It is an unfortunate truth that many unit owners are seemingly unable to appreciate this distinction, and will ask questions – or make demands – of 18

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directors in the lobby or elevator or via phone or email.

Similarly, many individual directors seem unable to understand that they may not manage the business of the corporation between board meetings.

This means that, unless the board has specifically discussed and authorized an individual director to act on behalf of the corporation in a specific matter (such as instructing management or signing cheques), no director should purport to be representing the corporation on any matter.

What Must the Board Do?

The Act sets out several responsibilities for the board and for individual directors.

These responsibilities include: • Managing the affairs of the corporation (subsection 27(1));

• Transacting business of the corporation at meetings of directors at which a quorum is present (section 32);

• If a vacancy arises in the board and there are not enough directors remaining in office to constitute a quorum, calling and holding a meeting of owners to fill all vacancies in the board within 30 days of losing the quorum (subsection 34(4));

• Acting honestly and in good faith and exercising the care, diligence and skill that a reasonably prudent person would exercise in compara-

ble circumstances in exercising the powers and discharging the duties of office (subsection 37(1)); and

• Disclosing to the corporation, in writing, the nature and extent of any material interest in a material contract or transaction to which the corporation is a party or a proposed material contract or transaction to which the corporation will be a party that a director may have (subsection 40(1)).

It should be noted that the obligation to act honestly and in good faith, in a business corporations context, has been taken to include the obligation to keep certain information confidential.

Directors should also be guided by the provisions of section 55 of the Act, which, among other things, specifies which records of the corporation may and may not be examined by a unit owner.

What Mustn’t the Board Do?

The Act also sets out a number of limitations on the powers of the board and the directors. Among other things, the board and the directors may not: • Conduct business except at a meeting of directors at which a quorum of the board is present (section 32);

• Subject to certain exceptions, participate in any discussion or vote at a meeting of directors with respect to a material contract or transaction or proposed material contract or

transaction in which the director has a material interest and to which the corporation is or will be a party (subsection 40(6));

• Make by-laws that are unreasonable or that are inconsistent with the Act or the declaration of the corporation (subsection 56(6));

• Make rules that are unreasonable or that are inconsistent with the Act or the declaration or by-laws of the corporation (subsection 58(2)); or

• Act in a manner that does not comply with the Act or the corporation’s declaration, by-laws or rules (subsection 119(1)).

It should be noted that subsection 119(1) places the same obligation to comply on the directors as on the owners, and an owner has the same right under subsection 134(1) as the corporation to bring an application before the court for an order requiring the board to comply with the Act, the declaration, the by-laws and/or the rules.

What May the Board Do?

In addition to the obligations and prohibitions set out above, there are a significant number of discretionary powers which the Act makes available to the board of directors. These powers include:

• Making certain agreements relating to telecommunications systems (subsection 22(2));

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• Calling a meeting of owners for the transaction of any business (subsection 45(4));

• Making, amending or repealing bylaws (subsection 56(1));

• Making, amending or repealing rules (subsection 58(1)); and

• Entering into an agreement for the provision of electricity to the units using smart meters or a smart submetering system (section 53.17 of the Electricity Act).

The courts have also commented on the powers of the board, and have provided further guidance with respect to those powers. Among other things, the court has held that the board of directors is entitled to interpret the provisions of the declaration and by-laws as it sees fit, and that the court should not interfere with such interpretation unless it is unreasonable (London Condominium Corp. No. 13 v. Awaraji, Ontario Court of Appeal, 2007). This power is

particularly important in the context of an application against an owner for a compliance order, where the owner may argue that the impugned provision of the declaration or by-laws should be interpreted in a particular way.

What Should the Board Do?

This last question is the most difficult to answer. For one, while the Act (and other sources) provide a list of obligations, restrictions and discretionary powers for directors, the nature of the Act (as is the case with most legislation) is such that it does not provide much in the way of guidance to directors. As well, every condominium corporation is different, and so a set of specific recommendations that may be appropriate for one board of directors may not be appropriate for another.

However, there are some general guidelines that most, if not all, directors can benefit from following:

• Be transparent. One of the most frequently-voiced complaints of unit owners is that they feel that the board is either not keeping them informed of what is going on, or, worse, is deliberately concealing information from them.

While the management of the corporation’s business is the board’s responsibility, and certain information should not be disclosed or disseminated to the owners, there is generally little harm for a board in making regular efforts to keep unit owners up-to-date with respect to corporation issues and events. In fact, by keeping unit owners so informed, the risk of misinformation by a group of unhappy owners may be kept to a minimum. These efforts can take the form of regular information meetings or a newsletter. By keeping unit owners informed, it is also easier to...

• Engage the owners. Many directors

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have expertise in a particular field, which expertise is often related to the director’s current or former profession. This expertise, depending on circumstances, can be very valuable to a condominium corporation. However, it is unreasonable to expect a board of directors to have, among its members, expertise in all areas of relevance to a condominium corporation. By engaging the owners and creating owner committees which report to the board, the board, as well as the corporation as a whole, can benefit from expertise and enthusiasm that owners may have in areas like interior design, landscape design, finance or social planning. However, despite this potential resource, directors must bear in mind that, in certain situations, it is more appropriate to...

• Rely on the experts. Depending on the situation, the “expert” may be the corporation’s on-site property manager, auditor, solicitor or other

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professional. Regardless, these are all resources that a board should make use of in appropriate circumstances. For one, the corporation will be better served by having certain matters handled by persons who are professionally qualified to handle those matters. For another, subsection 37(3) of the Act absolves individual directors from liability for a breach of their standard of care if that breach arose as a result of those directors relying in good faith on, among other things, a report or opinion from a professional in the subject area of the report or opinion.

Directors who are concerned about liability should also keep in mind...

• If you have an opinion, voice it. Too often, against their better judgment, directors will allow themselves to be swayed into silently going along with the majority at a board meeting. This is not to say that directors should be needlessly confrontational, but rather that directors should

keep in mind that they were elected or appointed as individuals and that they are entitled to express individual opinions. Healthy discussion is never a bad thing. However, if a director finds himself or herself involved in too many unhealthy discussions, such that he or she begins to dread board meetings...

• Remember that you’re a volunteer.

At the end of the day, serving on the board of directors is a volunteer position, and should be kept in perspective as such. Always remember to …

• Separate managing from carrying out the board’s instructions.

Although important decisions must be made by the board, it is the function of the management company to carry out the board’s instructions and to deal with day to day matters.

Let the manager do his job. ■

How to Pay for Retrofits

BY DAVID M. MORRISON, BA, LL.B MORRISON FINANCIAL SERVICES LTD.

hey say that death and taxes are inevitable. Another certainty is that all condominium properties will eventually require major repairs to, or replacement of , their common elements. How does the condominium corporation, whose constituency is constantly changing as people buy and sell units, prepare for this expense? What are the options when there is not enough money available?

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The Limits and Imperfections of the Reserve Fund

The people responsible for the legislation that is the foundation for condominium as a mode of real estate ownership in Ontario have understood that this was an issue from the start, although it has probably never been taken seriously enough. The law has always required corporations to maintain a reserve fund, to be used solely for major repairs and replacement of the common elements.

A portion of the monthly common expense fees are contributed to the reserve fund. The directors of each corporation are charged with the responsi-

bility of determining how much is required from time to time. Subject to historic statutory minimums of, originally, five percent of the corporation’s operating budget, and later, ten percent, the amount has to be “reasonable”.

To determine what is reasonable, it was expected that the directors would retain experts to prepare professional reserve fund studies, and historically many did so, but many did not. Now the requirement for a reserve fund study, updated on a periodic basis, is mandatory, although the legislation does not address what happens where a corporation fails to comply, either by not having a study done, by not updating it periodically, or by not soliciting the amount of contributions recommended therein.

The directors do not require the approval of the unit-owners to complete and pay for major repairs to, or replacement of, the common elements out of the reserve fund. Indeed, they are obliged to undertake such projects when necessary, and that is the purpose of the fund.

When a proposed retrofit goes beyond repair or replacement, however, and is considered an addition, alteration or improvement to the property, the reserve fund is not available, and the directors must obtain the approval of the unitowners in accordance with the Condominium Act before undertaking

the project. Where there is any doubt, the corporations’ counsel is the best person to advise whether a project under consideration falls into this category.

Counsel is also the best person to advise on the procedure for obtaining the unitowners’ approval where necessary.

Many condominium corporations have encountered the situation where, because a proposed project would constitute an addition, alteration or improvement to the common elements, the reserve fund is not legally available.

An even more common situation is where the reserve fund is legally available (for a repair or replacement) but there is simply not enough money saved. This can occur because the fiscal planning process has failed. After all, it is not an exact science, and it is extremely susceptible to political influence from unit-owners who wish to keep the monthly contributions as low as possible.

A shortfall can also occur because the expense relates to a latent defect in the construction of the building that was unknown and could not have been anticipated until it declared itself in some way. Sometimes there may be enough money in the reserve fund, but the use of all or a substantial portion of it for the particular project would leave the fund short for future needs. In all of these situations, corporations have had to consider how to pay for the necessary work.

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The Typical Thought Process

Condominium corporations encountering these types of situations invariably go through the same thought process.

The first inclination is to delay the work until sufficient funds to pay for it can be accumulated. If this is an option, fine.

But, more often than not, it is the type of thinking that got the corporation into the predicament in the first place.

Buildings tend to do better with constant maintenance to the infrastructure.

Postpone work for too long and problems tend to become deeper and the associated costs of repair larger. Along with that, it becomes much more difficult to project fiscal needs since, in the extreme case, the corporation will be operating in emergency mode.

Closely allied to delaying the project is staging it out. In other words, do part of the work now, part later, spreading it over, say, three years. Again, if this is an option, fine. The problem, however, is that if you are asking the contractor to mobilize three times, as opposed to once, the cost will invariably go up. In addition, the unit-owners may have to confront the idea of living in a construction zone for three years. Generally speaking, it is cheaper, and everyone is happier, when the contractor is able to get in and get out, completing the work as quickly and efficiently as possible.

For this discussion, then, we will assume that any further postponement, or staging, of the work is simply not an option. Otherwise, we assume away the problem.

Another option, again part of virtually every corporation’s thought process when dealing with this sort of issue, is to levy what is commonly known as a “special assessment”. Think of it as sending a bill to each and every unitowner for his or her proportionate share of the cost. A virtual swear word in the industry, for obvious reasons, the term “special assessment “ is in fact nowhere used or defined in the Condominium Act. It is clear, however, that the board of directors has the authority, where deemed necessary, to impose one.

Sometimes the blow can be softened by spreading the requirement-to -pay over several months.

While certainly no way to win friends and influence people, a special assessment constitutes a quick and efficient way for the corporation and the unitowners to address a large unplanned cost and get it behind them. In many cases, it will be determined to be the best option. But consider this: what if a large number of unit-owners simply cannot afford the assessment. So, rather than default, they put their units up for sale. Or, alternatively, they default in

payment, and the corporation is forced to lien the subject units and, again, they end up for sale. The law of supply and demand dictates that, if too many units are for sale at one time, the price drops.

This in turn, hurts all of the unit owners, including those who can afford to honour their share of the special assessment. Generally, therefore, it is in everyone’s best interest for the board to seek out a solution that accommodates the largest number of unit owners. It is at this point that, in many cases, consideration will be given to what is usually, and probably, the last resort – borrowing.

Borrowing

There is nothing in the Condominium Act that prohibits borrowing by a condominium corporation, and indeed, there are hundreds of corporations that have had to resort to this option in order to deal with a large unplanned expense.

Notwithstanding that, condominium corporations should, because of their assessment powers, be regarded generally as good credits, the major banks in Canada, with limited exceptions, have not really warmed to the idea of lending to them. Where banks have shown some willingness to lend, conditions are often imposed that can be difficult for a condominium corporation to meet.

There are logical reasons for this, but

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an explanation of them is beyond the scope of the article. Suffice to say that lending to condominium corporations in Canada has thus far been dominated by niche finance companies that have created specific products for this purpose.

In order to borrow, the corporation must have passed an appropriate borrowing bylaw. If such a bylaw is not already in place, the corporation’s counsel can advise on the procedure for implementing one. After that, if you are dealing with a lender experienced in the area, the process is quite simple. The lender is likely to ask a few general questions, such as how much is required and for what is the money being used; how many units comprise the condominium and what is the average value of a unit; how quickly does the corporation wish to repay the loan. Generally, however, credit approval will come relatively quickly and easily, with the loan being refused in only rare situations.

At the time of making the loan request, the corporation will have to give some thought to how quickly it wishes to repay the loan, otherwise known as the amortization period. Repayment over five years will obviously require much larger monthly payments than repayment over ten years or more, but of

course in the latter case the payments will go on much longer resulting in more interest costs. In most situations, the corporation will opt for an amortization period that results in a monthly payment that the widest group of unitowners can afford, but without dragging the loan obligation on longer than is reasonably necessary. It is possible, albeit not necessarily advisable or encouraged, to have two or more loans going, each amortizing over different terms. Unit-owners can then elect to participate in the loan that best suits their level of monthly affordability.

The documentation for a loan to a condominium corporation will be comprised of little more than a Loan Agreement and what is known as a General Security Agreement. The latter grants a charge over the corporation’s assets in support of repayment of the loan. Since most condominium corporations do not have any assets, what is really being charged is the corporation’s cash flow, represented by the monthly contributions of the unit-owners. This makes sense because, in the end, what the lender is relying on primarily is the power and the obligation of the corporation to require each unitowner to pay his or her proportionate share of all common expenses, includ-

ing the loan payment, and to enforce payment, using its super-priority lien rights in the event of any unit-owner defaults.

The act of borrowing by a condominium corporation is an act of the corporation, not the unit –owners. Thus, the documents will be executed by those who are empowered from time to time to execute documents on behalf of the corporation, and the lender will invariably require a written opinion from the corporation’s counsel that everything has been properly authorized and approved. The unit-owners are not required to sign the documents or guarantee the loan individually, and no mortgage is registered against anyone’s unit. Just as in the case of all other common expenses, however, each unit –owner will through the corporation, be responsible for his or her proportionate share of the loan obligation.

Borrowing should never be regarded as a substitute for prudent fiscal planning.

It can, however be a solution when there is no other workable answer to a large unplanned expenditure. ■

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New Tarion Warranty Resolution Process for Common Elements

BY SALLY THOMPSON P.ENG., HALSALL ASSOCIATES LIMITED AND KEVIN BRODIE, TARION WARRANTY CORPORATION he Ontario New Home Warranties Plan Act was revised effective July 1, 2010 to streamline and formalize customer service standards for the condominium warranty claim process. Prior to this date there was no formal process or timeframe for resolving a common element warranty claim. As a result, some claims took years to resolve, becoming worse over time. This increased both the builder’s repair costs as well as the costs Tarion incurred to inspect the builder’s work.

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In 2003 a standard process was introduced for making warranty claims on freehold homes and condominium units, along with a timeline that builders must follow when making repairs. It has helped builders and Tarion manage expectations and increase satisfaction among new home buyers. Introducing a similar process for common element claims will now benefit condominium corporations as well.

A number of key stakeholders provided input, including: condominium corporations, new home builders, the Canadian Condominium Institute, the Association of Condominium Managers of Ontario and members of the public. This article summarizes the new common element claims process and discusses the likely impact on condominiums.

Figures 1 and 2 summarize the new resolution process. This process applies to all condominium corporations registered on or after July 1, 2010.

The common elements claims process includes the steps a condominium corporation must take to submit a warranty claim; steps builders must take to perform work or otherwise resolve warranted items; and, if necessary, steps Tarion will take to become involved.

The process also sets out clear timelines to ensure claims are addressed promptly, and to help minimize the time and effort required by builders and condominium corporations when dealing with common element claims. It is important to note that only the condominium corporation can make a warranty claim for common elements – not unit holders.

Step 1 – Make a Common Elements Warranty Claim The condominium corporation can make warranty claims for the first year warranty by midnight on the anniversary of the registration date of the condominium project. To do so, a First Year Common Elements Form or a Performance Audit together with a Performance Audit Tracking Summary must be submitted to Tarion. This tracking summary, a new spreadsheet developed by Tarion, must reference all

items included in the claim form or audit document.

To make a second year warranty claim, the condominium corporation must submit a Second Year Common Elements Form and another Performance Audit Tracking Summary for the second year items. This must be submitted by midnight on the second anniversary of the registration date of the condominium project.

Vacant land condominiums and common element condominiums do not have common elements warranty coverage.

Step 2 – Builder Initial Repair Period

The builder has an initial repair period of up to 18 months from the first anniversary of the condominium registration date to repair or resolve all warrantable items listed on the First Year Common Elements Form or Performance Audit. During this repair period, both the condominium corporation and the builder must provide repair/resolution updates using the Performance Audit Tracking Summary every 90 days. For the second year claim, the builder has a period of 6 months from the second anniversary of the registration date. Tarion must be updated regarding progress 90 days into this repair period as well. It should be noted that the end of the 6-month

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period for the second year claim and the end of the 18-month period for the first year claim are the same date.

The condominium must provide reasonable access to the site to permit the

builder to complete the repairs.

Step 3 – Condominium Corporation Requests Conciliation If the builder does not repair or resolve

all warrantable items listed on either a first or second year claim form within the initial repair period to the satisfaction of the condominium corporation, the condominium corporation may request conciliation from Tarion by

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completing the Common Element Request for Conciliation Claim Form.

Conciliation is a process whereby Tarion determines whether an item listed on the claim form is warrantable, and whether the builder is required to perform work or pay compensation.

The Request for Conciliation Form must be submitted within 60 days of the end of the initial builder repair period, otherwise, the condominium corporation will be deemed to have withdrawn all claims for the items listed on the form. A separate conciliation request is required for first and second year items; these cannot be combined into one request. However, if two conciliations are requested within a short time frame, Tarion will attempt to schedule one time to look at all items.

request documentation from both the builder and the condominium corporation and the documentation must be provided as soon as possible in order to keep the process on track. Following the conciliation, Tarion will issue a Warranty Assessment Report, a document which will identify items covered by warranty.

Step 4 – Pre-Conciliation Repair Period To avoid a conciliation inspection, the builder has 90 days after the date the condominium corporation requests the conciliation to repair or resolve all the warrantable claims. At the end of the pre-conciliation repair period, the condominium corporation should notify Tarion if any of the items are resolved to their satisfaction so these items can be withdrawn from the conciliation process. The Performance Audit Tracking Summary will assist in tracking the resolution of defects.

As long as it is determined that at least one item in the Warranty Assessment Report is warranted, the conciliation will be considered chargeable, will be documented on the builder’s record of conciliations, and posted on the Tarion web site. In addition, the condominium corporation’s conciliation fee will be reimbursed.

Step 5 – Conciliation Unless the condominium corporation cancels the conciliation, Tarion will conduct a conciliation inspection to determine whether the items listed on the Request for Conciliation Claim Form are warrantable. Tarion may

The builder and the condominium corporation must both pay a conciliation fee: $1,000 for the condominium corporation and $3,000 for the builder.

If none of the items are found to be warranted, then Tarion will retain the condominium corporation’s conciliation fee, reimburse the builder’s fee, and issue a Decision Letter to the con-

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dominium corporation. This will outline the condominium corporation’s right to appeal Tarion’s decision to the Licence Appeal Tribunal.

Step 6 – Post-Conciliation Repair Period

The new customer service standard for the common elements process provides the opportunity for builders and condominium corporations to work together within a defined time period to resolve issues.

If the Warranty Assessment Report finds any item to be warranted, the builder will be given one final 90 day period in which to repair or resolve all warranted items. As with the other repair periods the condominium must provide reasonable access to the site to permit the builder to complete the repairs.

ranted items. Tarion will then either make a payment directly to the condominium corporation out of the guarantee fund, or arrange for the repairs to be made and charge the builder for the cost plus an administration fee of 15% and all applicable taxes.

Step 7 – Tarion Settles the Claim

Exceptions

If the builder has not repaired or resolved all warranted items within the 90 day post-conciliation repair period, Tarion will settle the remaining items directly with the condominium corporation. This may involve a claim inspection to determine the status of the war-

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All time periods for submission of claims that end on a weekend or holiday are extended to the end of the next business day that is not a holiday. If any portion of a time period fixed in the claim process occurs during the holiday period that lands between

December 24th to January 1st (inclusive) then the period is extended by nine days, as are all subsequent consecutive time periods.

Exemptions exist for certain situations and the claims process is modified to take into account special circumstances (e.g., emergencies, seasonal items, and industry/regional extraordinary situations). Tarion may also in its sole discretion, extend or shorten any time set out in the claims process if it determines that a builder is unable or unwilling to repair or resolve the claim items covered by a warranty, or where Tarion determines that the builder is not acting

reasonably to resolve the items listed on a warranty claim.

Analysis

The new customer service standard for the common elements process provides the opportunity for builders and condominium corporations to work together within a defined time period to resolve issues. Overall, this new process should be seen as a positive by condominium corporations because it should keep the warranty claim and resolution process to less than two and a half years from the first year performance audit submission, compared to the current industry experience where the resolution process can take much longer.

document to Tarion every 90 days. In order to complete these summaries, the builder and the condominium corporation will need to routinely communicate with one another so that the corporation is aware that repairs have been completed and had the opportunity to review or dispute the work.

Second, although it is important for managers and boards to manage all

dates, if the corporation finds itself running out of time to provide an update on repairs prior to conciliation, Tarion is prepared to work with the condominium corporation to assist â&#x20AC;&#x201C; provided the corporation alerts Tarion prior to the deadline. Adherence to the timelines within the process and maintaining open lines of communication among builders, condo corporations and Tarion will keep the process moving smoothly. â&#x2013;

Aligning the end dates of both the first and second year builder repair periods will significantly condense the second year resolution process in particular.

Prior to this new process being put in place, second year items were often left until after all first year items had been handled, which further extended the resolution process. Consultants and condominium corporations can help the process by organizing their second year claim such that any ties to first year claim items are clear; this will facilitate the builderâ&#x20AC;&#x2122;s repair processes.

The 18-month repair period is also beneficial because it provides a mandatory time frame for builders to address and remedy issues, potentially reducing the number of times the corporation must call to remind the builder to make repairs.

The 60 days following the end of the builder repair period should be used judiciously by the condominium corporation. If the condominium corporation misses this end date, they will be deemed as having withdrawn their claims and will have forfeited their warranty coverage. However, this is highly unlikely to happen for two reasons.

First, during the 18-month repair period, the condominium corporation and the builder must provide an updated Performance Audit Tracking Summary

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CONDO OF THE YEAR – 1st Quarter Finalist MTCC #1053, Palace Place

CCI Toronto is thrilled to announce that MTCC #1053, Palace Place, has been announced as the first quarter finalist of the annual Condo of the Year Award.

The following article was written as part of the corporation’s submission for entry to the contest. Our congratulations are extended to Palace Place.

Further details on this contest may be found on the CCI-T website at www.ccitoronto.org. The 2010 annual grand prize winner will be selected from amongst the four quarter finalists in the early fall of 2011 and will be announced at the CCI Toronto Annual General Meeting in November 2011.

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Palace Place shares the belief that as a community, we value economic, financial, social and environmental considerations that will maintain our home as among the most desirable places to live ~ Palace Place Vision Statement

ocated next to the spectacular Humber Bay Bridge, Palace Place is at the junction of the Humber River and Lake Ontario. Rising 47 floors above the shore, Palace Place has a population of about 1200 residents in 504 suites that range from 800 to 2,800 square feet.

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The spacious suites and upscale amenities of Palace Place offer our residents the comfort and services rivalling those provided by a five star hotel. From the 24 hour concierge in the elegant lobby, to valet service, six guest suites for visitors, and a convenience store open seven days a week, the accent is on quality and security — and above all, the comforts of home.

Completed in 1992, Palace Place has some of the most breathtaking views in Toronto. To the west is the curving shore of Lake Ontario and the Etobicoke Yacht Club, to the east, the beautiful Toronto skyline with the CN Tower.

Amenities Palace Place is at the front door of world class recreational trails that wind around the Humber Bay Shores and it is set amongst a magnificent nature preserve. Nestled within the family friendly parks of Humber Bay, you are just minutes away from the financial centre of Toronto. The nature trails and bike paths of Humber Bay Park wind through a wildflower meadow, a butterfly park and water inlets where swans nest and beavers build dams. Many of our residents are actively involved in groups that protect the butterflies, beautify the landscape and keep our waterfront clean.

Palace Place has a private shuttle bus that whisks our residents to Torontoâ&#x20AC;&#x2122;s city centre in only 15 minutes, making trips to downtown stress free.

Our shuttle also makes trips to several Shopping Malls and Grocery Stores. When you arrive home and pass through the lobby, you are greeted by the 24 hour concierge and the security staff. Valet service is available for your vehicle from 6 am to midnight.

On the panoramic 47th floor, there is a full range of luxurious facilities to entertain family and friends, including a piano lounge, a party room with a dance floor, a beautifully decorated private dining Room with a fully equipped kitchen that can seat 20 guests, a games room with billiard and ping pong tables, a large screen TV and a library. An outgrowth of the library is a vibrant book club that meets monthly for reviews and discussions. From the roof top, residents can enjoy panoramic views and watch the annual International Air Show and fireworks competition on Lake Ontario.

Recreational facilities at Palace Place include a state of the art fitness centre with a variety of cardio equipment and other commercial weight training apparatus. There is a swimming pool, a whirlpool, separate saunas and steam rooms, a squash court, two indoor driving range nets and putting floor for golf practice, a basketball net and an outdoor putting green.

Residents can also join a variety of fitness classes arranged by several personal trainers, which include yoga, pilates, stretching and dancing.

effective communication. We have just completed a comprehensive resident survey and 82.8 percent stated that they were satisfied with how they are kept up-to-date with developments and activities. Communications have evolved so that Palace Place has multiple processes such as quarterly Town Hall meetings where residents can dis-

On the five acres of richly landscaped grounds residents can enjoy quiet

cuss any questions or concerns with board members. Also, all board minutes and past annual general meetings (AGM) are posted on our website and archived for all owners to review at their leisure. Our in-house newsletter called The Wave is published quarterly with both hard moments on a Sundeck, share a picnic with family and friends in the sheltered BBQ area and meet your fellow residents on the garden patio casually or during one of the many organized social events.

An on-site Management Office and Concierge Service provide the convenience and personal attention of a full-service hotel, as well as unparalleled safety with 96 monitored cameras and 24 hour gated security.

Communication

There are many ingredients that contribute to a pleasant condominium lifestyle . . . good management, dedicated staff, enthusiastic board and committee members and most importantly,

copies and electronic versions. Owner satisfaction was one of the questions in our recent survey and ninety percent of respondents indicated that they were satisfied with their home at Palace Place.

We have no doubt that our enhanced communication processes have been a major contributor to this positive response.

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Use of Technology Our newly revamped website has become a main source of information for our residents. Announcements are posted daily so that members will have instant access to important information.

An online Suggestion Box allows residents to communicate concerns and questions to board and committee members. An album consisting of photos and videos of past social events is updated frequently. Need a specific form or document? They are all here in our website so there is no need to visit our management office, saving time for both residents and staff.

Electronic communication at Palace Place has increased dramatically so that now the majority of our residents have agreed to receive communications this way, saving our corporation money with reduced postage, paper, staff cost and saving a few trees along the way.

For example, the cost of distributing our annual general meeting (AGM) has been estimated to be about $10 per suite. With 504 suites in Palace Place, that amounted to a cost of over $5,000 each year. With about sixty percent of our owners now agreeing to receive these documents electronically, we have generated a savings of approximately $3,000 per year.

tion of renewable energy with a solar thermal unit. There is a building wide conversion from incandescent to CFL/LED lighting. These initiatives will position the building well in the City of Toronto’s greenhouse gas emissions reduction program. The importance of these initiatives has been rec-

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The Social Committee uses all of the above mentioned means of communication to provide a wide variety of opportunities for our residents to explore their interests, meet their neighbours and have fun through a variety of venues. Residents meet regularly for events such as Oscar Night, a weekly coffee hour and a monthly happy hour.

Sporting events such as the Olympics, football and hockey are shared on our large screen TV on the 47th floor. We continue to expand the

ognized by the City. The City’s Better Building Partnership (BBP) is providing significant grants to support implementation of the most recent energy efficiency initiatives.

scope of the events to use the social committee as a means of bringing our community closer together.

Our Staff

Management of Energy Management of energy is a priority at Palace Place. In 1998, for example, the domestic hot water system and other common elements were converted to natural gas from electricity in order to realize cost savings. In 2008 an Energy Committee was created. Its mandate is to recommend to our Board of Directors energy efficiency initiatives on both the demand and supply side. A soon to be complete phase of the buildings efficiency initiatives will result in further significant reduction in the use of electricity by the introduc-

enjoyable place to live.

Committees

Communities consist of people with a variety of interests and needs. We, at Palace Place have the following committees: Pet Owner, Safety and Security, Energy, Communication, Social, Property Standards, Recreational Facilities and Library.

These committees are driven by dedicated, committed residents who give up their time and energy to ensure that our community is a beautiful, safe and

A dedicated group of 46 staff members, some who have been employees of Palace Place since its inception, care for our building and residents. It is not surprising that members of the Palace Place team might remember residents as friends and family. This makes it possible for residents and their guests to be welcomed home and promotes security.

Newcomers to Palace Place are welcomed with guided tours of the property by the Resident Services Manager, Julie Davey. As a member of “the Clefs D’or” she is not only able to provide services that make settling into a new

home and neighbourhood an easier transition, but also provides residents or their guests with hard to obtain tickets, and assists with the planning of special events, trips, or virtually any other service residents of Palace Place may need.

Waste Management Together, Palace Place has achieved what some thought was impossible. We have inspired a reduce, reuse, recycle culture, so much so that the Corporation routinely receives credits (rather than pays levies) from the City of Toronto.

Palace Place handled this problem like they have handled so many in the past.

A plan was communicated to the community, the plan was refined based on feedback received, and finally the plan was set in motion.

Renovation of the Move-In Room created a simple and spacious area where

residents could sort their garbage, recyclables and organics. Bins were installed for the collection of items such as batteries, light bulbs and electronics and a shelving unit was installed where residents could exchange gently used goods with others.

Together Palace Place residents and staff learned from one another, and became the best diverters of waste known to the City of Toronto. This is simply the most recent example of “the Palace Place solution”. Through contemplation, consultation and teamwork Palace Place has made a successful community, one that is prepared to face future challenges.

Enhancing Property Values With the rising cost of land, the five acre property of Palace place in a parklike setting would be difficult to replicate in a new development. But, new

condominium developments often attract more interest than a mature condominium by potential buyers because they are well promoted by the developer. To promote the amenities enjoyed at Palace Place and enhance the value of our property; we have commissioned a four minute promotional video and a property virtual tour, much like the marketing strategy used for new developments. Our video and virtual tour can be accessed from our website at www.palaceplace.org.

We believe that we are well on the way to achieving the goals stated in our vision statement. “As a community, we value economic, financial, social and environmental consideration that will maintain our home as among the most desirable places to live.” ■

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Mentally Incompetent Directors

BY RHONDA SHIRREFF AND ANDREW BOURNS HEENAN BLAIKIE LLP hat can you do if you manage or own a condominium and you suspect that one of the directors of the Condo Board is not capable of fulfilling his or her duties?

What options are available if you notice that a director appears to be increasingly confused by his or her obligations, or perhaps begins to miss Board meetings? The prospect of an incompetent or incapable Board member should be a matter of real concern. As part of an ongoing series, this article will examine the basic principles concerning the law of incompetent directors.

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The Condominium Act provides some relief in this regard. In particular, the Condominium Act establishes that a person immediately ceases to be a director if the person becomes “mentally incompetent.” Unfortunately, the Act does not include a definition of this term. Nor is there any case law that clarifies what the term “mentally incompetent” actually means.

There may be practical reasons why there are no cases concerning the removal of a mentally incompetent director from a Condo Board. Perhaps most significantly, the legal costs associated with litigating the issue of a director’s mental competence would likely be prohibitive. In many cases, directors alleged to be mentally incompetent may not possess the financial resources to fight the issue in court.

Similarly, as property managers and condo owners often know too well, the resources of a condo corporation are scarce. It is expensive enough to man-

age a condo without the added cost of fighting over a director’s mental health.

Given the lack of guidance in condominium law about the circumstances in which a director may be removed for being mentally incompetent, it may be useful to look to other areas of the law with similar provisions for the removal of incapable or incompetent directors.

Statutes governing business corporations often contain similar provisions to the Condominium Act with respect to the competency of directors. For example, the Canadian Business Corporations Act provides for the removal of a director who is of

“unsound mind.”

Similarly, the Ontario Business Corporations Act provides that directors be removed if they become incapable of managing their own property. Unfortunately, there are no cases interpreting these provisions.

We can make some headway towards understanding how the concept of mental competence in the Condominium Act might be interpreted by looking to the law of wills and estates. In Ontario, the legislation governing the granting of the power of attorney is governed by the Substitute Decisions Act. Under Substitute Decisions Act, a person is considered incapable of managing his Fall 2010

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or her own affairs if he or she is not able to understand information that is relevant to making a decision in the management of his or her property. The Substitute Decisions Act also establishes that a person is incapable if he or she cannot appreciate the consequences of making a decision. According to the standard set out in the Substitute Decisions Act, a person who cannot manage their daily affairs, who cannot pay their bills, or who cannot appreciate the significance of their financial decisions is incapable and should not be entrusted to manage their own affairs.

There does not appear to be any cases that reflect on the relationship between the requirements under the Substitute Decisions Act and the capacity of a person to run a corporation. It would seem reasonable, however, that an individual would not need to decline to the level of incapacity required under the

Substitute Decisions Act before he or she would be disqualified from acting as a director on a Condo Board.

Given that directors are required to make decisions concerning not only their personal property and finances, but also the real property of other owners and the finances of the condo corporation, it is probably reasonable to expect the standard of “mental competency” required of directors under the Condominium Act to be considerably higher than the standard applied to determine whether individuals are incapable of managing their own affairs under the Substitute Decisions Act.

Despite the law’s uncertainty, a condominium resident who is convinced that a director is incompetent should take the appropriate steps to remove that director.

Until the end of 2009, the Condomin-

Simerra Property Management Inc. is pleased to announce that Scott Newhouse has joined our team as Regional Manager of Operations reporting directlytoJanice Pynn, ExecutiveVice President. Scott will be jointly overseeing the operations and delivery of services. Scott has a degree in Business Management and Marketing from the University of Toronto and has been working in the property management industry for almost 10 years. He achieved his RCM designation in 2004. He has managed a portfolio of condominiums most recently totalling 6,000 units in 68 properties; these include commercial, industrial and residential developments.

Scott has served as a Director of a condominium and is an active member of CCI,ACMO and CIM and is also associated with GTAA. To discuss services available at Simerra contact Scott at (416) 416-847-1358 | Email: snewhouse@simerra.com

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ium Act provided that a person immediately ceased to be a director of the condominium corporation if that person became “mentally incompetent.” The Act did not provide a definition of this term. Nor was there any case law that clarified what the term “mentally incompetent” actually meant. Fortunately, recent amendments to the Condominium Act have brought much needed clarity to this area of the law.

In particular, the Act was amended at the end of 2009 so that the phrase “mentally incompetent” actually disappeared from the Act altogether. The Act now provides that a director of a condominium corporation ceases to be a director if that person “becomes incapable of managing property within the meaning of the Substitute Decisions Act.”

The low standard of mental competency required of directors may concern some readers. It would probably make

many owners and managers of condominiums uneasy to learn that a director must decline to the level of near complete incapacity to be disqualified from acting on a condo board. Given that directors make important decisions that concern the real property of other owners, as well as the finances of the condo corporation, it is probably reasonable to expect that a higher standard of mental competency should be required.

Nevertheless, a person must now be judged incapable of managing their own property before they are deemed too “incompetent” to act as a director on a condo board.

For those who are convinced that a director on the condo board has become incapable of managing property, the next step is to seek the removal of that director. In some cases, it may be sufficient for a concerned individual to speak privately with the director they are concerned about. In most cases, however, it is probably more likely that the incapable director will put up a fight. When this happens, the next step for a concerned owner or manager of a condominium is to bring an application for the removal of the director to the Superior Court of Ontario.

Unfortunately, this course of action is apt to be very expensive, as well as time

consuming. In order to remove a director who has become incapable of managing their own affairs, a concerned individual must hire a lawyer to collect evidence, prepare court documents and finally, present arguments to the court that a director should be removed. As anyone who has been involved in litigation can attest, this process is both financially and emotionally draining.

In many cases, the condominium corporation may not have enough money to pursue the removal of a director in court. As well, most people are understandably reluctant to confront their neighbours in open court. In many cases, dragging a building-mate through the litigation process may only worsen existing tensions. In light of the difficulties associated with removing a director in the court, it may be more desirable to unseat an incompetent individual by using the ordinary procedure for removing directors that is set out in the Condominium Act.

Under the Act, a director may be removed before the expiration of the director’s term of office by a vote of the owners. In particular, a director may be removed where the owners of more than 50% of all of the units in the corporation vote in favour of removal.

Unfortunately, as owners and managers

of condominiums probably already know, obtaining the approval of more than 50% of all owners in an extremely difficult task. Indeed, obtaining this required level of support may be just as difficult as time consuming and frustrating as bringing an application in court. In most cases, readers would be well-advised to use their skills of persuasion and diplomacy to obtain the removal of an incapable director. If a private conversation with the director of concern does not achieve the desired result, it may be appropriate to address your concerns to that director’s partner or family members. While the topic of a director’s mental competency is a sensitive subject, a discussion with the director’s family may be usefully employed as a method of last resort.

To summarize, following the recent amendments to the Condominium Act we now have more clarity about the level of incompetence required to remove a director. Unfortunately, however, this added clarity has only highlighted that the Act will usually be of little assistance to frustrated owners and managers who have decided it is time to remove an incompetent director. ■

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Condominiums Have Come of Age and need to flex their political muscle!

BY GORDON J. CHONG, DDS MTCC # 0620

ondominium issues—the concerns of condo owners—need to be on the radar of both municipal and provincial politicians.

The upcoming municipal elections provide a perfect platform for the condo sector to venture forth and advocate for and assert itself just as other special interest groups have increasingly done over the past decade. In addition, this municipal engagement could also serve as a dress rehearsal for the 2011 provincial election. After all, the Condominium Act is a provincial statute that has an impact on all aspects of condo living. It defines the governance, management and how reserve funds may be invested.

Not to be outdone, private interests saw an opportunity. Private developers began assembling land by buying up older single-family homes in urban cores [characterized as “block-busting” by community activists opposed to the intensification of high-rise development] in order to build stand-alone apartment buildings or clusters of highrise buildings like St. Jamestown at Parliament and Wellesley in downtown Toronto or “apartment row” along Davisville and Balliol in the Yonge/ Eglinton area of midtown Toronto.

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As an aside, the Canadian Condominium Institute [CCI] has been actively lobbying the provincial government for over a year on behalf of the condo sector to update the Act to reflect contemporary conditions and clarify ambiguities.

Condos have interests that are common to homeowners as well as to the multiresidential rental sector and, perhaps surprisingly to some, the social housing sector. Condominiums’ hybrid nature makes them unique in the multiresidential sector.

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It’s time that condos receive the attention they deserve and attain parity with the services received by single-family dwellings. After all, they are taxed at the same mill rate. “Service Equity” is not an unreasonable expectation.

Multi-residential living came into its own after the depression era with the migration of people into major urban areas and was also impacted by the returning veterans after World War II. These twin phenomena catalyzed the building of large-scale social housing projects such as Regent Park in downtown Toronto.

After this explosive growth of high-rise rental apartments began to ebb in the 1970s due to increasing opposition by those who saw this trend as an attack against traditional neighbourhood communities, private developers turned their entrepreneurial bent to fractional ownership possibilities in multi-residential dwellings. Thus were born condominiums and equity co-operatives.

Today, outside of the social housing sector, condominium dwellings dominate the multi—residential sector.

There are now roughly 500,000 condo units province-wide in Ontario, housing at least one million residents. There are 9,000 condominium corporations across the province, with 5,000 in the

Greater Toronto Area [GTA] alone, that these residents call “home.”

While the demographic profiles of these residents vary from the financially comfortable empty nesters requiring specific age-appropriate amenities to young singles just getting into the ownership market requiring fewer creature comforts, the service requirements to the buildings themselves are identical.

Most of these services are provided by municipalities like Toronto, Mississauga, Oakville, Richmond Hill, Vaughan and Markham etc.

The services include policing, transportation, fire protection, social services, parks & recreation, libraries ambulance, licensing, planning & development and building permit approvals, to name some. These are the very services that have an immediate daily impact on our lives, which is the reason the municipal level of government is often described as the one, which is “closest” to the people.

While significant and often critical services are provided by municipal governments [including school boards], the traditional voter turnout in municipal elections has been notoriously low—- only 30% to 40%! It appears as if the mundane nature of municipal issues don’t attract the same media or voter attention and passionate debate as health care or immigration and refugee issues.

While this is quite pathetic, it does provide the condo sector the opportunity to have a greater impact on the outcome if it can harness and marshal its resources by clearly articulating its needs. Then individual owners must discharge their civic responsibility by paying attention to what the incumbent politicians and the aspiring political candidates are saying and doing. They can further exercise their influence by actually working for a candidate or making a donation to their campaign.

Ultimately though, they must vote to not only fully discharge their duty, but to have any meaningful influence over the political process.

While there are issues such as transportation, police, fire and ambulance services that are common to all residents in a municipality, there are condospecific issues such as the bulk rates charged for garbage collection that require specific attention. While condo owners pay the same tax rate as singlefamily dwellings, condos have received

While condo owners pay the same tax rate as single-family dwellings, condos have received less than comparable service in the past. less than comparable service in the past.

Two years ago, condo owners were confronted with a new invoicing system with no prior consultation, thus compelling condominium Boards of Directors to absorb substantial unbudgeted maintenance fees for 2 years.

In the City of Toronto, the recently revised model for the Waste Levy charged by the municipality will mitigate the burden somewhat; however, continued vigilance of the city’s waste management protocols is required if previous experience can be used as a guide.

It took 2 years of lobbying by the rental apartment owners and the condo sector [CCI had a representative on the working group] before a more equitable, clear billing model was achieved.

From this one example alone, it is obvious that vigilance, persistence, resources, partnerships and unity are required to protect the interests of the condominium sector.

Another issue that is going to require continuing attention is the impact of the Harmonized Sales Tax [HST], which

came into effect on July 1. The joint ACMO and CCI Toronto Government Relations Committee will continue to meet with provincial officials to advocate additional mitigation measures for condos.

This same Committee was successful in convincing the provincial government to give condo corporations registered before May 5, 2001 more time to top up their reserve funds. The time was extended to 15 years from 10, thus allowing a reduction in the impact of the HST on reserve funds and came into effect on July 1 as well.

On the subject of reserve funds, it should be noted that CCI Toronto has hired a consultant and is now actively investigating the possibility of lobbying the province to treat the condo sector in the same manner as the social housing sector in respect of the permitted investments for their reserve funds.

As I mentioned in an earlier article in the previous edition of CondoVoice, social housing is allowed greater latitude in matching their investments to their capital budget requirements as determined by their reserve fund studies [known as Building Condition Audits].

From the foregoing examples, which are but a few, it is manifestly evident that the condo sector cannot divorce itself from government edict and regulation. It is up to the condo sector to work with the government, preferably in an organized unified way rather than in a fragmented fashion. Governments love to divide and conquer. Organized groups are stronger and more difficult to dismiss. The bigger and noisier [respectfully, of course] the better.

As the summer draws to a close, especially in Toronto, the mayoralty race is gaining attention and momentum. John Tory, seen as the Mayor-elect by many, has finally brought closure to the speculation that he might still throw his hat in the ring. He stated finally and unequivocally that he was not going to be in the running, thus putting an end to the silly season.

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We are left with 5 “credible” candidates, as we are given to calling candidates who we think have a chance of winning. They are the frank, at times blustering, Conservative Councillor Rob Ford and the brash former provincial Liberal Cabinet Minister George Smitherman, widely perceived as the front-runners. The NDP Deputy Mayor Joe Pantalone, former Heart and Stroke CEO and Liberal insider, Rocco Rossi and Sarah Thomson round out the cast of aspirants.

While the Toronto race has the greatest potential for dramatically altering the political landscape and face of a council because of the number of retiring incumbents, not to be ignored are the Mississauga and Vaughan elections because of the recent travails of Mayor Hazel McCallion and Mayor Linda Jackson respectively.

Condo owners need to pay close attention to the platforms of the mayoralty and council candidates. We need to

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‘While the Toronto race has the greatest potential for dramatically altering the political landscape and face of a council … not to be ignored are the Mississauga and Vaughan elections…’ scrutinize their previous experience and track records in politics and/or in their work lives. Were they successful and respected? Were they clear and transparent in their dealings? Did they do what they said they would do? This is

especially important in cases where there was opposition by vocal, assertive, organized entrenched interests against what was demonstrably in the public interest to carry out. Did they demonstrate the fortitude required of a true leader? Or did the intransigence of the opposition pressure them successfully to reverse themselves and capitulate?

What we need are elected officials who are sufficiently intelligent to assimilate the advice given by unbiased professionals, make decisions, have the courage of their convictions and not vacillate afterwards. Remember that even municipal politicians have 4-year contracts that cannot be shredded.

Choose wisely on October 25 so we can demonstrate our collective political awakening and firmly establish our rightful place in the political conversation! ■

Member News ACCI Member Profile SUE BOTTRELL

It’s hard to imagine that it’s been 26 years since I first started out in the condominium industry. Even before actually starting to practice condominium management, I was still involved in condominiums themselves.

I started out as the first female site clerk for Tridel Construction at their Islington 2000 property, watching the site being built from the ground up (think hard hat and safety boots and you would be correct). I stayed with Tridel for quite a few years doing pre-delivery inspections of both townhouse and high rise condominiums (back when Tarion was called HUDAC and then ONHWP). I then switched over to Del Property Management where I was a site secretary for about two years and then was promoted to property manager, and I had the opportunity to work with Saul York and Alan Rosenberg who are two well known names in the condo industry. I was with Del for ten years and then, wishing to have a shorter commute, joined what was called Newton Property Management, owned by Richard Kubig , RCM, ACCI at the time. Richard, who was one of my mentors, encouraged me to obtain my ACCI designation, and I also took the Basic Condominium Directors and Managers Course and the Advanced Condominium Directors and Managers Course. Newton was my home base for six years where I took several courses at Durham College to enhance my education.

I then had the opportunity to join at the time what was Wallace McBain and Associates under the guidance of Andy Wallace RCM, ACCI and Marilyn McBain RCM, ACCI. Andy Wallace was instrumental in encouraging me to study for and sit the Registered Condominium Manager Exam. Wallace McBain and I parted ways after four years and I re-joined Newton Property Management owned by new owner Colin Sinclair.

The Experts Before you hire a lawyer, an accountant, a property manager, a reserve fund study provider, an insurance agent, an engineer, a realtor, or mediator/ arbitrator, check their condominium credentials.

Practicing law and practicing condominium law are not one and the same.

Practicing property management and practicing condominium property management are two very different endeavours. And, condominium audits and reserve fund studies require expertise in all kinds of condominium matters.

So look for the experts ... they have achieved the designation “Associate of the Canadian Condominium Institute” (ACCI) which assures you that this individual has extensive experience in servicing condominiums and has been successfully examined by CCI. Their ACCI designation is a recognition of a condominium expert’s professionalism and outstanding achievements. These individuals must be a professional member of CCI; have at least three years of professional condominium experience; have contributed to the condominium community by teaching courses, writing articles, participating in seminars or providing other services; and have successfully completed an extensive examination.

Over the next few years Newton Property Management became Newton Trelawney Property Management when Colin Sinclair purchased Trelawney Property Management from Judy Duffus. I have been working for Newton Trelawney Property Management for over 10 years now.

During my time I was one of the first managers to successfully complete a Declaration and Description change (under the New Condominium Act) to D.C.C. # 167 in Oshawa, and numerous Performance audits.

About four years ago I was promoted to senior manager for the east end high rise division. Currently I still manage my own portfolio of buildings, and, as senior manager oversee 5 other building managers. I also have taken over the responsibility for occupational health and safety issues at the east end high rise sites, and am known for my fire safety knowledge. So, I have had the opportunity to work with some of the most well known and respected leaders in the condominium industry – what a wonderful opportunity this has been.

I am a single parent with a beautiful daughter, Laura, who is finishing her last year of nursing at Durham College/UIOT. When not at evening board meetings, I enjoy ballroom/Latin dancing, swimming, walking and spending time with family. ■

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In Memorium

DOUG DEMPSEY f you’re lucky, you’ll meet two or three people in your life with hearts as big as Doug Dempsey’s.

“Anita finally caught me when I slowed down in my late forties, and for that I am truly grateful. For me life really began at forty-nine,” Doug was fond of saying.

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A resident of our building for the past twenty-nine years, Doug Dempsey was one of the people who make 55/65 Harbour Square (YCC 510) the best building to live in on the waterfront.

Doug began volunteering early and in 1984 became editor of the condominium’s newsletter. Over the years Doug never tired or wavered in his commitment to his building, his neighbours, or

Born and raised in Willowdale Ontario, Doug worked in the family general store, Dempsey Brothers, after school until he found his calling as a printer, a trade he worked at for the next 55 years.

Doug Dempsey

BBQ, dressing as Santa for the kid’s Christmas Party, serving on the Board of Directors, or as editor of our awardwinning HarbourSide UPDATE, Doug was never short of commitment, professional savvy, energy, or stories of his globetrotting adventures with Anita, the love of his life.

Doug Dempsey with his wife Anita

L-R: Vic Persaud, Doug Dempsey, Pauline Brown

his community. Doug stood out in any group as he was always well organized and never at a loss for ideas nor short on optimism. In 2008 Doug decided that our condo should enter the Canadian Condominium Institute’s Condominium of the Year contest and, with the board’s blessing, he began working on our submission. To be perfectly honest, neither Doug nor the Communications Committee he headed had any idea what a winning entry looked like, but Doug’s optimism and leadership inspired his team to not only assemble a professional and thorough submission but the winning entry.

Whether he was helping with the Wine and Cheese Party, the Canada Day 46

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It was in 1959 that Doug joined the Rotary Club and continued with that organization until the day he died.

During his 51 years with the Rotary Club he held several high offices with the organization and traveled throughout the world.

Doug Dempsey’s years of volunteerism and hard work no doubt improved the quality of life in our building, and likely the dollar value of our homes but as Ralph Waldo Emerson said, “Rings and jewels are not gifts. The only gift is a portion of thyself.” And with that Doug Dempsey was always generous.

Doug Dempsey and his wife Anita (as Mr. & Mrs. Claus)

We will miss him.

■ Photos by Jack Gilbert

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Ghacan Services (CONDOMINIUM ACCOUNTING SERVICES GROUP)

Looking for Accounting service for your Self-Managed Condominium? Then Ghacan Services is your choice.

Over 23 years in the industry, our experience enables us to provide excellent condominium accounting services to Property Managers and/or Self-Managed Condominiums.

At Ghacan we strive to perpetuate an attitude of â&#x20AC;&#x153;Do It Right The First Timeâ&#x20AC;?

Call us at 416-435-4946 or e-mail us at info@ghacan.com. or visit us at www.ghacan.com

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New Members

CCI-Toronto Welcomes the Following New Members Individual Members C. Allardyce C. Compton J. Harrada

Corporate Members DCECC # 0232 MTCC # 0945 PCC # 0159

PCECC # 0875 PSCC # 0869

PSCC # 0873

TSCC # 1633 TSCC # 1957 TSCC # 2033 TSCC # 2035 TSCC # 2065 TSCC # 2070

YRSCC # 1055

Professional Members

Sandra De Zen SSBCS De Zen Investments Incorporated

Lucy Guida

Michelle Kelly SmithValeriote Law Firm LLP

Lyndon Ross Esbin Property Management Inc. Karen Mergler Brookfield Residential Services Ltd.

New Trade Members One Source GIC Susan Sweny

ViFloor Canada Ltd. Philip Ten Kortenaar

Arrudas Janitorial Services

First General Service Solutions

Online Property Management Inc.

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Here Comes the Sun: Is Solar PV a Good FIT for Your Condominium?

TIM STOATE AND BRYAN PURCELL TORONTO ATMOSPHERIC FUND

ust a few years ago the idea of putting solar panels on the roof of your condominium would have seemed altruistic at best and foolhardy at worst — something you might do for the sake of being green but certainly not something you would do for the sake of your bottom line. The problem was that by the time the panels generated enough electricity to pay for themselves, they would be at or near the end of their life expectancy (25 years).

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All that has changed with the passage of the Government of Ontario’s Green Energy Act, and the new Feed In Tariff (FIT) and MicroFIT programs. The microFIT program offers owners of small rooftop solar photovoltaic (PV) installations a generous price of 80.2 cents for every kilowatt hour (kWh) of solar energy they produce. And better yet, once a contract is signed that price is guaranteed for 20 years.

The microFIT program has revolutionized the economics of small scale solar installations. At a guaranteed price of 80.2cents/kWh, solar panels will usually pay for themselves in 8-12 years, and offer a very reasonable return on investment over the course of a 20 year microFIT contract. This makes a 52

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rooftop solar installation an attractive investment opportunity for any building owner, including condominium corporations.

At this point, you may be asking yourself how can we sell the solar energy we produce, won’t we be using it all in our building? The answer is both yes and no. Through the microFIT program, the energy from rooftop solar installations flows directly to the electricity grid, rather than into your building. In practice, most of that solar energy will then be drawn back into your building to power your lights and appliances. Essentially, your local utility is buying the solar energy from you at 80.2cents/kWh, and then selling it back to you at 7.5cents/kWh, for a net profit to your building of 72.7cents/kWh!

However, solar PV isn’t a viable option for every building. The first thing to consider is the size of your roof, and what else is up there. The ideal rooftop has at least 80m2 of free, unshaded roof space. The second thing to consider is the condition of your roof. If your roof requires major repairs or outright replacement in the near-term future, now is probably not the time to install solar panels. The third thing to consider is the height of your building. The

higher your building is, the higher your installation costs will be because most of the materials will need to be craned up to the roof. A reputable energy management firm or solar installer can help you evaluate the suitability of your rooftop for a solar PV installation.

If your roof is suitable for a solar installation, you’ll then need to figure out how to finance it. Depending on the size of installation you are considering, the costs are likely to be in the range of $50K to $120K including materials and installation. Generally speaking, you can’t use your reserve funds to finance a solar installation. That’s because the Ontario Condominium Act stipulates that reserve funds should only be used for capital replacement projects (repairs/replacement of existing building components) and not for capital additions (installation of completely new building components). You can unlock your reserve fund by passing a special funding plan, but this must be approved by at least two-thirds of the membership in a special meeting.

Another option is to take out a loan.

You’ll be paying interest on the loan, of course, but the income from selling the solar energy should be enough to cover your loan repayment costs. Once

the loan is paid off, your building will be able to keep all of the revenue generated by the solar installation. There are a few legal steps you must take before signing on the bottom line for a loan, however. First you need to fully inform your members of the purpose and cost of the loan and its terms and conditions. You will then need to hold a special meeting to pass a borrowing by-law authorizing the loan with the support of 50% +1 of the corporation’s members to proceed.

The final option is to enter into a leasing arrangement with a solar company. The solar company will pay 100% of the costs of purchasing and installing the solar panels. In return, they will earn the revenue from selling the solar energy that is produced. In exchange for the use of your roofspace, your building will receive annual payments equivalent to around 10% of the revenue generated by the solar installation. Your building doesn’t need to spend a penny, but the annual income from the solar installation will be considerably less than if you owned the installation outright.

Before moving forward with a solar installation, be sure to compare the benefits of investing in solar energy with the benefits of investing in your building’s energy efficiency. Despite the attractive price paid for solar energy

under the microFIT program, the return on investment for energy efficiency retrofits in condominium buildings is usually even higher. Or better yet, invest in energy efficiency and renewable energy at the same time as part of a comprehensive energy plan for your building.

For more information on planning and implementing energy efficiency and/or renewable energy projects, check out our TowerWise website at TowerWise.ca. If your building is in the

416 area code, you are also eligible for our free TowerWise Conservation Advisor service — sponsored by the City of Toronto and a number of nonprofit partners including the Canadian Condominium Institute and the Greater Toronto Apartment Association. If your building would like free, independent advice on energy conservation renewable energy, pick up the phone and call Rob Detta Colli at 416-450-7989 or email advisor@towerwise.ca. ■

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Newsletters & Websites: Communication, Caution, and Common Sense

BY MARIO DEO, LL.B. AND KRISTEN BAILEY, BA HONS., B.ARCH LL.B. FINE & DEO LLP he number of condominium corporations developing their own websites and newsletters increases steadily year to year, as an easy and efficient method by which each community communicates and portrays its unique identity to its members.

Websites and newsletters present an opportunity for efficient mass communication and are often appreciated by residents as a valued source of information. A board of directors may wish to put its collective mind to a number of issues, outlined below, when either developing a publication, or evaluating the success of an ongoing one.

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fessional appearance so that readers know where to look for different types of information.

Acceptable Content & Liability Issues The most significant reason for identifying the “purpose” and/or “goals” of

the publication is to ensure that the board of directors has a clear direction as to acceptable content. Common sense must dictate the content that is included in a newsletter or website. As written communication directly from the board of directors to the residents, it is the voice of the condominium corporation. Therefore, the board must

Identify the Purpose of the Publication Like any other form of professional communication, a newsletter or website must have an identified “purpose” or “goal(s)”. The written content must be accurate, easy to read, and should align with the purpose or goals of the publication. A newsletter distributed by a condominium corporation could have various purposes: the distribution of reminders to residents about compliance with particular rules, providing seasonal updates regarding landscaping/snow removal, updates on common element renovation projects, notification of neighbourhood occurrences/ events, safety and security reminders etc. The development of consistent headings and sections lends to a proFall 2010

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SUMMA PROPERTY MANAGEMENT INC. PROFESSIONAL PROPERTY MANAGEMENT & CONSULTING

“Your condominium deserves personal attention and service.”

Over 25 years experience.

We provide Professional Condominium Property Management with attention to detail. Your property is important to us!

Regular on-site visits and inspections, attendance at all meetings. We are available to be personally contacted by Board Members at almost any time – not just ‘business hours’.

Expect Superior Service and a commitment to quality property management no matter what size your condominium.

At Summa we take pride in managing your property.

647-341-7990 propman@summapm.com www.summapm.com

When experience and quality counts!

CLOTHES DRYER FIRE PREVENTION

“Serving the Condominium Community Since 1996” PROVIDING: • CLOTHES DRYER AND EXHAUST SYSTEM CLEANING as prescribed by the Fire Marshal and all Appliance Manufacturers • In suite and common area exhaust and ventilation ductwork cleaning • Fan coil preventative maintenance service • Washing machine flood prevention • Secondary dryer lint box conversions “Providing the most organized, cost effective service programs available”

Visit our website at www.dryerfighters.net to learn why clothes dryer fire prevention is required.

Dennis Monk: (647) 236-5643 Randy Mason: (647) 239-8787 Office: (905) 761-1761 Email: dryerfighters@hotmail.com 56

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have the final say and control over the content of anything published under the name of the condominium corporation.

Further, a newsletter or website published by a condominium corporation should not be a forum for unit owners or residents to communicate their thoughts, events or issues.

Caution should be exercised to avoid liability issues that could arise. Below are some guidelines for developing the content of a newsletter or website : • Remember that a newsletter or website is the “voice” of the condominium corporation that will be scrutinized by residents, owners and possibly potential owners.

may attach to the condominium corporation. That is, regardless of whether or not the event is included in the newsletter, the board should assume that liability is an issue. As always, however, the possibility of liability should not always prevent the corporation from events or activities, provided the risk is reasonable and covered by insurance.

The newsletter or website should not be a forum or medium for individual residents to publicize or invite others to their own in-unit events or organized activities; inclusion of such events in the publication can give the appearance of the event being board-sanctioned or approved, regardless of any written waiver of the board’s involvement. If

‘Any written communication distributed on behalf of a condominium corporation must be correct, accurate and professional.’

• Personal information about an owner or resident should never be disclosed unless written permission is obtained from that individual. Personal information includes more than a name or unit number. If a person’s identity can even be determined based on the information in an article or story, then such information may be considered “personal” for the purposes of liability under privacy laws.

• It should go without saying that nothing defamatory should ever be put in a newsletter or on a website. If the board of directors is unsure, then err on the side of caution or get a legal opinion as to the risks of putting something into print.

Information about an event or activity hosted by the condominium corporation (movie night, wine and cheese, an outing, etc.) can be included in a newsletter. The board should assume that if something goes wrong, liability

there is demand for residents to have an opportunity to publicize or promote their own activities, perhaps the condominium corporation could consider having a community bulletin board in a mail room or other space. Having such space on a website can prove to be problematic, as it would need to be constantly monitored. Better still, only preapproved items should be posted. This precaution is an unfortunate reality in the political life of a condominium, as many condominiums have experienced misuse of internet communications with owners on a serious scale, causing huge expense and community strife.

A publication should not include the personal opinions of board members and should not include personal opinions or comments of residents or owners. The board may decide to include a column in which it publishes questions submitted in writing by residents, and to which the board provides responses.

There are advantages and disadvan-

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tages to having such a column.

Published words can come back to haunt, therefore, caution should be exercised when choosing what to print.

However, including such a column may be an opportunity for the board to address residents’ concerns on issues that have widespread interest.

In a very few but serious cases, these forums and websites state such wildly incorrect information that they can stop sales from going through. Few purchasers in today’s market would buy in a condominium building without doing a Google search on the condominium.

To make matters worse, information posted on the net is exceedingly difficult to remove – a black eye on the market value of a condominium can stay posted for a very long period of time – even years. It is incredible but true that it is usually owners, not tenants, that post such negative information thereby reducing the attractiveness of their own community in the public’s eye.

‘If any doubts exist as to whether or not something should be included, use common sense…’

Any written communication distributed on behalf of a condominium corporation must be correct, accurate and professional. Creating newsletter or website content is not rocket science, and if the purpose and the goals of the publication are clear to those authoring and editing the content, then the process will be easier, and the product, consistent. If any doubts exist as to whether or not something should be included, use common sense, look to the “goals” of the publication and exercise caution when putting things into print: remem-

ber it is easier to add information down the road than to take it back once it has already been published.

A Word About Unauthorized Websites and Forums Incredibly, many owners, usually for misguided reasons, seek to enlarge the political sphere of condominium life by making it public on the internet. The reason that such public forums are misguided is because the communications contained in them usually leads to a less positive market position for units in the condominium corporation, as many real estate agencies are getting smarter and keeping abreast of the political strife in particular communities.

Unfortunately, court orders are sometimes the only solution to the problem and even then, not always practically obtainable, due to the expense. ■

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Have you renewed your CCI-T Membership for 2010-11?

If not, call our membership department at 416-491-6216 Ext. 241 DONNA SWANSON ACCI, FRI

Real Estate Brokerage

For your Real Estate Needs call: 416-515-2121

• Real Estate Broker of Record - s peci al i zi ng i n Co ndo mi ni um Sal es since 1982 • Current condominium Owner, Pas t Pres i dent and Di recto r • ACCI - An Associate of the Canadian Condominium Institute • Pas t Di recto r of Toronto Chapter of CCI • FRI - Fellow of the Real Estate Institute of Canada and past

Director of Toronto Chapter of REIC

Email: donnaswanson@sympatico.ca

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PROVIDING EXCEPTIONAL SERVICE TO THE CONDOMINIUM INDUSTRY FOR OVER 25 Y EARS SPECIALIZING IN COMPLETE PROPERTY MANAGEMENT SERVICES: Residential High-rise & Townhouse Condominiums Industrial & Commercial Condominiums

Hands-On Management Individually Designed and Tailored To Meet And Exceed Your Communities Needs For more information, please contact: Gary Atkin, RCM, ACCI Matthew Atkin, RCM, CMOC, ARM, CPM or Nathan Atkin, B.A., RCM

G.S. Atkin Property Management Specialist Inc. One Shady Lawn Court Mississauga, Ontario L5N 1H2 24-Hour Emergency Line (905)-567-6820 Direct Line: (416)-258-6011 Fax: (905)-567-6930 Website: www.gsa-pm.com Email: info@gsa-pm.com

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Upcoming Events

Mark Your Calendars Condo 101 Course Dates & Times:

Saturday January 15th, 2011 from 9:00 a.m. until noon or, Thursday June 2nd, 2011 from 7:00 p.m. until 10:00 p.m.

Location:

Novotel North York Hotel

Cost:

$95 for CCI Members and $125 for Non Members (plus HST)

This three hour course will focus on the topics that every Director should be aware of and will provide participants with a basic knowledge of the Condominium Act. The course is an excellent means to find out what you need to know to be effective as a condominium owner or director. The information presented will be of interest to those purchasing a condominium or to those who want to know what a condominium is and what it means to live in one.

Level 200 Course Dates & Times:

Wednesday October 6th, 13th, 20th and 27th, 2010 or, Saturday February 26th and March 5th, 2011 from 9:30 a.m. to 4:00 p.m.

Location:

Novotel North York Hotel

Cost:

$200 for CCI Members and $275 for Non Members (plus HST)

This informative five night or two day course is a must attend for all new Directors or Condominium Residents who want a better understanding of the way Condominiums function and should operate. Topics covered include: The Directors' Role, Insurance, Property Management, Budgets and Finance, Reserve Funds, Physical Building Management and Effective Meetings.

Condo 201 Course Dates & Times:

Saturday November 27th, 2010 from 9:00 a.m. until 12:00 p.m. or Saturday March 26th, 2011 from 9:00 a.m. until 12:00 p.m.

Location:

Novotel North York Hotel

Cost:

$95 for CCI Members and $125 for Non Members (plus HST)

This ½ day course will teach directors all they need to know about proper Governance issues and how to ensure a well functioning Board. This is a ‘must-attend’ session for any new Director or for any owner considering running for a Board position.

Level 300 Course Dates & Times:

Saturday June 4th and Saturday June 11th, 2011 from 9:30 a.m. to 4:00 p.m.

Location:

Novotel North York Hotel

Cost:

$200 for Members and $275 for Non Members (plus HST)

Completely updated, the Level 300 course is designed for the dedicated condominium director.

Upon completion of the course, participants should understand all aspects of reserve funds, major repairs and replacement, financial management, common problems and solutions, legal responsibilities, mediation/arbitration and health and safety/emergency planning matters.

For further course information, to download registration forms or to register online, please visit www.ccitoronto.org/Education

NEW – watch for details coming shortly about our condo courses in webinar format!

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President’s Message Cont’d.

Conference website, www.condoconference.ca. Plan to attend, and stay in the know.

With the new Ontario Government session starting in the early fall, the joint CCI-T and ACMO government Relations Committee is gearing up for a very busy fall. We intend to take a number of initiatives to the government and all opposition parties. During the drafting of my President’s message, the Ontario government announced a Cabinet shuffle and the new Minister of Consumer and Business Services (which covers condominiums) is the Hon. John Gerretson.

Finally, CCI-T recently notified all members via email about the Ontario government’s survey on condo living.

The purpose of this survey is to gather information on your experiences as a condo owner in the areas of decision making, relationship with your Board, condo maintenance and condo ownership. There is a link to the survey on our home page, www.ccitoronto.org – it’s the item called “Are you a Condominium Owner?”, and we encourage everyone to complete the survey.

For CCI-T, we expect the Fall to be a growing season, and, on behalf of your Board, I’d like to thank you for your support in making that true.

Cheers!

Armand Conant, B.Eng., LL.B., D.E.S.S. (Sorbonne) President, CCI Toronto and Area Chapter

Check out the “Members Only” section on the CCI Toronto Website!

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From the Editor Cont’d. and the more aggressive (or “bad”) developers, the latter of which are advertising lower first year budgets as a result of the loopholes that they are taking advantage of, which their better counterparts are refusing to do.

Here’s a list of thoughts on some of the major issues about developer disclosure and suggested remedies. The suggestions will not only improve the circumstances for a lot of purchasers, but will also level the playing field among developers by preventing the more aggressive developers from taking advantage of the weaknesses in the legislation: 1) Budget statements are disclosed for one year, but many expenses such as leases, mortgage payments, and loan payments are deliberately delayed for one year. That’s simply pulling the wool over the eyes of the purchasers and shouldn’t be allowed;

2) The one year budget guarantee is meaningless where the declarant goes bankrupt. There should be security posted for this obligation for declarants that have no positive history of compliance with this obligation (similar to the idea that some new declarants have to post more security than others when registering with Tarion); and,

3) A minority, but significant numbers of declarants are low-balling the first year budgets. It’s a well known fact in the industry that its more profitable to pay the penalty of a deficient first year budget than to achieve a lower unit purchase price by disclosing the proper budget amount. The solution? If the first year budget is off by more than 1015%, the guarantee is extended for 5 more years - inflation adjusted of course, with security posted.

4) Do away with the requirements for condominium corporation to accept

transfers of superintendent’s suites, guest suites or any other property, which often come at a significant cost and vendor-take-back mortgages at significantly higher rates The best developers don’t participate in this practice anyway. The others shouldn’t.

5) With the exception of equipment necessary for greener buildings, leasing back property or equipment to the condominium corporation must be prohibited. Such practices create an unfair advantage for the more unscrupulous in the business.

6) Some disclosure statements start a condominium corporation off in a debt position from day one. Loans in disclosure statements starting in the early life a condominium are absurd. They should be immediately prohibited.

7) Present law permits declarants not to pay common expenses on units they continue to own after registration, as long as such an exemption is disclosed.

This means that the existing purchasers that own the remainder of the units have to pay the common expenses that are not paid by the developer-exempt units. Only a few, but a significant number of declarants take advantage of this absurd idea. Curiously, if you read the disclosure documents where such exemptions exist, it would take you hours to really understand it, if at all.

It is obvious that a declarant that is taking advantage of this law does not want to make it apparent that it is doing so.

All such exemptions should be immediately prohibited.

In subsequent issues, topics such as retaining strategic units and the creation of favourable contracts by developers will be addressed. There will also be some discussion about the lack of Tarion coverage on retrofit condos and common element condominiums.

Mario Deo, LL.B.

Fall 2010

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List of Advertisers A.R. Consulting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62 ACMO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65 Adams & Miles LLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70 Atrens Management Group Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57 Baird Roofing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70 Ball & Associates Inc. (Floodcheck) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70 Bayshore Property Management Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . .60 Best Guard Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Brady & Seidner Associates Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48 Brokers Trust Insurance Group Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48 Brook Restoration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 Brookfield Residential Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 Brown & Beattie Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64 Carma Industries Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 City of Toronto Energy Efficiency Office . . . . . . . . . . . . . . . . . . . . . . . . . .20 Comfort Property Management Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47 Condominium Living Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 Construction Control Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72 Coulter Building Consultants Ltd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 CPL Connoisseur Painting Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60 CPL Condominium Design Interiors . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 D-Tech (Nexus) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 Davroc Consulting Engineers . . . . . . . . . . . . . . . . . . . . . . . . . . .41, 54 & 70 Donna Swanson Real Estate Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . .61 DPC Property Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66 Dryerfighters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56 Dust Busters Home and Office Cleaning Inc. . . . . . . . . . . . . . . . . . . . . . .62 Elia Associates Barristers and Solicitors . . . . . . . . . . . . . . . . . . . . . . . . . .30 Enerplan Building Consultants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66 Fine & Deo Barristers & Solicitors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Firenza Plumbing & Heating Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70 Fogler, Rubinoff LLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62 Gardiner Miller Arnold LLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 Genivar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64 Geofocus Mould Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 Germguard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 Ghacan Services (Condominium Accounting Services Group) . . . . . . . .48 Green Leaf Landscaping and Maintenance Ltd. . . . . . . . . . . . . . . . . . . . .70 GRG Building Consultants Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51 GSA Property Mana gement Specialists Inc. . . . . . . . . . . . . . . . . . . . . . .64 Heenan Blaikie LLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40 Horlick Levitt Barristers & Solicitors . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 ICC Property Management Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61 J. Edick & Sons Landscape Contractors Ltd. . . . . . . . . . . . . . . . . . . . . . . .70 LAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44 Larlyn Property Management Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 M & E Consulting Engineers Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67 Maple Ridge Community Management Ltd. . . . . . . . . . . . . . . . . . . . . . . .32 Mareka Property Management Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 Metro Group of Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53 Miller Thomson LLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63 Morrison Financial Services Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 Morrison Hershfield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 Nadlan-Harris Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60 Ontario Screen Systems Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56 Pillar Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 Pro-House Management Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 Provident Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 Regal Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69 Rogers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 Royal Grande Property Management Ltd. . . . . . . . . . . . . . . . . . . . . . . . . .11 Samuel Property Management Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56 Simerra Property Management Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40 SmithValeriote Law Firm LLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48 SR Wise Management Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62 Stratacon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58 Summa Property Management Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56 Suncorp Valuations Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70 Toronto Hydro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59 TowerWise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68 Waste Solutions Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64 Whiterose Janitorial Service Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 Wilson Blanchard Management Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71 YARDI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50

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