CondoBusiness - October 2009

Canada’s Most Widely Read Condominium Magazine

October 2009 • Vol.24 #7

Amenity appeal PM#40063056

Times have changed

09342_CondoBusiness_Oct09.indd 1

The party room How much is your spa really costing?

11/2/09 12:06:01 PM

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Contents

departments

23

Marketing Condominium minimalism

26

Marketing The evolution of trends in condominium amenities

29

Legal How much is your spa really costing?

33

Legal Construction consideration

37

Design The party room

41

Maintenance Do your homework

46

Smart Ideas

Focus: AMENITIES

11

Times have changed

By Robert Kravitz

14

Amenity appeal

By Amie Silverwood

19

Time to upgrade

By Daria Winnicki

editor's Letter

Publisher Steve McLinden Editor Amie Silverwood Advertising Sales Paul Murphy, Sean Foley, Atif Malik Senior Designer Annette Carlucci Designer Ian Clarke

Amenity trends

Production Manager Rachel Selbie

The advantage new condominiums have

Contributing Writers Robert Kravitz, Daria Winnick, Heather Ann Scott, Tammy Gilmer, Joseph W. Ryan, Sophie Patrillo, Phil Staite, Erin Decoste

over condominiums built two, five or ten years ago is that the amenities they offer are fresh and exciting to potential buyers.

Buyers may overlook small square footage in favour of a fresh lobby, media room with state of the art technology or an infinity pool on the rooftop patio.

But older condominiums don’t have to be behind new ones – if condominium boards are always looking to improve their assets. An aged condominium can be updated with fresh new amenities that are important to buyers and current unit owners. An established condominium corporation can have it all (including more generous square footage per unit and a track record of sound condominium management).

This issue, we look at amenities from many angles: their financial burden, their appeal and any legal concerns that boards may face. Times have changed and a condominium that changes with the trends has the advantage in the market.

Amie Silverwood amies@mediaedge.ca

Circulation Manager Cindy Younan

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President Kevin Brown Accounting Manager Maggy Elharar 5255 Yonge Street, Suite 1000 Toronto, Ontario M2N 6P4 (416) 512-8186 Fax: (416) 512-8344 e-mail: info@mediaedge.ca CONDOBUSINESS welcomes letters but accepts no responsibility for unsolicited manuscripts or photographs.

Canadian Publications Mail Product Sales Agreement No. 40063056 ISSN 0849-6714 All contents copyright MediaEdge Communications Inc. Printed in Canada on recycled paper.

8 CONDOBUSINESS | www.condobusiness.ca

finances

Times have changed When looking for a condominium about

five

years ago, a first-time homebuyer thought he had found the perfect unit

in a large condominium complex built 40 years ago. Bright and sunny, the structure was considered the place to live when it was first constructed because of the extensive use of glass and because it was seen as a city within the city.

The complex offered several in-house amenities,

By Robert kravitz many of which were unusual for the time.

October 2009 11

FEATURE

Some of these amenities included a quick-food market open 12 hours per day, barbershop and beauty salon, dry cleaner with pickup and delivery service to all tenants at no charge, valet parking, outdoor and indoor swimming pools, dif ferent- sized communit y rooms to hold small meetings or moderate-sized gatherings, 24 -hour manned security service and a library. However, there was one problem.

Although the size, price and location of the apartment were just what this young buyer was looking for, one of the most important building amenities he wanted, a gym, was missing. According to his real estate agent, when the complex was built in the early 1960s, the private and public gyms we have today were a rarity. Further, because so many of the tenants in the complex were now older, having lived in the building for many years, few were

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interested in adding a gym, and calls to convert the library into a gym were quickly drowned out.

Such a situation would likely not occur in a property built today. Although a large condominium complex may not have its own marketplace, beauty salon and barbershop, it is almost certain to have a gym. And today, with the difficult ec onomy imp ac ting most of N or th America, some condominium complexes are making gyms one of the key selling points and most popular amenities.

F o r i n s t a n c e , t h e 1, 5 0 0 - u n i t Harbourview Estates in Toronto claims it’s recreational and exercise facilities “are unrivaled” by any in the city. Such features as these are available to all tenants and included in their monthly maintenance fees: a 25 -metre swimming pool, fullsize gymnasium, jogging track, whirlpool, cardio, weight and conditioning rooms, squash court, bowling lanes, billiards room, outdoor tennis court, indoor golf simulator and a juice bar.

Although not all new C anadian condominium projects offer this many gym-related amenities or include them at no extra charge in their monthly tenant assessments, vir tually all now of fer some of these conveniences at varying charges to tenants. Clearly times have changed. Whereas a library may have been a welcome addition 40 years ago, it has long since been replaced by athletic facilities. And the nicer, better-equipped and more well-maintained the gym, the more likely it will prove to be an effective marketing tool.

Gym equipment selection The heart of an athletic centre is the ac tual workout g ym. T he world of gym equipment is vast, with scores of manufacturers building all t ypes of machines, free weights, bars, aerobic machines and the like. With so many choices, condo developers and those seeking to retrofit their current gym facilities are advised to work with a gym consulting and design service.

One of the first things the consultant will likely ask is about the tenants most expected to buy into the property. For middle-aged and older tenants, a large as sor tment of tre ad mills, elliptic al machines, rowers and upright bike

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FEATURE

equipment would be best. If buyers and tenants in their 20s and 30s are anticipated, these machines should be balanced out with free weights and other weight lifting equipment.

The consultant will then help developers and managers select the proper equipment, design the layout and create a mood. The mood will also be determined by the age group most expected to use the athletic facilities. Colour schemes as well as the appearance of the gym will be designed accordingly and, if done properly, will reinforce and complement the overall design of the facility.

For greater durabilit y and tenant approval, it is best to select only top-quality, commercial gym equipment with a strong warranty. Depending on the equipment, this would include a lifetime warranty on the actual frame of the equipment, two or more years on moving parts and six months or longer on grips and upholstery.

In addition to selecting top - quality equipment, developers and managers are advised to have an equipment maintenance program in place. According to one gym designer, the equipment should be treated as a car would be. Regular service, oil changes, air filter changes and the like will ensure years of enjoyment. If the equipment is ignored, problems can quickly mount.

Larger condominium athletic facilities might find it best to outsource the care and maintenance of gym equipment.

However, many manufacturers and their distributors will provide maintenance training, instructing building staff how to care for the equipment. Essentially, this involves such things as tightening belts and bolts, calibrating tension, adding lubrication to moving parts, ensuring there are no sticking or worn parts and cleaning the exterior and inside of the machine to prevent dust and dirt from building in mechanical drive systems.

Going green from the start “Selecting the best gym equipment possible and designing the most beautiful facilit y imaginable will all fall short if it is not well cleaned and maintained,” says Mark Warner, product manager, disinfectants and sanitizers for Enviro-Solutions, a manufacturer of green cleaning chemicals. “Just as the

equipment must be maintained by trained personnel, so must the gym itself.”

What tends to work best, according to Warner, is to have someone per forming some cleaning and maintenance of the gym throughout the day, with major work, such as mopping floors and cleaning restrooms an d sh owe r s , d o n e af te r hours. “I would also suggest building owners and managers implement a green cleaning program right from the start,” adds Warner. “We know some conventional cleaning products can cause allergic reactions when the fumes are inhaled or touched.

This is intensified in a gym because people may be breathing harder, may sweat during the course of the workout and are touching lots of different gym equipment.”

Environmentally preferable cleaning products, he says, are less likely to cause such problems. Taking this a step further, he suggests using only green-certified soaps in restrooms and showers. Green certification by such organizations as Canada’s EcoLogo™ program verifies that the product has been independently tested and determined to be healthier for people and have a significantly reduced impact on the environment.

Fixtures In addition to green cleaning products, developers and managers are encouraged to use only water-conserving restroom and shower fixtures. Fortunately, in recent years there has been an influx of new restroom technologies that effectively reduce the amount of water used in a typical gym facility.

According to Klaus Reichardt, Founder and Managing Partner of Waterless™ Co, manufacturers of restroom fixtures, this includes high-efficiency or dual-flush toilets, waterless urinals and low-flow showerheads and faucets Although tastes and styles will always change, what appears certain, at least

for now and the foreseeable future, is that buyers of condominiums want a gym included in the proper ties they select. Whether they have to pay for this added amenity does not seem to be an issue, as long as the gym is there. And as we can see by the Toronto complex mentioned earlier, gyms are evolving d r am atic all y into c o m p l ete athl etic centres, catering to a wide range of exercise, and tenant, interests. CB R o b e r t Kravitz i s a write r fo r th e professional cleaning, building, hotel, and hospitalitiy industries. He may be reached at info@alturasolutions.com.

October 2009 13

FEATURE

Amenity appeal

By AMIE SILVERWOOD

One of the greatest advantages condominiums have over other types of housing boils down to the

amenities available to those who buy into the building. Residents of condos may enjoy having a full-time concierge who can receive their parcels or let the repairman into their units. Others make good use of the exercise facilities, swim laps in the pool or enjoy the convenience of having shops, a restaurant or a spa in the building.

There are as many kinds of condominiums as there are buyers and it’s generally the amenities offered that sets one apart from the competition.

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FEATURE

October 2009 15

finances

Of course, no building can have it a l l . A n d n o b u ye r i s l o o k i n g fo r a c ond ominium w here they will have to pitch in to maintain amenities they don’t use. It’s best to find a balance by providing the amenities that appeal to the buyer most likely to be interested in the condo because of its location, the size of the units or other factors.

H oweve r, t h e b u ye r m ay f i n d t h at a m e ni t i e s t h at we re d e a l b re ake r s while shopping for a home aren’t much useful after settling in or residents may find amenities that were thought of as unnecessary frills are handier than they anticipated.

According to Elli Davis, top Real Estate agent in Toronto for Royal LePage for 23 years, older residents are more interested in amenities such as a concierge, 24 hour security or valet parking. Younger

residents enjoy amenity spaces such as a gym, swimming pool or theatres – spaces that they would frequent outside of the condominium if the amenity weren’t offered within the building.

“It’s a demographic thing,” Davis explains. “The younger people want more of a health club idea. The older people are more into service.”

But not all seniors are willing to financially support a long list of amenities, service-oriented or not. Those who use their condos as launch pads to fairer fields are looking for a little less luxury.

“A lot of my older clientele don’t want frills because they go to the country or they go to Florida and they don’t want to pay the maintenance fees for all those extras that they’re not going to use anyway. I think the younger people use them more than the older people.”

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Davis has seen all kinds of amenities in her work selling condo units and she has seen many kinds of buyers searching for their own shopping list of amenities. Those who swim regularly will want a good sized swimming pool; clients looking to stay in shape want a full-sized gym. She has seen a driving r a n g e , te n n i s , s q u a s h , r a c q u et b a l l cour ts, billiard rooms, libraries, workshops and ro of top p atios with barbeques. Some amenities are more financially draining for the condominium corporation than others but as long as they’re being used and enjoyed regularly by the residents, they’re a benefit to the building. But often these amenities are left dark.

“You get the few people who are real swimmers and you get the few people who use the meeting rooms and such

finances

but I think generally, they’re empty,” says Davis.

When amenities aren’t being enjoyed, boards may consider finding a more useful purpose for the space. Before this can be done, however, there must be a general consensus that the renovation is the right choice for the condominium corporation. Boards will have to send out a survey outlining exactly what is proposed and asking residents to respond with a yes or no. If they get a lot of responses indicating that residents are interested, the matter must pass a vote with at least 80 per cent of residents on board for the switch.

Residents who bought into a building with a swimming pool may be reluctant to let that swimming pool be converted into another type of amenity. But if an amenity that requires a great deal of upkeep is

rarely used, residents can be convinced that its replacement will bring them much appreciated savings.

Jose De Oliveira is a contractor with JCO and Associates who does regular refurbishments to condominiums. He’s done several amenity adaptations – the most common is the replacement of a hot tub in older buildings looking to save money and find space to expand their gym facilities.

“It becomes cost effective to get rid of a hot tub that requires maintenance,” says De Oliveira, “and if you’re making an exercise area, you have the cost to remove the tub, replace the floor and many times you keep the same lighting and air conditioning system that’s there.

So what happens is you spend a little bit of money and get rid of the hot tub and in the long run, you save money because you

don’t have to maintain it anymore. So that is a good thing.”

Many older condominiums are replacing hot tubs to find space for aerobics rooms or gyms since trends shift and people may have different priorities than they did when the building was first built. Elli Davis agrees that these refurbishments are attractive to buyers.

“Ever yone’s more into fitness than they used to be in the 70s and 80s,” she explains. “Everyone’s more conscious of that.”

Finances can be a good motivator of change but residents may be interested in changing underused fitness facilities or reconfiguring wasted space. Older buildings often have underused hot tubs and squash courts but don’t have any fitness facilities or card rooms. De Oliveira has taken out squash courts or racquetball

October 2009 17

feature

“

No buyer is looking for a condominium

where they will have to pitch in to maintain amenities they don't use.

”

courts to make space for exercise or aerobics rooms.

“Everyone’s interested in staying in shape and ever ybody is interested in saving maintenance fees,” he says. “For example, taking a whirlpool that’s never used and it costs to operate, to chlorinate etc. Taking that out and taking a savings on a monthly basis and applying that to your operating costs on a yearly basis is very interesting especially to owners who understand the costs and want to better utilize the space. That is pretty much the key: utilization of the space and saving money.”

According to De Oliveira, taking a hot tub out isn’t a difficult job. Replacing a fullsized swimming pool, on the other hand, is much more of a challenge.

“A s w i m m i n g p o o l w o u l d b e a difficult thing because you have a large impression in a slab. It’s not a difficult thing to take out a hot tub and to infill and to make it into an exercise room.

A s w i m m i n g p o o l i s a l i t t l e m o re challenging because it’s a large area you have to infill. And you have to get structural drawings and you have to adhere that the structure you’re putting in can carry the load and so on and so fourth. So it’s a more detailed renovation than to replace a hot tub.”

But if it’s in the interest of saving money and making better use of the space, it might be worth the effort.

“The bottom line is better utilization of the space, saving money and saving energy,” says De Oliveira.

Finding the right balance bet ween useful and varied amenit y spaces and keeping c osts d ow n w ill m ake residents happy and attract buyers who appreciate a condominium that is wellrun and up to date. CB

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design

Time to upgrade Condominium owners are faced with some tough decisions

these days. “When is it a good time to put my condo on the resale market? If I sell now, will I get a reasonable return on my investment?� Even though Toronto has been experiencing a rise in the housing market in resent months, condo owners who are outgrowing their current spaces have to think hard By daria winnicki about these questions.

October 2009 19

design

This position is indeed a strong option for many condo owners and the Federal Government is certainly assisting owners to make this decision easier. Through the Canada Economic Action Plan, and the implementation of the temporary Home Renovation Tax Credit (HRTC), the house, condo and cottage owner now has an opportunity to put their tax dollars back into their respective residences. This 15 per cent non-refundable tax credit will apply to eligible home renovations

m a d e af te r J a nu a r y 2 7, 2 0 0 9 a n d before February 1, 2010. Claims may be submitted when filing income tax returns for 20 0 9 on expenditures exceeding on thousand dollars, but not more then ten thousand dollars for a maximum tax relief of $1,350. This is a significant amount which will encourage 4.2 million Canadian families to take advantage of this opportunity.

The type of expenditures incurred during a renovations which qualify are such as;

20 CONDOBUSINESS | www.condobusiness.ca

professional services, building materials, fixtures, building permits and cost of labour.

It does not include the purchase of new furniture, appliances, tools, or the cost of any maintenance.

Condominium corporations need to be aware that an eligible condo owner can also submit expenditures endured when renovating the common areas. In addition to determining what type of renovations will be best for the building, condo corporations are also responsible for reviewing and approving unit owners’ requests for renovations: a task which includes ensuring all renovations abide by the condominiums bylaws and rules. Condo corporations and their board of directors certainly have a busy year ahead of them.

Most condo owners should be focusing on two areas to renovate – kitchens and bathrooms. If the owner purchased the unit originally from the developer, they most likely selected from the builder’s standard finishes.

Over the past several years, builders' standard suite finishes have improved signific antly. Buyers are demanding higher quality features and stipulating finishes be included in the purchase of a new construction condominium. In case of an older condo unit on the resale market with laminate finishes, dated cabinetry, old appliances and carpeting, then this unit should be updated to compete with the growing number of new buildings in the marketplace.

Potential buyers in this market need to be wowed. Home staging (the act of preparing a private residence for sale in the real estate marketplace) highlights a condominium unit’s best features, shows the buyer how to make best use of the space and helps them connect emotionally with the space so the real estate representatives hears, “We love it…let’s put in an offer.” But, if the key features of the unit are not up to the industry’s new standards, then no amount of home staging will help an older condo stand strong against the hot, new buildings.

Owners of older condo units who choose to take advantage of the Home Renovations Tax Credit need to keep prospective buyers in mind and consider what type of features and finishes are important to a new occupant.

design

Kitchens When it comes to kitchen design, functionality and style need to come together. For most of these small condo units, the kitchen is the most important area and takes up the majority of the square footage. In addition to being the area of preparation and cooking, kitchens also function as dining areas, work surfaces and storage spaces. For example, a client of mine turned her hallway pantry into a shoe closet. Versatility is the key here.

Before choosing materials, owners should look closely at the style of the building, which was determined by the architect and interior designer. For example, a slender glass downtown To ro nto buil d ing w ith a m o d er nist a e s t h et i c w i l l a t t r a c t b u ye r s w h o appreciate sleek cabinets, quality materials and stainless steel appliances or, better yet, integrating the appliances with the cabinets. The purchase of new appliances is not, however considered an eligible expenditure for the HRTC. Selecting a countertop material that is different from the standard granites seen all over Toronto will set a unit apart from competition. Quartz is an excellent alternative. This natural material is available in a large variety of colours and is stronger and requires less maintenance then granite, as it does not need to be sealed.

Backsplashes help tie in all the different materials in the kitchen and are a great opportunity to get creative. With all of the material choices available today, the best direction is to keep the design fresh and clean. Adding under mounted cabinet lights will highlight the backsplash and provide more adequate lighting to the work surface.

made by DuPont, is a blend of acrylic polymers and stone derived materials. It's a material which can be shaped into any style and can achieve a custom look.

In the competitive Toronto condominium market, it is beneficial for unit owners and condo corporations to take every opportunity available to help set them a p ar t fro m the other s . T he H o me Renovation Tax Credit does not only help homeowners improve their existing spaces, but it also creates economic

activity by creating jobs for contractors, designers, trades, suppliers‌a plan that benefits many. CB For more information regarding the Home Renovation Tax Credit, please visit www. cra-arc.gc.ca/hrtc/.

Daria Winnicki is an Interior Designer and Real Estate Sales Representative. For further information you may contact her at daria@designdevelopment.ca.

Bathrooms Converting the rarely used bathtub to a modern spacious shower will help add value to the unit. Moving around the location of the fixtures is usually not an option in condo renos, the selection of bold tiles with a light texture will add depth and warmth to a typical bathroom layout. With rain showerheads becoming affordable and more common, replacing the builder’s faucets and fixtures is highly recommended.

Vanities are key when upgrading a bathroom. Laminate counters and drop in sinks are now updated. One-piece sinks and countertop vanities are a great option when working with small spaces. Corian October 2009 21

marketing

Condominium minimalism Living in the lap of luxury is not a realistic choice for many

condominium residents anymore and many are looking towards a streamlined future.

Developers are making the choice to cut back on the expensive By erin decoste and lavish amenities and designs that are so often attributed with condos.

October 2009 23

marketing

The current landscape shows an overall shift towards a less luxurious design in the building and look of condos. This is not to say there is no place for a grand showcase of wealth but that as the collective wallet gets lighter, many are making wiser decisions about where their money is spent.

Builders are going back to the basics in condominium designs and buyers are responding. Olympic-sized swimming pools, state of the art spas and elaborate lobbies are no longer the norm, instead a pared down look is all the rage, especially for firsttime buyers.

24 CONDOBUSINESS | www.condobusiness.ca

A sc aling down is bet ter for the pocket book and most buyers, realtors and developers would agree that fewer amenities means fewer condo fees.

“The trend for living right now is living cheaper and green living,” says Joy Paterson a sales representative at Right at Home Realty Inc. “A lot of newer buildings are including smaller pools and other scaled back amenities to cut costs.”

Paterson thinks that many buyers are looking for ways to cut costs but still enjoy their homes.

“People are definitely looking for lower maintenance fees,” she says. She mentions that people are becoming less comfortable with paying exorbitant fees to live in their homes.

Many condos are cutting back on upscale amenities because besides the upfront cost there are the long term fees to consider. Exercise rooms, pools and spas all require maintenance and the older they get the more they require.

P rac tic al amenities are not g oing anywhere, however. Twenty-four hour s e c u r i t y, c o n c i e r g e s a n d b e a u t i f u l lawns are necessary luxuries.

A recent survey done by the Pew Research Center found that the recession has changed American minds about what household items are luxuries and what are necessities.

The survey polled 1, 003 Americans about what they buy for their homes and what they consider to be extravagant.

The poll found that 6 6 per cent said the dr yer was a necessit y, which is

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down from 83 per cent in 2006 and the dishwasher was found to be a necessity by only 21 per cent of respondents, down from 35 per cent.

T his sur vey reflec ts the growing trend brought on by the recession of a streamlined approach to living. More

people are willing to cut back on the things they deem luxuries and see the past necessities as unneeded. Some of this scaling back may be due to environmental concerns. People are more aware of their ecological footprint and may not want to waste electricity to dry their clothes.

Yet some believe that luxur y never goes out of style, no matter what the current economic situation happens to be. Developers are getting creative to appeal to buyers instead of pushing the same, albeit expensive, amenities. The mainstays are nice, but focussing on facilities and services that others lack is what attracts buyers.

“Developers are tr ying to be different with coming up with different amenities,” says T ina A mato, vice president of Baker Real Estate Inc. “There’s a lot of different amenities in the buildings, for example, swimming pools, exercise facilities and theatres.”

The more creative and different a condo is the more likely people will be interested. They will buy into the idea

of creative luxury, even on a budget.

And many first-time buyers are looking to spend their money on a condo that will suit their particular needs, like a building that is in the heart of a bustling downtown core.

Condos that adapt to the public’s demands are going to survive in the long run. If more people are deciding that they really don’t need all the extras then designers and developers must try to work that into their new condos. Luxury living is hardly a thing of the past but with more buyers aware of the costs of extravagance, whether financially or environmentally, a simple back to basics model of living will prevail.

W hatever a buyer or developer chooses, whether it is to offer or buy into grand luxury facilities and services or to scale back, condos are becoming increasingly flexible to meet a myriad of tastes. It remains to be seen what the future holds for condos. Grand or humble, expensive or chicly affordable, condos are at the forefront of an exciting time in real estate. CB

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marketing

The evolution of trends in condominium amenities By tammy gilmer

For the past few years, condominiums have grown

in popularity in most major cities as urban centres expand. With an abundance of condominiums emerging in urban cores and surroundings alike, prospective buyers have much to consider when searching for the right dwelling. As city life evolves, condominium builders are incorporating features that allow owners to live, work and play altogether in one convenient location.

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marketing

S inc e the p ro lifer atio n of c o n d o projects, amenities have greatly evolved adapting to the changing needs of society.

Amenities that were once a luxury are now considered standard. Hardwood and laminate floors, granite countertops, stainless steel appliances, fitness centre, pool and the concierge desk have become the usual standard features in today’s condominium complexes. Other features such as business centres which were the rage a few years back, have been replaced with a conference room or boardroom, large pools are being replaced by smaller ones with currents to swim against, with spa-like areas complete with hot tubs and saunas.

The newest trend amongst condominium amenities include the yoga studio and massage room, the theatre room with big screen and comfortable chairs, fancy party rooms and guest suites allowing owners to make use of common amenities while saving on the square footage in their unit.

More luxurious features include private wine cellars, humidors, infinity pools and screening rooms.

Green construction is also emerging as LEED certification recognizes buildings and developers for their efforts to build new construction with a green philosophy in mind. Developed by the U.S. Green Building Council (USGBC), LEED provides building owners and operators a concise framework for identifying and implementing practical and measurable green building design, construction, operations and maintenance solutions. It aims at improving performance across the most important metrics including energy savings, water efficiency, CO2 emissions reduction, improved indoor environmental quality and stewardship of resources.

Up and coming trends to look for are Wi-Fi connectivity, media rooms, grocery stores, art collections, rooftop sculpture gardens and outdoor amenity decks with tennis courts, pools, and pet walks.

Low maintenance, front desk security an d p rox imit y to c entr al are as are common amenities that attract most people to this lifestyle including young professionals, newlywed couples and retirees. In addition to the convenience these types of dwellings offer, condo

Leaders in Condominium law Nelligan O’Brien Payne’s Condominium Law Group is extensively involved in all matters related to existing condominiums, the conversion of other forms of multiple unit housing to condominium, and condominium development.

We can also assist in representation in all types of litigation, including:

Construction deficiency claims Claims under the Ontario New Home Warranties Plan Act Insurance defence proceedings Disputes between condominium corporations, owners, and tenants www.nelligan.ca

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613-238-8080

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October 2009 27

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properties are an affordable way to get into the market whether it be as an investment opportunity, a first home or an opportunity to live in the centre of it all.

This year is proving to be a good time to join the market according to a recent House Price Survey (Q2-09) and Market Sur vey Forecast released by Royal LePage Real Estate Services. The report says that as the economy begins to stabilize and consumer confidence improves, house prices are expected to appreciate slightly in much of eastern and central Canada.

“S lightly lower condo prices, an abundance of condos to choose from – with varying amenity options – and a variet y of government incentives, it is indeed a favourable time to get into the market and enjoy the condo lifestyle whether it be in an urban setting or slightly in the outskirts of town,” says Trish Manning, broker and manager, Royal LePage Real Estate Services Ltd. When shopping for a condo, the most important features prospective buyers

seem to b e intereste d in are g y m facilities, 24-hour security and concierge and visitor parking. With parking in urban areas hard to find, and costly when available, prospective condo owners like seeing more spots for guests and visitors. Security offers peace of mind and although it adds to the cost of maintenance fees, most buyers will gladly pay the difference. Rooftop patios with a view for use during the warmer months are also coveted.

While amenities are attractive and appeal to many buyers at first glance, smart buyers are aware that the more amenities a building has, the higher the monthly condo fees will be. This is especially the case with pools and security, as those features add to the expenses. As well, over time, condo amenities get old and require replacing or repair resulting in the increase of maintenance fees on a yearly basis.

Some condo boards have incorporated user fees that increase existing rental fees for party rooms and meeting rooms.

They have also established cleaning fees

28 CONDOBUSINESS | www.condobusiness.ca

for owners who book certain facilities, where in the past a refundable security deposit is all that was required.

There is no doubt that high condo fees equate to a lower resale value as buyers are very aware that condo fees will continue to go up and become reluctant to buy in a building that already has high fees. An interested buyer may not even consider viewing a unit if the condo fees are high. However, although most buyers look for lower condo fees, if the building offers the amenities the buyers value and feel are important, they usually will not object to paying for them.

As new condos emerge with newer, state of the art amenities, keep in mind the features that are most coveted and add to resale value include a modern and updated lobby and security, especially among females who are an important segment of today’s real estate market. CB

Tammy Gilmer is the Director of Public Relations and National Communications for Royal LePage Real Estate Services.

legal

How much is your spa really costing?

The condominium corporation’s first year:

is there a period of time in the life of a condominium corporation that causes a corporation’s board of directors and representative management more stress and anxiety?

By joseph w. ryan

October 2009 29

legal

OUR COMMITMENT to our clients coupled with 30 years of experience drives our motivation in developing innovative and proactive property management services.

The question is largely rhetorical, as those who have served a Condominium corporation during that initial period of time will likely recall all too acutely the stresses and anxiety of navigating through the dark, unfamiliar territory of a condominium’s first year. There are plenty of individuals prepared to assist a corporation in finding its way (for a modest fee, of course). Invariably the course is somewhat easier to navigate i f the b o a rd a n d m a n a g e m e nt a re aware of the key markers that signal potential hazards. That observation is particularly true in situations relating to the condominium’s recreational amenities and the agreements governing their use and operation.

In an age of shrinking average unit sizes, it seems developers are i n c re a s i n g l y a t te m p t i n g to a t t r a c t prospective purchasers with enticing shared facilities - such as an exclusive night club or a Mediterranean style pool or spa - as the bait to get purchasers to bite.

GPM PROPERTY MANAGEMENT INC. 242 Applewood Cres., Unit 5 Concord Ontario L4K 4E5

905.669.0222 416.245.4005 visit us at www.gpmmanagement.com

30 CONDOBUSINESS | www.condobusiness.ca

H owever at trac tive they may b e, all of these facilities are governed by agreements. Boards and management must therefore be particularly vigilant of more complex agreements that might contain onerous or even oppressive provisions for the condominium corporation. T hese provisions could have unforeseen, unanticipated consequences, par ticularly as these f a c i l i t i e s a re i n c re a s i n g l y s e e n a s profitable enterprises long af ter the condominium is turned over.

Consider the following example where a condominium corporation is bound by the declarant’s board to an agreement which sets out, among other things, a formula for the calculating and setting of fees and for the collection and payment of such fees, in relation to the use and enjoyment by unit owners of recreational facilities which the developer will continue to own and operate.

That agreement sets the fees at an initial, attractively low rate and freezes those fees for what appears to be a

legal

seemingly reasonable period of time, after which the developer can raise those fees annually by a healthy percentage. There is no specified term for the agreement nor any mechanism specified in the agreement for revisiting or renegotiating some of its terms after a period of time.

Likewise, the agreement is silent as to any term of the agreement or mechanism for its renewal, nor is there any sunset provision on the developer’s right to increase fees annually – in other words, the developer, as owner of the recreational facilities, can increase fees each year up to the maximum prescribed p e rc e nt a g e a n d t h e c o r p o r at i o n is bound to pay it in perpetuity. In such a scenario, the potential cost exposure to the corporation over time could total in the millions.

However, there is help under the Condominium Act for those who take prompt action in such situations.

First, it is imperative that any agreement or agreements relating to the operation of these amenities be reviewed carefully and

as soon as possible after turnover under s.

43 of the Condominium Act. Any such agreements must be reviewed not just to understand the meaning and implications of individual provisions, but more impor tantly, to understand the manner in which those provisions interact and how they might operate in concert to visit serious prejudice on the condominium corporation. If there is any doubt as to the meaning and import of any individual provision or the agreement as a whole, the agreement should be forwarded to the corporation’s solicitors to review.

S e c o n d l y, i f t h e r e i s a n y t h i n g objectionable in the agreement, the corporation should consider, in consultation with management and counsel, the remedies available to it under sections 112 and 113 of the Condominium Act. The nature of the agreement in question will, for the most part, govern which of those sections applies.

But, here is the caution: both sections are similar in that they both stipulate a limitation period for taking steps there

under of 12 months from the date of turnover. Boards and managers are cautioned not to underestimate how quickly that 12 month period can pass.

That limitation period in those sections is not flexible, fluid or discretionary. The corporation and management should assume that if the corporation is a day past that 12 month period, it is a day too late and a day unlucky.

Therefore, a concluding charge to boards and management alike: get on top of these agreements immediately, mark your calendars, be on the right side of time limits and when you turn to your favourite libation to quiet the noise in your head after a board meeting on this issue, make sure that you are lifting your glass in celebration and not tipping it in commiseration. CB

Joseph W. Ryan is a lawyer with Fine & Deo Barristers and Solicitors and can be reached at jryan@finedeo.com or 905-760-1800 ext. 228.

October 2009 31

legal

Construction consideration As every property manager or condominium corporation

knows, it takes a tremendous amount of work to properly maintain the common elements of a condominium complex.

Generally, the required work can be categorized into two broad groups.

The first categor y is that of general maintenance. This would include things such as cutting the grass, maintaining pool facilities and ensuring that janitorial needs are met. The second broad category is that of facility improvements, such as a restoration of underground parking facilities or the re-facing of the exterior of a building.

Each categor y posses its own set of unique challenges for the property manager or condominium board who is responsible for overseeing the work.

Facility improvements Facility improvements tend to be larger construction projects that require more planning and supervision than day to day maintenance. In a typical construction project, an owner, or an agent of the ow ner, eng ag es the ser v ices of a

By sophie patrillo general contractor to build a specified improvement. The general contractor, in turn, will retain the services of numerous subcontractors, each of whom will be responsible for a specific aspect of the overall construction.

These subcontractors might engage the services of further subcontractors, workers or material suppliers for the completion of their part of the project. As a result, the contractual organization of a construction project usually resembles a pyramid with multiple branches stemming out representing all of the different contractual relationships between the various parties working on the contract.

In cases such as this, only one person – the general contractor - will have a direct contractual relationship with the owner.

Contract law is fundamentally based on the doctrine of “privity of contract.”

That is, only parties to contracts should be able to sue to enforce their rights or claim damages. The requirement of privity under the law of contract effectively prevented subcontractors from claiming against anyone but their respective payers should they not be paid. As such, subcontractors had no contractual claim against the owner. This left very little protection for those subcontractors and material suppliers that were further down the construction pyramid.

In Ontario, there is legislation which s et s o u t s p e c i a l re m e d i e s , r i g ht s and obligations of parties involved in a construction project. This is set out in the Construction Lien Act (“Act”). The perceived need and consequent demand for special statutory protection for the suppliers of services and materials to the construction industry grew out of October 2009 33

legal

the complicated nature of the construction industr y and the perceived inadequacy of ordinary contract law to deal with the contracting practices of the construction industry. A basic awareness of the obligations imposed by the Act is necessary to ensure that a condominium corporation does not run a foul of the legislation.

The Act applies to any “supply of services” or “materials” to an “improvement.” These words have a very specific legal meaning.

The term “supply of services” describes any work done or ser vice per formed upon or in respect of an improvement.

“Materials” include any movable property that is used, facilitates or becomes part of the improvement. Finally, an “improvement” refers to any construction, alteration, addition, repair, erection or installation on any land.

Most would agree that a brick layer who supplies the bricks, mor tar and labour to construct a building fits within the parameters of the Act. The brick layer’s physical labour would be a supply of services, the bricks and mortar would be a supply of materials and the construction of a building would be an “improvement” within the meaning of the Act. However, not all cases are as clear cut as this and there are definitely some grey areas in the law as to what constitutes an “improvement.”

Generally, the courts have held that there must be some degree of permanence to the improvement that is made for lien rights under the Act to arise. For example, landscaping work that results in a permanent change in the appearance of the premises, such as the planting of trees or the laying of sod, would be an “improvement” under the Act, whereas the mere cutting of grass, weeding or pruning would not give rise to a lien. The supply and installation of furnaces, elevators, escalators, boilers and air conditioning equipment are further examples of the type of items that fall within the definitions of the Act. A s a g e n e r a l r u l e of t hu m b, l a rg e capital projects and facility improvements tend to fall within the definition of an “improvement” under the Act. As such, the obligations imposed by the Act must be satisfied to avoid potentially costly litigation. A full examination of the Act would be lengthy. However, from the perspective of the “owner,” the most important section of the Act is that which deals with the “holdback.”

34 CONDOBUSINESS | www.condobusiness.ca

legal

General maintenance contracts General maintenance of the common elements does not amount to a “building” or a “repair” to the land and, as such, does not constitute an “improvement” within the meaning of the Act such as to trigger lien rights.

Accordingly, holdback is not a consideration when dealing with these types of contracts. Notwithstanding, care should be taken when entering into service contracts, or any other contracts for that matter, to prevent possible litigation down the road.

Make sure your contracts are in writing – contracts should be reviewed annually and a determination made as to whether they need to be updated or otherwise

The holdback is an insurance fund providing a measure of securit y for the payment of suppliers below the contractor and sets out the maximum extent of the liability of an owner in certain circumstances. The Act provides that each payer upon a contract or subcontract under which a lien may arise must retain a holdback equal to ten per cent of the price of services or materials as they are actually supplied

amended. Any material changes to the scope of work or contract price should be properly documented.

Shop around – when hiring a service provider, whether it is for janitorial services or security forces, interview different companies. You may find that certain companies fill your needs better than others.

Ask for references – speaking to previous customers can be an invaluable tool as it can provide a sense of a company’s past performance.

under the contract or subcontract until all liens that may be claimed against the holdback have expired or been otherwise satisfied. The Act sets out in detail when lien rights expire.

Consider the following example: Owner Inc. hires ABC General Contracting Ltd. for the reparation of the concrete parking garage roof slab, landscaping and paving at a cost of one million dollars, inclusive of all taxes. ABC General Contracting

Ltd. hires a subcontractor to carry out certain portions of the work and also rents equipment necessary to complete the contract from a rental company. It is agreed that ABC General Contracting Ltd. will bill Owner Inc. by way of ten draws of one hundred thousand dollars each.

Each time that ABC General Contracting Ltd. submits a draw request to Owner Inc., Owner Inc. is required to retain ten per cent of the payment as basic

October 2009 35

legal holdback. As such, Owner Inc. will only pay ABC General Contracting Ltd. $ 90 thousand each time that a draw is submitted.

Provided that Owner Inc. maintains all the proper holdbacks, at the end of the contract it will have a holdback pool of one hundred thousand dollars.

This money is held by Owner Inc. until the expiry of the lien period, at which time a search is conducted to determine whether any liens have been registered against the property. If there are no liens registered on title, Owner Inc. is safe to release the holdback to ABC General Contracting Ltd. However, if either the subcontractor or equipment supplier remains unpaid, and registers a lien, and proves the quantum and timeliness of its lien, the holdback money is made available to it. If the lien is for less than the holdback, the lien claimant would be paid in full and the balance, if any would be released to ABC General Contracting Ltd. If the lien is for an amount greater than the amount of holdback retained, Owner Inc. is not responsible for a greater amount as it maintained all the proper holdbacks. The lien claimant would then look to ABC General Contracting Ltd. for payment of the balance of its account.

If Owner Inc. failed to maintain the proper holdback and paid ABC General Contracting Ltd. in full before the expiry of the lien preservation period, if a lien was subsequently registered, Owner Inc. would be required to pay the holdback to the lien claimant out of its own pocket.

No par t y can contract out of the provisions of the Act. Accordingly, there is no mechanism by which the holdback obligation can be avoided. The examples above are in no way meant to be an exhaustive discussion of the impact the Act could have on a construction project.

H o w eve r, a t a m i n i m u m , i f yo u a re undertaking a project, stop and consider w h et h e r t h e p ro j e c t fa ll s w i t hin t h e definition of “improvement� and consider whether a holdback should be maintained.

If necessar y, seek clarification of your obligations before proceeding in a manner that could put the condominium corporation at risk.

No matter how careful you are, problems can and do arise. However, doing a bit of extra work at the outset can save you time and money down the road and possibly prevent the condominium corporation or property manager from being involved in litigation. CB

36 CONDOBUSINESS | www.condobusiness.ca

design

The party room By heather ann scott

The infamous party room,

almost every condo has one left empty

and often dark. Is there a reason that these rooms for the most part remain dead spaces? Of course, they were designed that way.

October 2009 37

design

“

The idea of booking reception-style rooms for parties may be outdated.

As an amenity, the idea of a party room is appealing for condo unit owners who live in small spaces and think it a bonus to have a big beautiful room to throw a party for that special occasion. But not many people end up using it. We all have birthdays once a year and holiday traditions and occasions to celebrate like anniversaries or a birth. But the idea of

booking reception-style rooms for parties may be outdated since the rooms aren’t really that great and they serve a very limited use.

Designers know that form follows function and that aesthetics add value, therefore a square room with a small kitchen and finished with typical wallcovering and carpet is a classic example of “it is what it

38 CONDOBUSINESS | www.condobusiness.ca

”

is” and it’s not very appealing or valuable.

So what would be a better design for these rooms? Let’s start first by opening up the door with availability.

If the space was open for use most of the time, it would automatically expand the limited function of the room from just a party room. Availability would mean the usage would have to be variable for day

design

and night and desirable for both, a multifunction common space. The idea is not to eliminate the ability to have a private function, but to enhance the existing facility to include everyday benefits.

It’s already equipped with a kitchen, tables and chairs, how about a little service please? A private vendor could make use of the kitchen and serve a limited daily menu – a quick breakfast and coffee in the morning, coffee and biscuits in the afternoon or a fresh health shake or power bar after exercise. With the installation of a second lockable fridge and a roll down pantry, the space receives a major upgrade for the use and value of the facility.

Now that we’ve added food service, take a look at technology. Would residents find value in free wireless internet service in this common area? It’s easy to bring a laptop in and more private than a coffee shop. For those who work at home, perhaps the change of scenery or ability to meet a client would be well served. And for some who are occasional internet users, this might mean savings and convenience, a real bonus. Consider adding screens or projectors with satellite TV and video services so residents can catch the news, watch a sporting event or view a personal production at an event, maybe a birthday memorial.

Practical functions must meet with an attractive and comfortable atmosphere to invite people to use it. Lighting and sound are key elements. The quality of light has an enormous effect on the mood of any space. Varying light sources with multiple controls such as switching and dimmers will provide flexibility for different settings throughout the day and night. How the space makes you feel is as important as what you do there.

Making these changes can offer many improvements and services added but its appeal comes primarily from appearances.

The room should be a blend of commercial appeal and residential comfort. A mixture of furnishings and seating areas with optional lounge settings can divide the space’s energy and functions. Consider the appeal of a favourite restaurant, coffee shop or lounge. It’s the design that brings repeat business. The use of interesting materials and colours, attention to detail and focal points create an ambience that is comfortable but not too familiar.

Consider the ceiling, for example. It shouldn’t look like a bedroom or living room. Reflective surfaces used creatively will greatly enhance the use of lighting, sparkle and movement throughout.

There’s one more aspect that will make a dramatic difference, replace the basic building door with a glass entry door, open up and let the energy flow.

When there’s a par ty, the room is booked as usual except there is nothing

quite usual ab out this p ar t y ro om.

Rearrange the furniture, adjust the mood lighting, connect a laptop or iPod to the sound system, turn on the visuals tune in to MTV, it’s party time. A new generation has arrived and it is time to evolve into a better design. CB

Heather Ann Scott can be reached at info@ heatherannscott.com or 416-591-8404.

Fabrication

Renovation

Accessories

Custom Elevator Solutions

Tel: 905.837.6751 Fax: 905.837.6753 www.premierelevator.com info@premierelevator.com

October 2009 39

Management

Do your homework The choice of elevator service provider is of critical importance to property managers, the board and to the condominium owners.

By phil staiter Ever y day many people depend on the safe and reliable operations of a condominium’s vertical transportation system. The elevator system is made up of electrical and mechanical equipment that is constantly moving.

Ty p i c a l l y, a 15 - f l o o r b u i l d i n g w i t h three elevators averages 35 0,0 0 0 to 400,000 starts per year. Problems can

be experienced with the equipment or there can be perceived problems with the elevator equipment.

Elevator service should be a partnership b et ween the building m anag ement and the elevator service provider. The relationship should be based on honesty and integrit y. Building management should also be educated to understand their contracts and elevating equipment.

The relationship should start w i t h t h e s e r v i c e c o n t r a c t . To d a y,

companies have many different types of c o nt r a c t s . Bu il d in g m a n a g e m e nt should have an understanding of what is and is not covered by their contract. Although the contracts m ay l o ok simil ar b et we en d if ferent elevator ser vice companies and there is only a slight difference in monthly m ainte n an c e p r i c e, the re m ay b e a major dif ference in what is covered un d er the c o ntr a c t . A lth o u g h s o me of the ter ms m ay b e te c hnic al, not October 2009 41

Management

“

The property manager should

understand how much their elevator system is used before signing an elevator maintenance contract.

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5:41:35 PM

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understanding the contract may result in extra costs for building management.

Types of maintenance agreements Knowing the different types of elevator contract options can greatly increase the chances of saving money and finding a maintenance agreement that meets your building’s requirements. The more risk the board is willing to assume, the lower the cost of services. Most elevator companies of fe r t w o m a i n t y p e s of e l ev a to r maintenance contracts. These contracts offer a range of coverage options and discount opportunities.

A full maintenance contract (FMC) is written to allow an elevator service company to take total responsibility for the repair or replacement of elevator e quip ment id entifie d (althou g h the identified components may vary from c o nt r a c t to c o nt r a c t o r c o nt r a c to r to c o nt r a c to r ) i n t h e m a i nte n a n c e agreement The repair or replacement of components is the elevator contractor’s responsibilit y when required during normal use of the elevator, excluding outside influences such as vandalism, floods, etc.

Oil and grease (OG) or examination and lubrication contracts include lubrication of moving parts and minor adjustment on a regularly scheduled basis. When additional ser vices are needed, the mechanic repor ts potential problems to the proper t y manager who then schedules all repairs to be paid by the corporation. The monthly cost for the OG contract is relatively low but when you include repairs, the entire yearly cost is usually much higher and more complicated to budget. OG agreements also generate additional paper work, as the property manager must coordinate with the maintenance provider on all

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October 2009 43

Management

repairs. Customer satisfaction with this type of agreement is usually very low.

Coverage under a sur vey and report contract consists of quarterly, semi - annual or annual inspection of all major equipment components.

The inspection does not include maintenance, repair work or dismantling equipment. Maintenance or replacement recommendations may be completed by the owner or

b y s e l e c te d c o nt r a c to r s u n d e r t h e property managerâ&#x20AC;&#x2122;s coordination.

Understanding maintenance contract terms and conditions Next management will need to find an elevator company. The company selected will then perform maintenance services under the type of contract have specified.

But hereâ&#x20AC;&#x2122;s where troubles can begin. You must understand what is not covered

and how those services will be billed and what steps can be taken to control overall maintenance costs.

The proper ty manager should understand what the additional chargeout rate for work outside of the contract that is c omp lete d on a l ab our and materials basis. Charges for single man or team hourly rates for both regular time and overtime should be confirmed.

Also, it should be understood if there are additional charges, for such things as traveling to a job site or fuel surcharge.

The property manager should also know the minimum time charged for labour and materials.

The proper ty manager should underst and how much the elevator s y s te m i s u s e d b e fo re s i g n i n g a n elevator maintenance contract. Many elevator ser vice companies are providing onsite elevator maintenance much less than once per month although the maintenance contract is paid monthly. Most managers are under the impression that their elevators are maintained monthly, when some elevator service companies are visiting the site as few as three times per year. Preventative maintenance is key: this results in fewer c all backs and fewer shutdowns.

The property manager and elevator service provider should have a relationship so that the management can understand the life cycle of their elevator equipment and can plan accordingly. Major elevator components wear out over time and cannot be replaced any more, elevator technology is constantly improving the service, power usage and safety to the residents. There may be major safety features that can be addressed to reduce building liability to prevent accidents, such as trips and falls or people being struck by a door.

When the property manager und er st and s their elevator ser v ic e contracts and building requirements and is able to build a strong partnership with their elevator service provider, the result is reduced costs, increased communication and equipment planning for the future.

Phil Staite is Vice President of Quality Allied Elevator (www.qualityalliedelevator.ca).

44 CONDOBUSINESS | www.condobusiness.ca

SMART IDEAS

Painting windows From French doors to glass cabinets, painting windows can seem like a challenge. However, by breaking it down into these simple steps, youâ&#x20AC;&#x2122;ll be done in no time.

Clean window frames with a sponge and diluted soapy water.

Wash the sponge frequently. Allow areas to dry completely.

Apply painterâ&#x20AC;&#x2122;s tape to the inside corners of the windows and around the outside of the frame.

Paint following the directions from the paint manufacturer.

Remove tape at a 90-degree angle before paint fully cures. When painting more than one coat, use a utility knife around the inner tape edge to break the paint bond to tape and then remove at a 90-degree angle.

46 CONDOBUSINESS | www.condobusiness.ca