Investing in a Condominium is more than just paying the maintenance fees. Understanding the operations of the condominium can save you money and protect your investment. For previous articles in this series, please click: http://chinesenewsgroup.com/news/667830
Condominium investors must get involved with the management of their investment. They must participate directly or indirectly with its operations. One “direct” means is to become a member on its Board of Directors or committees. They can also pay attention to the condominium's financial health through attending its Annual General Meetings and requesting information and documentations from the Condominium Management as needed.
The Condominium Board is defined by Ontario's Condominium Act and the condominium's own declaration document. Typically, three or five Board members sit on the Board and are re-elected in different years to ensure quorum is achieved on the Board. Recently, the Condominium Authority of Ontario (CAO) requires each newly elected director to complete an on-line course within six months of election to ensure a basic knowledge of Condominium rules and management skills are attained by the directors. Failure to do so will disqualify the director(s).
Within the Board of Directors, meetings are conducted to review the affairs of the condominium and to provide directions and monitor the work of the Condominium Management contractor. The meetings and decisions are officially made in accordance with the condominium rules and when they are not specific, by Robert's Rule of Order (as used in corporate meetings). A majority of attending directors will set priority for projects, evaluate competing bids for projects, and select contractors under the advisement of the Condominium Management.
So far, we are talking about residential condominiums. What about commercial condominiums such as commercial plazas where businesses are conducted? The difference there will be the establishment of “self-directing management” in the case when small number of unit and owners are involved. Without the help of a “professional property manager”, the “self-managing directors” will have to be experienced and prepared to spend time to get things done. This opens up opportunities for fraudulent use of funds by directors while executing large projects and pocketing funds in collusion with contractors. There are also situations where contractors are rigging the bids and reaping high profits at the expense of the inexperienced directors. Both of these are criminal acts.
How to get rid of condominium directors when they are not looking after the interests of the owners? A director can be removed before the expiry of his term by a vote of the owners who together own a majority of the units and the owners may elect at any Annual General or Special Meeting any qualified person in the place of any director who has been so removed or who has died or resigned, for the remainder of his term. Otherwise, vacancies on the Board are replaced by a majority consensus of those remaining on the Board for the duration until the next Annual General Meeting where an election will be held.
Special Meetings can also be called by owners on any subject matter including the overturning of any of the Board of Director's decisions or removal of directors when a request by at least 15% of owners is received by the Board. It is therefore important for owners to be aware of the financial condition of the condominium and conditions of the condominium building structures.
In the case of the residential condominiums, Condominium Management can also take advantage of inexperienced or inattentive directors to collude with contractors and benefit financially from the transactions. This is a criminal act, of course. Over the years, I have even seen Condominium Management took out the reserve funds of a condominium and left the country!
In 2016, Canada’s Competition Bureau targeted the booming condominium sector in the Greater Toronto Area, ordering more than 100 condo boards to hand over records as part of a sweeping criminal investigation. The bureau is probing what it calls “allegations of bid-rigging and conspiracy” involving the region’s multimillion-dollar condo renovation industry.
Since 2017, property managers working in Condominium Management will require licences to provide condominium management services in Ontario. The regulation of property managers is designed to weed out the bad apples, which have received most of the publicity in recent years. There are three types of licences for condominium managers – General Licence, Limited License, and Transitional General License. Each requires an application to be filed by the manager, along with the fee and a police background check. They will need to be renewed and may be revoked in some cases when severe violations of rules and expected conduct are filed with the Association of Condominium Managers of Ontario (ACMO). ACMO rules are not applicable to “self-managing condominiums”.
We want to look after our investments and pay attention to the operations of our Condominium Corporation. Understanding condominium operations and getting involved are first steps toward that goal.
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