Legislative hearings 22 Oct 2015

Here are the Committee Transcripts: Standing Committee on Finance and Economic Affairs - 2015-Oct-22 - Bill 106, Protecting Condominium Owners Act, 2015.

There were 19 witnesses who addressed the committee. Some represented the condo industry associations, some were consumer advocates, industry professionals and some were individual condo corporation directors or owners.

The presentations are well worth reading as the witnesses brought forward different issues and problems that are important to anyone who is interested in the problems facing condo residents and owners.

Subcommittee report

Association of Condominium Managers of Ontario

Catherine Murdock, the current the president of the Association of Condominium Managers of Ontario and Dean McCabe, a past president and director of the Association of Condominium Managers of Ontario spoke for their association.

Mr. Holland Marshall
Holland Marshall, spoke on behalf of CondoMadness and listed the changes to the Act that need to be changed or repealed.

Ms. Barbara Captijn
Barbara Captijn is a new home buyer in Toronto and is the author of a consumer blog regarding new-home-buying issues in Toronto. She spoke about her concerns with Tarion providing inadequate protection for condo owners.

Mr. Chris Jaglowitz
Chris Jaglowitz is a partner at Gardiner Miller Arnold, a Toronto law firm that represents and advises several hundred condominium corporations throughout Ontario. We also assist unit owners individually and in groups. He is also the editor of the Ontario Condo Law Blog.

Ms. Nancy Lee
Nancy Lee is a homeowner and past tenant of a few condominiums throughout the GTA. Ms. Lee stated that Tarion  does not provide adequate protection for condominium owners.

Mr. Regis Jogendra
Regis Jogendra is a retired justice of the peace and he spoke on the need to stop the annual general meetings being controlled by the management company. They verify the proxies, they reject the proxies and they prevent proxy holders, duly authorized by the owners, from even participating in the meeting.

Mr. Jogendra also spoke on the need for condo directors to have proper qualifications and training.

Ms. Donna Lacourse
Ms. Lacourse stated that she is really worried about is excessive influence and control over owners and directors by industry associations.

She stated that when our building used ACMO-trained companies, we never once found a person who could type an error-free letter or who could spell or who would ever use spell-check. We never once found a person who could prepare standardized requests for quotes or who knew how to compare and evaluate contracts or even knew how to calculate the common expenses.

Her biggest personal concern is that the Condominium Authority will make the names of condo directors available to the general public. "But we directors are volunteers. We are entitled to our privacy, we are frequently physically vulnerable in our own home, and our identities should not be splattered over a provincial website. There is just no legitimate need to distribute our names to unknown persons without our explicit prior consent."

Ontario Home Builders’ Association
Mr. Stephen Hamilton and Mr. Joe Vaccaro spoke on behalf of the Ontario Home Builders’ Association. One very interesting point that they raised was to include the 10-day cooling off period that buyers or new condos have to purchasers of re-sale condos.

They also support better disclosure for purchasers of new and resale condominiums as when someone lives in a condominium, they are also living with a new community of owners that have a shared responsibility for the well-being of the building.

Miller Thomson LLP
Mr. Patrick Greco, Mr. Warren Kleiner and Ms. Megan Mackey are partners in the condominium law practice.

Their presentation was very interesting with these two paragraphs being of special interest:

"There must be an obligation for shared facilities agreements to be fair and equitable. Developers often prefer themselves when they’re drafted. Some good changes have been proposed, but those aren’t enough. Too often, the residential components subsidize the commercial. We have situations with commercial garages where the slab is a common element, so the residential corporation pays for its replacement. We have situations with residential corporations subsidizing hotel services and amenities, and the residential condominiums have absolutely no say. Sometimes, it’s one residential corporation subsidizing another through unfair cost contributions."

"With these changes, shared facilities agreements being fair and equitable, good-faith disclosure requirements and banning the leaseback of ensuite equipment, developers will still build, sell units and make money, but purchasers in Ontario would at least have some measure of protection."

Eagle Audit Advantage Inc.
Ms. Judy Sue and Mr. William Stratas spoke on how easy it for contractors, property managers and rogue condo directors to commit fraud.

"We learned that all condominium corporations are equally vulnerable to financial exploitation and victimization by trusted persons of authority, including managers and sometimes the directors themselves."

"In their marketing materials, all management companies claim to have best practices in place. We have found that in some companies, there appear to be absolutely none. This problem appears in all sizes of management companies, including some of the largest ones. When there is an absence of internal controls at a management company, it can permit an astonishing scale of losses by fraud."

"Reasons for termination of managers absolutely must be disclosed. The industry recycles its duds. This is a huge problem. The licensing regime needs to know the real story about what’s happening in terminations or, shall we say, voluntary departures. Whatever the case, put it on paper, put it in writing, disclose fully and transparently. Transparency was supposed to be one of ACMO’s themes."

"The criminal process has an importance for public deterrence and public denunciation. It is really interesting when you compare the record of prosecution and pursuit of management company and manager misconduct in the United States, in major jurisdictions like Florida and other places—I follow all this on the blogs, on the Web. They are always prosecuting and charging major crimes. In Canada, nothing. It’s very silent about that. People seem somehow not wanting to make the call."

Malvern Condominium Property Management
Mr. Van Smith is an experienced property manager. He spoke on the number of ways fraud happens in condos and he made some good suggestions on how to improve the procurement process.

Advocacy Centre for Tenants Ontario
Kenneth Hale is the director of advocacy and legal services with the Advocacy Centre for Tenants Ontario.

He stated that residential condominiums have been the primary source of new rental housing for the last 30 years in Ontario. In the Toronto and Ottawa CMAs alone almost 100,000 condominium units are occupied by tenants.

He want to insure that eviction of residential tenants should only be granted by the Landlord and Tenant Board and not by the Condominium Authority or Superior Court.

Mr. Charles Smedmor Mr. Ronald Smith
Charles Smedmor and Mr. Ron Smith are chartered professional accountants. They are specialists in forensic and investigative accounting

The three main points they made were that there should be enhanced protection of the condominium's reserve funds, enhanced auditor reporting and a code of ethics for condo directors.

Mr. Charles Smedmor stated:
"I, as a chartered accountant, am amazed at how many people—I find, and Ron is of the same opinion—do not understand what exactly is a crime in terms of white-collar crime in Canada. A secret commission is in section 426 of the Criminal Code, but most people think that if someone gives you two airline tickets to Florida in return for getting them the gardening contract, that’s just a gift. No, it isn’t. To even seek or to receive it is a crime.

I believe that we should have, in the education for the condominium directors, a fair dose of explaining the crimes that they have to watch for, the white-collar crimes that can create problems for their condominium corporation and for them personally."

Mr. Ronald Smith:
"And to me, if the board was strong—and how do you get a strong board, because they’re inheriting things from the board before them, and if they’re not trained and if they don’t have the business acumen, they’re just repeating the same sins of the past? Property managers can just run roughshod over a board, and a board is left with being a rubberstamp. So the board, being the gatekeepers, if they knew what really is expected of them, then I think they would rise to the task, because the board members are good people who are volunteering their time—"

Condo Information Centre
Anne-Marie Ambert is an condo owner, a former president of the condo board, and she was also the only owner on the government’s expert panel.

"In the past six years, since my website, which is meant to help condo owners, was launched, I have received over 3,700 letters, largely from desperate condo owners, which reflect some of the realities in about 40% of all the condos in Ontario."

"I want to point out that financial matters in condos account for over half of all the letters that I have received. This is, in other words, the number one problem. There is a great abuse of surplus monies. Article 84(2) is regularly abused in the sense that many condos have, in effect, a third budget. In addition to the yearly common expenses and also a budget for the reserve fund, they have what they call an “emergency” fund or a fund by any other name. This is often where the surplus goes, and this third budget is not regulated by the act. As a result, boards use it as a slush fund for their pet projects that may run into the tens of thousands of dollars without having to ask owners’ permission."

"A very big issue is the lack of approval by owners of substantial modification—which is article 97(6)(a)(i)—which will not so much change with this act. As currently written, it states that any modification that a board wants to make does not need owners’ approval if the planned expenditure is lower than 10% of the annual common expenses budget. When condos have annual budgets over $2 million—as more and more will have, and do have—this means that a board can, in effect, spend up to $199,000 of owners’ monies without these owners’ approval. This is a lot of money, and this is being spent on modifications—what I call frills."

"Indeed, contractors are attracted to condos that can spend a great deal of money without having to ask owners’ permission."

"I know that in some condos you have a president, for instance, who has been their president for about 20 years and he aged as gracefully as possible with the rest of his poor elderly owners; he goes to each one of these and he threatens them. He tells them, 'If you don’t vote for me on your proxy, you won’t have the services that I’ve been giving to you. You know how good we are.' And they’re terrified."

Mr. Calvin Tarr
Calvin Tarr. I’m here as an independent condominium owner.

That’s been my experience in condominiums. It went from getting involved with the condominium auditor and recognizing that he wasn’t there to serve the interests of myself as a condominium owner, or a contractor. Next, I brought concerns around building code violations to the property management and also to the board, to find out that there was no one there, either, to take interest in making sure that the things that were concerning me would be addressed. So I’m finding out that there were no enforcement mechanisms in the condominium that I was living in that had also to do with fire department violations. I was unable to get any servicing around that.

So that caused the condominium to instruct management to go ahead and tell security forces that I should not be walking in any other building other than the one I occupied, which had me getting a trespass notice that later went to court. Of course, it did not stand up in court

I have concerns around proxies, in that just last year there was a need for two AGMs that had to be held in the building within a one-week period. Given that proxies were written up, there were four positions available. Three board members’ names that were running for the board had their names put in the first three spots, leaving just one blank line. That would have someone thinking that you’re only allowed to vote for one person, when in fact you’re allowed to vote for four.

In that same election, the property management went ahead and instructed security to just leave on doors campaign literature that was from the president. Three candidates who were running for the board had their campaign literature taken off of doors by security.

Ms. Reva Landau
My name is Reva Landau. I’ve been a condominium unit owner and resident in a 200-unit condo in central Toronto since 1993. I’ve also been a member of the board on several occasions, for a total of about nine years.

I have waited four months on several occasions to see approved board minutes and financial statements. It was after significant, constant emails, telephone calls and letters to the board that I finally received them.

Most condominiums have at least some non-resident owners. In Toronto, a number of condominiums have 50% to 60% non-resident owners. Unless an owner can get a hold of the names and mailing addresses of other unit owners, they can’t contact them to force a vote on the rules, to force a vote on questions of changes and modifications that do fall under section 97, and for a number of other issues.

Now, judges have ruled that unit owners do have the right to the names and mailing addresses of other unit owners, but some condominium boards and property managers say, “That’s just the opinion of a couple of judges. We don’t have to release the names and mailing addresses.” They claim privacy concerns, or that subsection 55(4) forbids them from releasing records relating to specific units or owners

Mr. Craig Robson
My name is Craig Robson. I’m the representative of the Waterloo Region Home Builders’ Association

We have to be very, very careful about these property management requirements and licensing. I think it’s a good thing to license property managers generally, but if you’ve got a small condo in Fenelon Falls with 20 units in it and the nearest property manager is a guy who spends most of his time in the men’s room at the Queens, you would probably not necessarily want to hire that person

Real Estate Institute of Canada
Johnmark Roberts and Scott Fischer spoke for REIC.

First, REIC supports the establishment of the two new condominium authorities, however they are greatly concerned about the costs associated with these self-funded bodies.

We fear that, without proper oversight, the condominium authorities could needlessly make condominium ownership more unaffordable by unilaterally raising fees. We recommend that Bill 106, section 129 and section 130, be amended so that any fees and levies should be set by the minister and Lieutenant Governor in Council for better oversight and transparency.

Second, as an educational organization with a strong professional code of ethics, REIC supports raising the standards for a condominium board of directors.

Compulsory education for new board members is a good idea but could easily increase costs and discourage owner participation. The training of directors should be a best practice that should be encouraged through incentives and education but left to the discretion of each corporation. Further, we recommend that the educational training programs should be expanded to include leadership, governance, asset management as well as responsibilities and liabilities.

ADR Institute of Ontario, Inc.
I am Susette Clunis and I’m the executive director for the ADR Institute of Ontario

ADRIO supports the retention of mediation as a means of resolving condominium disputes.

ADRIO believes that arbitration is an appropriate process for determining certain condominium disputes. To the extent that some disputes are not governed by the condominium authority, arbitration might be a viable alternative to court. ADRIO believes that disputants should have an option to arbitrate if all parties consent to the process.

ADRIO supports the inclusion of dispute resolution training for condominium managers.

ADRIO supports the development of information and educational tools, including online material by the condominium authority and other providers for the use of owners and condominium boards.

ADRIO supports the use of regulation to create the dispute resolution scheme.

ADRIO supports the recommendations of the Association of Condominium Managers of Ontario and the Canadian Condominium Institute in respect of the amendment to section 1.42(1) of Bill 106 to permit parties who mutually agree to opt out of proceeding to the condominium authority to mediate or arbitrate their issue privately. Parties may desire a private and confidential process.

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