Tag Archives: condominium act of ontario
First time in a high-rise home?
Toronto’s extraordinary condominium boom continues
Shlomo Sharon, National Post
Condominiums have recently become the dominant form of housing in Toronto. Condo living attracts many types of buyers, who are trying this lifestyle for the first time, including singles, young couples, families, empty nesters or retirees. They each have individual expectations of what condominium living will be like. The owner of a 500-square-foot unit wants different things than the owner of a 2,000-sq.-ft. unit in the same building. The retiree’s expectation differs from the investor who has rented out his unit. The dog owner’s view of the common elements differs from a condo owner’s without a pet. The owner of a more expensive unit may want a concierge and valet parking, while someone with a smaller unit may feel such services are unnecessary.
Here are tips to ease the transition into this type of homeownership.
Many first-time condo buyers may not know that a developer is only required to complete a unit to the satisfaction of municipal requirements (which is providing water and electricity to the unit). They can leave unfinished items to be completed after the move-in date. Most agreements of purchase and sale say that buyers must complete their interim closing regardless (but checking in with a lawyer is certainly recommended).
After the interim closing and the payment of further deposits and adjustments, it may be a few months or more before the developer is able to register the development as a condominium corporation through the land registrar. Until that is done, final closing cannot occur (and a mortgage cannot be registered against the unit). During this time, the purchaser will live in a construction zone and pay monthly interim occupancy fees. Occupancy fees are made up of three main components: common expense fees, property taxes and interest on the unpaid balance of the purchase price. Purchasers are often not aware they have to complete two closings, and are surprised to learn that this occupancy fee is essentially “rent” paid to the developer.
We often hear from buyers: “Why do I pay occupancy fees? I don’t own the unit yet and I don’t receive any services.” It is a payment to the developer to cover the expenses of the building during the occupancy period. These occupancy fees can be used as the developer sees fit, except the portion of the fee slated for the reserve fund, which, after an occupancy period lasts more than six months, must go to into the reserve fund (essentially an enforced bank account that ensures there will be enough funds down the road for major common element repairs).
Once the condominium corporation is registered and final closing has occurred for the majority of the units, a turnover meeting must be called; all unit owners are invited to attend. The unit owners are, in effect, taking control of the condominium corporation by electing a board of directors to look after the building’s day-to-day operations, with the assistance of the property management company and the guidance of the corporation’s lawyer.
Unit owners often have a misconception that the management company is an extension of the developer and ask them to fix deficiencies in their unit. But the property management’s scope is limited to common elements. It is not unusual for a property manager to be asked by an owner to repair a faucet “since I have paid my rent on time.” Unit owners do not pay rent, they pay common expense fees, which cover the common elements of the building and not maintenance on a unit.
In some cases, the management company is appointed by the developer, however, the management agreement is with the condominium corporation and is for managing the common elements. The property management company communicates and receives instruction from the board of directors. A good management company can also help reach an amicable resolution to issues between the developer and the condominium corporation, to try to save on legal fees.
Buyers should also be aware that what is in a marketing brochure at the time of sale may not be what the developer delivers. The developer always reserves the right, as stated in the fine print, to make changes. A lawyer familiar with condo contracts can identify what items are subject to change and what are included.
Most buyers know that when the developer begins selling units, it can be two to three years before occupancy takes place. So it’s important to note that, while the expenses set out in the budget at that time are prepared with the best estimates, they will be on the conservative side. It is very common for expenses to go up after the first year, sometimes by 25%, and will go even higher with the HST. These increases are mostly for utilities (hydro, gas and water/sewer) and would have originally been based on estimates of a similar building.
The reserve fund contribution also sees increases. The fund must be in compliance with the Reserve Fund Study, a requirement under the Condominium Act of Ontario. Having a healthy reserve fund is important for any unit owner who wants to maintain and increase his building’s and his unit’s market value. Down the road, resale buyers will want to see sufficient reserve funds when deciding whether to buy into a particular condominium corporation.
Sometimes unit owners will compare their common expense fees to those of other buildings, but those fees depend on many factors, including the services that are provided, the number of units in the building and the expenses that are included.
While the developer is usually responsible for any first-year shortfall in the reserve fund, condominium corporations should not take it to the bank. Developers tend to review the first-year financial statements and challenge the amount of the deficit– and, if they’re successful, the owners will be responsible for the shortfall.
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Contact the Jeffrey Team for more information - 416-388-1960
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Condo boards need more regulation
Mark Weisleder – Yourhome.ca
I have received a growing number of complaints since writing about how condominium boards operate.
These include:
Inexperienced property managers who keep poor records, are delinquent in collecting common expense payments or enforcing condominium rules and procedures.
Systems falling apart because they were not maintained properly.
Budgets not being prepared in a timely fashion.
A small group of owners who fight any attempt to raise the common expenses, even if it means that systems fall into disrepair.
Unfortunately, there is very little government regulation as to who can be a condominium property manager. Yet the property manager, in most cases, has a tremendous impact not only on the condominium building being properly maintained, but on the actual resale value of the inside condominium units.
For example, if reserve funds are depleted to deal with unanticipated repairs and replacements, this will make any potential buyer wary of investing in that building.
The Condominium Act of Ontario requirements for a condominium director are that you be over 18 years of age, not be bankrupt and not be declared mentally incompetent.
That is hardly sufficient qualifications for the responsibilities of being a director who will be overseeing and approving budgets that could total millions of dollars and affect hundreds of unit owners. There are no other real educational or financial requirements.
Many condominiums look to retired accountants, who are owners, to appoint as directors. But not all buildings have these types of resource people who both live in the building and have the time to devote to being a board member.
The good news is that there are some things boards can do immediately to assist themselves.
They can join the Canadian Condominium Institute and attend educational programs that are offered during the year, to remain up to date on industry developments and obtain referrals for reputable professional managers.
There is also an interesting website called www.condoinformation.ca, which offers useful practical tips for condominium owners, such as how to deal with bicycles, bike racks and security – given that bikes are usually not permitted in the elevators, dealing with the number of pets in the building and preventing owners from endangering others by throwing things off their balconies.
Don’t just wait for the government to get involved because that may take years. Every unit owner needs to take some responsibility as to how his or her building is being run. The decisions made not only impact your rights to enjoy your common area facilities, they will also have a large impact on the resale price that you can expect to get.
For potential buyers, find out who is managing the building you are interested in. How many years have they been in business and do they manage multiple buildings or just this one?
What is the business background of the directors of the condominium corporation and how long have they been in the position?
Ask all of these questions in advance so that you are not surprised after closing.
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Contact the Jeffrey Team for more information - 416-388-1960
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Incoming search terms
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- Unique Challenges For Toronto Condo Buyers In A Booming Market A checklist for Toronto condo purchasers Kathleen Waters, Vice-President, TitlePLUS...
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- Hidden costs can be a new Toronto condo owner’s nightmare Monthly fees can almost double in first 3 years, says Ellen...
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Condo Culture
Renters are also subject to board rules
Marilyn Lincoln, National Post
Q. Our condo board is having a problem with the declarant (builder) who is leasing out units and is not providing the corporation with the names of the renters or any other info. These renters have not received copies of our bylaws from their landlord (declarant) and they continue to violate our rules and claim ignorance. The builder informs us he does not have to provide any information and he thinks section 83 (1) of the Condominium Act does not apply to him. Is this an error on his part?
A. The declarant, otherwise known as the builder or developer, is the owner until the date of registration of a condominium declaration and description. Following the registration, the builder must appoint the first board of directors for the corporation. Once the majority of units have been sold, the declarant must hold a turnover meeting at which the owners can elect a board of directors. Sometimes a declarant will continue to be part of the corporation long after the turnover meeting, especially if they still own some of the units. As a condo owner, he or she is entitled to rent their units. However, they are not exempt from following the Condominium Act of Ontario, which is the law.
It clearly states in section 83(1) of the act that any owner who leases a unit or renews a lease shall, within 30 days of entering into a lease or renewal, notify the corporation. The owner must provide the tenant’s name, the owner’s address, copy of the lease or a summary of it, along with a copy of the declaration, bylaws and rules of the corporation. The owner must notify the corporation in writing when the tenancy terminates. The corporation must maintain a record of all notices that it has received.
Failing to provide the above information can result in consequences. For instance, in our corporation, an owner didn’t read our rules prior to leasing his unit. He rented his condo to a family with two dogs, when our documents state only one dog per unit. Needless to say, it was a very stressful time for both the tenants and the board of directors who had to enforce the one-dog restriction. The tenants moved out within six weeks.
Owners, take note: You are responsible for your tenants, who are subject to the same rules as owners under the Condominium Act. In the above case, the writer mentions the tenants are violating the rules and claiming ignorance. The board should send a letter to the tenants and the owner indicating the oversight. If tenants refuse to follow the rules, the corporation can obtain a court order under Section 134 of the act, requiring compliance. If the tenant refuses to comply with the order, the court has the authority to terminate the lease.
Marilyn Lincoln is a condo owner, director and author of The Condominium Self Management Guide, 2nd edition.
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Contact the Jeffrey Team for more information - 416-388-1960
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