Wednesday, October 30, 2013

Condominium Reforms Part 11

As a Property Investor myself   I am personally pleased to see the Standardization of all condominium Declarations.

As we noted in our previous blog, the Stage Two Solutions Report on the Condominium Act Review (the “Report”) focused on five major areas where it was noted that changes are recommended. One of these areas is consumer protection.
We have outlined below a number of the recommendations which are directed towards those purchasers who are buying new condominium units from developers. Many of these recommendations are aimed at eliminating surprises.
Smarter Disclosure
Right now, purchasers are provided with a large book of condominium documents, which include a disclosure statement and proposed declaration, rules, by-laws and first-year budget. Purchasers have a ten-day cooling-off period within which they can review the documents. If there is something in them that they don’t like, then they can walk away from the deal without any penalty. However, many purchasers do not review the documents  because they are too lengthy and/or the language is difficult for them to understand, and they don’t want to pay their lawyer to read them.
It is proposed that the disclosure statement and condominium documents be published on a project-specific website so that purchasers can do word searches. This will make it easier for them to search specifically for provisions that they are concerned about, such as pets, for example.
It is also proposed that the Ontario Government publish an easy-to-read guide in plain language that would be distributed to purchasers by all of the developers. This would educate purchasers about what is involved in condominium living. Many purchasers don’t realize that there are more obligations than just paying common expenses – that there are limitations on their freedom that they would not have in a freehold home, such as, for example, pet restrictions, restrictions on renovations, even restrictions on the colour of the window coverings. This often becomes apparent when there is a breach of the declaration or rules and the Corporation attempts to enforce compliance. Purchasers need to understand that even though they will own their own unit, they must comply with the condominium documents. While this recommendation is definitely a good idea, there is still no guarantee that purchasers will actually read the guide.
Standardization of Condominium Declarations
The Report recommends that the Ministry create a standard declaration for residential condominium projects (including those residential developments that also include some commercial units). This standard declaration would include standard unit boundaries, maintenance and repair obligations, and insurance requirements. A standard declaration will allow a purchaser buying a new condominium to compare new condo projects on an “apples to apples basis”. There will be more consistency among condominium projects as to what are owner responsibilities and what are the condominium corporation’s responsibilities. Hopefully, this will also avoid some of the ambiguities and inconsistencies that are often found in declarations relating to maintenance and repair obligations and what is included in the unit. Of course, this would not apply retrospectively to existing condominiums nor to those condominiums presently being developed.
Prohibit Selling or Leasing of Assets that  Become Common Elements or Corporation Assets
Many purchasers of new condominiums are surprised to discover that  that the condominium corporation may be required to purchase or lease  assets from the developer, such as, for example, guest suites, superintendent’s suites, service areas, recreation amenities, building equipment, etc. and that the leasing/acquisition costs  form part of the common expenses. The Report recommends that this practice be stopped (except for limited exceptions for  specifically disclosed  green energy equipment). The result will be that while these additional leasing or acquisition costs will not form part of the common expenses, the costs of each unit will be increased, as the developer will still need to recover its costs of building these assets.
More Realistic First – Year Budgets
Currently, many owners  of newly created condominiums are finding that their common expenses dramatically increase in the second year. This causes angst for many purchasers as their personal budgets are based on the first year projected common expenses received from the developer. Several recommendations attempt to address this issue:
Developers will no longer be able to sell/lease units/assets to the condominiums, as these costs increase the common expenses.
Developers are not permitted to assume or to defer any costs in the first year that will kick in during subsequent years and cause a spike in the common expenses.
The minimum budget contribution to the reserve fund will be the greater of the amount set out in the reserve fund study undertaken by the developer, or an amount based on a formula that remains to be determined. (The Report concluded that the current reserve fund contribution of 10% of common expenses was not sufficient to create a healthy reserve fund.)  Developers will be required to   commission  a reserve fund study at the time that the developer starts marketing the units.  The reserve fund contribution in the first year budget would be based on that reserve fund study.  The developer would then be required to update the reserve fund study after the initial occupancy of the condominium and prior to registration. If increases to the first year reserve fund contribution  are warranted  based on the updated reserve fund study, such increase would be reflected in the budget without being deemed to be a material change.
Avoidance of Subsidization
Many new condominiums have ground floor commercial units. In some cases, the developers do not install separate utility meters for the commercial units where utility costs are shared on a pro rata basis by all the units. This results in the residential units subsidizing the utility costs consumed by the commercial units, as commercial enterprises generally consume more utilities than residents, particularly in businesses such as restaurants and hair salons, for example. The recommendation is that in mixed-use condominiums, developers will be required to install separate utility meters for the commercial units. This should result in lower utility costs being included in the common expenses of the residential owners.
If these recommendations are implemented, purchasers of new condominiums should be better informed about the responsibilities of condominium ownership, including the financial responsibilities.

All of the items covered here are positive for the Owners and Future Investors of Condominium Units in Toronto, ON. 

Tuesday, October 22, 2013

Condominium Status Certificate

Do you think it should be the real estate sales professional’s responsibility to request a Condo Status Certificate or the solicitor’s. We all know that you must have one if you are closing a deal that involves a condo – but do you think it is better to get it ahead of time or just let the lawyer request it?

Traditionally, the process of requesting a Condo Status Certificate required tracking down the appropriate person at the condo corporation, making your request in writing (usually by fax) and then having to mail payment by certified means before they will even get started on the request. Next you can wait up to 10 days before the Condo Status Certificate is ready and arrange a courier to pick up the massive document.
Seems like a complicated, time consuming way to go about getting something, especially given the fact that it is 2013 and technology makes virtually every other aspect of our life effortless.
GeoWarehouse has made the process of requesting Condo Status Certificates a little bit easier. While many are not fully available for online viewing, they can be requested online through the GeoWarehouse Store.
What does this mean to you? It means that you can simply access the GeoWarehouse Store, request a Condo Status Certificate online, pay by credit card and then either receive it electronically or, if it is not available electronically, arrange to have it picked up.

I love the concept of ordering the Status Certificate online and waiting for the E Mailed link to everything. ByLaws, Financial Statements, Insurance Certificate, Rules and Regulations, Declarations and the updated Status Certificate.  Easy to read, adjust the font and just download the appropriate PDF'd section.  A condo management's contact details are obtained when you negotiate the offer with the owner of the unit. 

Received online.
Lawyers are angry because they need to print it for their clients
Clients are unhappy because the lawyer charged them for printing it.

In my experience the conversation goes something like this;
Lawyer: If I print it...   I need to charge you....  Thats a dollar a page. 
Buyer:  HUMMM   Pause ...  Nahh...   Its ok.  What's in it?
Lawyer: Rules about what you can and can't do,  what you legally own and what the state of the condominium building is in.

You are already angry at what the lawyer charges for a closing; cost is everything.

RESULT?  No one reads the Declarations or By Laws re; pets, commercial vehicles, using your condo as your International business headquarters or hundreds of other details like you're getting the right locker and storage unit and any proposed Maintenance Fee increases or scheduled Capital Repairs in future years

Danger?  None. We are all reliant upon the Title Insurance should something run aground.

Personally?   I request, pay and pick up the Status Certificate, read the By Laws and check the legal descriptions... because, I have been on the Board of Directors of a number of Corporations; and have an accounting back ground I understand the Financial Statements. Your lawyer is the best source to re read the Declarations and By Laws during the Conditional Period in your Agreement of Purchase and Sale. Stan Gelman has spoken of the need to review the entire bundle of documents.

Audrey Loeb of Miller Thompson released a really good whitepaper titled “Condominium Ownership – What You Need to Know”

While it is possible to get Special Assessment Insurance with your Home Owners Policy it is better to subject them to additional scrutiny.

I would like an original signature under seal from the condo corporation that the facts at that particular moment in time are true, rather than a faxed or emailed Status.

Wouldn't you?

Saturday, October 19, 2013

Toronto Development Charges Condo and SFD

Proposed Development charges increase in 2014 approved as presented at Toronto City Council October 8th 2013.
Development chargesCouncil approved changes to the development charges the City collects from new construction to pay for a portion of growth-related capital costs. The new development charges bylaw will take effect on November 1. Under the new bylaw, rates will be increased over two years by about 75 per cent for residential development by 25 per cent for non-residential development beginning February 1, 2014. Council also adopted several motions concerning requests for reports and/or potential actions on topics such as affordable housing, development within priority neighbourhoods, and provincial development charges legislation. 
While the City of Toronto is building 3 times as many condominium units as compared to the Region of Peel; the Development Fees are less than half and actually a third.  The aging / mature population and the influx of people to Toronto continues. To suggest there will be more building of single family homes [in the 416] is uninformed.  Building will be up and ever higher. 

The Development Fees should be equivalent  or at least similar between municipalities as we build more condos for Mature Housing and [individually owned] rental units. If you have purchased a condominium unit that is not yet registered, effective the implementation date, if the builder needs to pay these expenses they will be passed on to you at closing.

This is why Stan Gelman urges you to CAPP THE CLOSING COSTS in the Agreement of Purchase and Sale during the Period of Rescission. [Cooling off Period]

Good Advice...  Are you closing on a condo soon?  

Friday, October 4, 2013

New IMPROVED Condo Act coming

Adding a layer of Government that is similar to a Tribunal will create additional government red tape and bureaucracy.  Court Rooms, Paralegals, defenders. Hearing Rooms, Benches, Judges, recordings, DARP where we already have arbitration and mediation available.

All because Buyers refuse to read and understand condo Declarations and want to appeal BY LAWS after they move in.  Yes, I understand that there is opportunity for abuse of the Rules process.

Residents, stakeholders and experts representing Ontario’s booming condo industry have shared their proposed solutions for updating the province’s Condominium Act. Released on September 24, 2013, the stage two solutions report is the result of extensive public engagement efforts undertaken by Canada’s Public Policy Forum and Ontario’s Ministry of Consumer Services (MCS).
Key recommendations include:
  • Creation of a Condo Office, an arm’s length umbrella organization that could provide functions such as education and awareness, dispute settlement, condo manager licensing, and a condo registry.
  • Improved consumer education and protection
  • Updated financial management rules and dispute resolution mechanisms
  • Stronger qualification requirements for condo boards, including mandatory training for first-time members
  • A new licensing program, managed by the condo office, to ensure that condo managers are properly trained and qualified.
To produce this report, people with expertise in various condominium issues reviewed the Stage One Findings Report and the public comments it generated.


Condo Owners Need and Boards of Directors also need to band together to get better representation, prices for services and contracts that are tendered.

Have you had condo problems?

Wednesday, October 2, 2013

How will you know it's a good deal?

When the traffic is SLAMMED in the other direction with Police, Fire and Ambulance vehicles...  Do you slow to take a grim look around...

The internet is the same.   It's a snap shot of sizzle that grabs your attention... for a moment.

Builders and Developers of Condominium Units understand this concept really well and apply it in their marketing for you be attracted to their plate, to eat the sizzle, consume the hype.  But what is the value when you wake in the morning? 

After the building is up and running the issues are very practical and pragmatic.   Now you need to explain the legal workings and realities of a condo community
I do that.   I help people understand.    Call me 
See on