Articles

Condo Act Review Hurts Condo Owners

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by Linda Pinizzotto,

Realtor and Founder President CEO Condo Owners Association (COA)

 

Condo Owners, Condo Buyers and the General Public need to ask a basic question “How much will the Condo Act Review cost Tax Payers?

The Ministy of Consumer Service hired the Public Policy Forum to oversee the consultations of the Review Stages 1, 2, and 3.    The Condo Owners Association believe that the process is flawed and PPForum have overlooked or maybe avoided or buried some very precious recommendation in all stages of the Condo Act Review.

Unfortunately the Review carried over 90% of Condo Related Trades and many Associations who should have been involved; were not invited.   Ontario has over 1.3 million Condo Owners yet Ministry reports show under 2,000 Condo Owners who participated.  condo picThere was limited social media, news and awareness venues.    Condo Owners are being expected to search the net and/or the Ministry/Provincial website to locate their own information.    Sadly, the Condo Owners Association believes it is impossible for the average Condo Owners or Condo Buyer to grasp the whole situation because it is way too complicated.   Rather than hiring the Public Policy Forum to meet with over 90% condo service trades, the Ministry of Consumer Services, Minister Tracy MacCharles should have implemented a full campaign for public awareness.  It is 2014, technology and social media could have made the Condo Act Review, Declarations, By-Laws etc. a household name for every Ontarian.  Knowledge is the key to working together to ignite better condominium communities.

The whole process as identified in the Ontario Government Newsroom announcement to “Build a Better Condo Act” needs to have another statement added to read “in favour of Who?”    There has been no transparency on the cost of this review and although it was announced on June 2012;  on April 2014 other than the Ministry announcing Property Management licensing, other announcements are non existent. Ontarians need to give though to:    “How many Condo Owners have lost money during this wait because of improper governance and accountability in their condominiums whether it be through their Board of Directors or Property Management.

How many overpriced contracted service trades as a result a Boards choice after securing only 1 tender have been approved and paid. It’s been almost 2 years, how many condominiums and Condo Owners experienced unnecessary overpriced expenditures to the operating budget or possibly the reserve fund during process.   In Stage 1 of the Condo Act Review,  The Condo Owners Association suggested their version as   “An Independent Agency or Organization to Work with the Community”  however by Stage 3 of the Review the Public Policy Forum eliminated any further discussions when they did not invite either the Condo Owners Association nor the Canadian Alliance for Condo Owners Rights on the Expert Panel.    It was an absolute shame and certainly harmful to all Condo Owners and Condo Buyers.     Page 24 of Stage I Condo Act Review  http://www.ppforum.ca/sites/default/files/Full_Condominium%20Act_EN_0.pdf

Another side to this review has been completely ignored.   The new condo market is known to sell their units on a price per square foot basis with additional premiums on the floor of the building.  There is also added costs for lockers and parking.   Buyers hope that the value of the unit at the time of purchase is expected to rise by the time the building is completed approx. 2-3 years later and following occupancy and registration stages.   Sometimes the increase hasn’t shown enough profit to cover the costs of reselling the unit after registration of the building considering a double Land Transfer Tax (if the unit is in Toronto), the legal and closing costs plus the real estate commissions and HST for services.

In these cases; many Buyers may buy time by renting their unit until the value increases enough to cover the costs and provide them with a profit.   However, if it is an investor they have to pay the full cost of HST on the purchase price at the time of final closing and if the occupancy period was 5 months, it is highly possible there may not have been any income received and the unit was vacant during this period.   While you add all of these costs, the window for profits tighten. On the other side of the resale market condominium; it is common to see a lower price per square foot.  There is also a large influence on unit value depending on the maintenance fee.

There are many condominiums where 1200 sq feet units sell for only $200,000 however their maintenance fee is $850.00 per month.   In these cases, the value of the building has taken a drop in price because the maintenance fee has increased too much.   Another negative impact would be the reserve fund.  Some buildings are sitting tight with over a million dollars in reserve funds yet others have depleted reserve fund and/or extremely low with potential special assessment on all unit owners. Real Estate is suppose to be a sound investment and a long term shelter for Ontarians to have equity as they pay down their mortgages and hope to realize more value in their property.

The fact that this Condo Act has taken 14 years to materialize and another 2 years for discussions is costing Taxpayers not just Condo Owners an estimated millions/millions of dollars in lost value.    The Condominium Act is supposed to provide a transparent, good governance, accountability and certainly best business practice as a form of protection for Condo Owners and Condo Buyers.    The Condo Owners Association believes it has failed.

The Condominium Act needs to be a mandated Act with impending fines for those Board of Directors who do not adhere to the Act.  It cannot be self-governed;  the proof is staring all Ontarians and Politicians in the face because this Condo Act Review has identified severe problems to include abuse, proxy forgery, power struggles, unaccountability of Board Members, issues of Non-Licensed Property Management Firms and Property Managers, the list goes on.   There were concerns on implementing more Consumer Protection on new condominiums.  The Minister’s Public Information Sessions and online submissions were filled with stories of mangers, Board Members, Owners and Buyers not understanding the Condominium Act, Declaration, By Laws or Rules and Regulations.   Multi-Million dollar Corporations are left unattended with an enormous platform for potential of abuse.

A standardized declaration in easy language is a must.  We have a Country of Multiculturalism; plus almost every condominium in the Province has a different declaration.  The reason:  they are prepared by the builders lawyers on new construction and there could have been insertions and/or deletions over time as well.   Plus, the Condominium Act is way too complicated;  even Lawyers and/or Judges have been found to question interpretations.    The Condominium Act is supposed to provide a transparent, good governance, sound business with best practices and a form of protection for  the Corporation who are the Condo Owners and Condo Buyers.    The Condo Owners Association believes it has failed and will continue to do after this costly review.

The Ministry of Consumer Services have entertained a Condo Office to handle dispute resolution through mediation and arbitration at an estimated cost ($3 per month)  which will HIT CONDO OWNERS with over $25 Million Dollars in expenses.

Condo Owners have to be their own voice through the Condo Owners Association (COA)  http://www.COAontario.com    The Condo Office is not the office, it is simply a CASH GRAB.   All Ontarians need to take time and let their MPP’s know they oppose the Condo Office and they are concerned about the process of the review.

All Condo Owners and Condo Buyers need to register with the Condo Owners Association.   http://coaontario.com/register1

 

 

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About the Author:

Linda Pinizzotto represents Buyers and Sellers in Toronto, Mississauga, Oakville and surrounding areas. She is an award winning, popular and very well known Realtor who is extremely passionate about her profession. She has excellent real estate market knowledge which reflects in her successes with over 30 years experience. Linda Pinizzotto values her clients and reputation, making sure they receive first class advice and information and expertise and protecting their interest every step of the way.
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