One of the more controversial aspects of the proposed Green Energy Act (“GEA”) is the requirement that owners who offer to sell or lease prescribed properties must obtain (at a prescribed cost) and give to the prospective purchaser or tenant a prescribed report or rating of that property’s energy consumption and energy efficiency. All of the particulars will be prescribed in a regulation after the GEA is passed into law.
The fine details have not yet been announced but the current plan seems to be that an energy audit will need to be obtained and paid for by anyone selling a new or used house or condo unit, and that part of the cost will refundable as a tax credit, grant or rebate. The current proposal will saddle each owner with a $300 upfront cost of the audit and stick the taxpayers with the $150 cost of the rebate plus the unknown cost of the extra bureaucracy needed to administer all of this. Burdening homeowners and taxpayers with that kind of cost in the current climate is decidedly unwise, but the proposal will certainly expand the ranks of the energy auditors by creating a large captive market.
While requiring energy audits for detached freehold homes and other types of buildings might seem to make sense at some level, the underlying concept of mandating energy audits for condominium units is open to serious question. Does it make sense to require an energy audit in the case of, for example, a 600 square-foot high-rise condominium unit with one exterior wall? Does it then make sense to mandate the same type of audit of dozens or hundreds of similar units in that same condominium building? The concept appears rather foolish considering that, among other things, the building components that would most likely be identified as problematic would lie within the common elements and thus fall within the exclusive jurisdiction of the condominium corporation. Even if a problem was revealed, the unit owner could take no steps to solve the problem independently.
To that end, the most likely result of an energy audit in a high-rise condo unit that reveals a small issue or a potential improvement would be the creation of a needless dispute between the owner of the unit and the condo corporation. The unit owner would demand rectification of a trifling matter in the common element components and the condo corporation would likely be facing many similar repair requests where the repair costs would quickly erode the annual budget or reserve fund while generating no appreciable benefit or improvement. Further, streams of unit owners demanding action in response to their energy audit results would paralyze any condo corporation with needless distraction, diversion and division.
More disputes of this sort are inevitable in the case of older condominiums that clearly do not meet today’s modern building standards and environmental codes. Many of those condominiums are already struggling to keep their buildings safe and efficient without bankrupting their unit owners through increased common expenses and special assessments that may arise from dealing with owners’ complaints that their 1970 condominium building does not meet 2009 energy efficiency standards.
The concept of mandatory energy audits may seem more sensible in the case of detached or semi-detached townhouse condo units but, as with high-rise units, the result of an audit would most likely identify components of the common elements that may need to be repaired/replaced or modified. This would arguably give rise to the same type of disputes described above.
Perhaps a practical approach to energy audits for condominiums is that each condominium corporation be mandated to obtain a building-wide energy audit on a regular basis, and that this report satisfy the requirements contemplated by the Green Energy Act. To avoid unnecessary costs and duplicated efforts, perhaps this type of audit could be integrated into the reserve fund study mandated by the Condominium Act, 1998. This could make sense because most condominiums already conduct energy audits to help find ways to slow the exponential rate at which their utility costs have been increasing over the past several years, and all condominiums are required to conduct reserve fund studies and updates on a regular basis.
Purchasers of condo units that take the time to carefully review the reserve fund study would probably be interested to know about the energy consumption and efficiency of the condo and whether there is a plan to expand or increase conversation measures. Purchasers that do not closely review the reserve fund study (lambs to the slaughter) probably have no interest in whatever information might be contained in an energy audit anyway. The early word from the realtors is that the potential benefit of an energy audit to the purchaser of any kind of home is questionable.
What do you think?
- Should energy audits be mandatory for the sale of individual condominium units?
- Should condo corporations obtain their own energy audits on a regular basis?
- Should energy audits be integrated with the reserve fund studies mandated by the Condo Act?
Let’s hear what the energy auditors, property managers and engineers think might be a sensible compromise when it comes to energy audits for condominiums. Perhaps together we can devise a workable solution to propose to the government to help prevent a terrible mistake.