Before continuing our exploration of the CMSA, we thank our friends at the Ministry for pointing out that we had misnamed the CMSA in our earlier pieces as Condominium Management Standards Act when the correct name is Condominium Management Services Act. We have corrected the title and text of the earlier pieces accordingly.
In this fourth part of our review of the CMSA, we review the threshold for being granted a license as a condominium manager or a management services provider.
Threshold for licensing
If the CMSA is passed, a person will, for the first time, need more than a pulse and a smile to manage a condominium in Ontario.
For individual condominium managers, the minimum threshold is yet to be established in a regulation but is expected to, as a bare minimum, include the same features as condominium directors (i.e., be 18 years old, not bankrupt and not incapable of managing property). In addition, section 37 includes some new and overdue factors that might disqualify an applicant, such as shaky financial position, past or present conduct and making false statements on license applications and renewals. We can describe some of these latter items as “character” considerations.
Specifically, section 37 provides:
- (1) An applicant that meets the prescribed requirements is entitled to a licence or a renewal of a licence by the registrar unless,
(a) the applicant is not a corporation and,
(i) having regard to the applicant’s financial position or the financial position of an interested person in respect of the applicant, the applicant cannot reasonably be expected to be financially responsible in engaging in the activities of a licensee,
(ii) the past or present conduct of the applicant or of an interested person in respect of the applicant affords reasonable grounds for belief that the applicant will not perform the activities of a licensee in accordance with law and with integrity and honesty, or
(iii) the applicant or an employee or agent of the applicant makes a false statement or provides a false statement in an application for a licence or for a renewal of a licence;
So, an individual who is a second-time bankrupt and has just finished serving a sentence for a perjury, fraud or breach of trust conviction, or has fudged some major details on their application form can expect to be given a rough ride when applying for or renewing a condo manager license. This is as it should be.
In addition, section 37 goes on to provide that corporate applicants that meet the prescribed requirements are entitled to a license unless:
(i) having regard to its financial position or the financial position of an interested person in respect of the corporation, the applicant cannot reasonably be expected to be financially responsible in engaging in the activities of a licensee,
(ii) having regard to the financial position of its officers or directors or an interested person in respect of its officers or directors, the applicant cannot reasonably be expected to be financially responsible in engaging in the activities of a licensee,
(iii) the past or present conduct of its officers or directors or of an interested person in respect of its officers or directors or of an interested person in respect of the corporation affords reasonable grounds for belief that it will not perform the activities of a licensee in accordance with the law and with integrity and honesty, or
(iv) an officer or director of the corporation makes a false statement or provides a false statement in an application for a licence or for a renewal of a licence;
From the bolded words above, we see that the financial and character analysis goes beyond the corporate applicant itself, but looks to officers, directors and “interested persons” of both the corporation and its officers/directors. Section 37(2) defines “interested persons”:
37 (2) For the purposes of this section, a person shall be deemed to be an interested person in respect of another person if the person is associated with the other person or if, in the opinion of the registrar,
(a) the person has or may have a beneficial interest in the other person’s activities;
(b) the person exercises or may exercise control either directly or indirectly over the other person; or
(c) the person has provided or may have provided financing either directly or indirectly to the other person’s activities.
This expansive definition of interested persons, when combined with section 37(1), establishes that management service providers or their principals that are owned or controlled or influenced by unsavory characters or criminal organizations or gangs may be refused a new or renewal license. This makes sense considering that considerable funds flow through or are handled by management firms and that condominiums represent a way in which large sums of money can be laundered. Management firms with even distant ties can be blacklisted and denied a license to operate a condo management business.
And in the case of both individual and corporate license applicants, section 37(1)(c) to (e) further provide that licenses may be refused where:
(c) the applicant or an interested person in respect of the applicant is carrying on activities that are, or will be if the applicant is licensed, in contravention of this Act or the regulations, other than the code of ethics established under section 76;
(d) the applicant is in breach of a condition of the licence; or
(e) the applicant fails to comply with a request made by the registrar under subsection (3) [which empowers the registrar to request info in support of the application or verification of that info].
Taken as a whole, section 37 gives the registrar a broad discretion in deciding whether or not to grant licenses. The goal, of course, is to ensure that bad characters, repeat offenders, bankrupts and criminals, whether directly or through intermediaries, are not let into the proverbial henhouse. This robust screening will provide significant protection to corporations and unit owners.
Recognizing that good people sometimes run into financial trouble and might declare bankruptcy or be convicted of minor criminal offences that don’t reflect on one’s character, the CMSA provides for conditions to be imposed on licensees at the registrar’s discretion. For individual condo managers who work for a management firm, personal bankruptcy might warrant restrictions on having custody or control over cheques, cash or accounts and mandatory heightened oversight by employers and potential disclosure to the client. This would permit the individual manager to keep working while protecting the client’s assets. A self-reporting requirement will likely be built into the code of ethics, whereby a license holder’s failure to report a bankruptcy or criminal conviction when it happens might itself result in discipline. This type of requirement is customary for other regulated professions, including lawyers. We actually suggest that mandatory self-reporting of bankruptcy and criminal convictions be built into section 45, which already contemplates mandatory reporting to the regulator of changes to licensees’ employment, address for service and corporate shareholdings.
As for the educational requirements for being granted a condominium manager license, the CMSA is silent on the specifics but provides (in section 77(1)(7)) that regulations may be passed to outline the educational and exam requirements and to designate certain educational courses or programs that will be accepted.
The working group that formulated most of the framework for the licensing model recommended that candidates for full condominium manager licenses must successfully complete educational courses in Condominium Law, Physical Asset Management, Administration and Human Resources, Financial Management for Condominiums, and Customer Service. The first four of these courses are already an integral part the educational requirements for ACMO’s RCM designation and are presently offered at several Ontario community colleges and online.
And as is common in most regulated professions, continuing education was recommended by the working group as an essential feature of license renewal and is widely expected to be mandated by regulation under the CMSA.
Compared to the current standards (which are nothing beyond a pulse and a smile), the above features establish a formidable threshold to being licensed as a condo manager or management services provider.