Just in time for the first week of fall, the Summer 2009 edition of our Condo Alert! newsletter is now available here.
Topics include:
Stay tuned for the fall edition, which will be released just in time for the annual CCI/ACMO Condominium Conference in early November.
Q: What percentage of unit owners is required to approve a modification of the maintenance and repair obligations contained in a condominium declaration?
A: 90%, as required by section 107(2)(d) of the Condominium Act, 1998.
Q: If two different proxy holders show up at an annual general meeting and they each hold a proxy from the same unit owner but the proxies were signed on different dates, which proxy is valid?
A: The most recent proxy is the valid one, often because most forms of proxy contain the words: “I (We) revoke all proxies previously given.”
Q: Is it correct that no board member can sit more than 2 – 3 year terms? What happens next? Do they take a year off and run again the following year?
A: The Condominium Act, 1998 contains no restrictions as to the number of terms a director can serve. Some corporations’ by-laws may contain term limits, in which case the by-law may specify any additional restrictions or procedures. Term limits are not a very good idea because it is often hard to find volunteers willing to spend the time and effort to serve on the Board.
Anyone following the progress of Ontario’s Smart Metering Initiative and wondering how it applies to condominiums should read an August 2009 decision of the Ontario Energy Board (“OEB”) on smart sub-metering in rental buildings. See the decision here.
This case was commenced by the OEB on its own initiative as a stop-gap interim measure to try and guide a widespread frenzy of landlords outfitting their rental buildings with smart sub-metering equipment despite the fact that such installations have been expressly prohibited by law since 2005. Some landlords have actively begun downloading electricity costs to tenants, which is similarly illegal.
Continue Reading Rental buildings set to take the lead in smart sub-metering
The Toronto Sun reports that the impact of the proposed HST on condominium corporations and their unit owners is turning into a political football in the September 17 provincial by-election in the Toronto riding of St. Paul’s.
The opposition parties have condemned the proposed new tax because it will cause condominium fees to increase.
Finance Minister Dwight Duncan says he does not expect to see a substantial increase in condo fees, which flies in the face of the predictions made by the condominium management industry that fees will rise on average by 6 to 8%. These predictions were reported in recent months in the Toronto Star here and in the Globe and Mail here.
Notwithstanding the large number of services that the HST will affect, Finance Minister Duncan says:
"I have a condominium in Windsor and my condominium fees will likely not be affected because the services we buy are very competitively delivered."
Let me guess: His condo corporation is locking-in and pre-paying the next ten years’ worth of fees for legal, accounting, engineering, property management, landscaping, contracting, housekeeping and any other service not currently subject to PST. Alternatively, perhaps this corporation has chosen to discontinue some or most of those services.
Shame on you, Minister Duncan. Rather than try to convince us that the HST is not going to have a big effect on our pocketbooks (which is decidedly untrue), you would do better to convince us that this tax is necessary and will benefit all of us in the long term.
Meanwhile, we wait to see what the voters of St. Paul’s decide.
A troubled condo project in Ottawa is being taken over this week by the developer’s major creditor. The Ottawa Citizen reports that this creditor announced it is terminating the existing purchase agreements and that:
The former purchasers of the condos were told they would receive their deposits back. But it’s not clear about other expenses, such as upgrades and fixtures that have already been purchased.
This situation illustrates that while a purchaser’s deposit for the purchase price is protected by section 81(1) of the Condominium Act, 1998 (“the Act”), not all monies paid to a developer are covered by this statutory requirement that money be held in trust by the developer’s lawyer or another trustee.
Continue Reading Deposits are safe, but what about money paid for upgrades?
The Toronto Star reports that an ACMO luncheon panel to be held in September on the topic of the HST will feature a very brave parliamentary assistant to the minister of revenue. The article also outlines ACMO and CCI’s estimation of the impact the new tax will have on condo corporations and unit owners, which information has been submitted to the Ontario government. (See ACMO’s submission here.)
Update (Sept 27/09): National Post reports on the above-mentioned ACMO luncheon here.
Unfortunately, it appears that arguments being made by the condo industry associations in support of exemptions or reductions of the HST are falling on deaf ears, as are the pleas of every other industry association, social group and watchdog. By all accounts the government has very clearly made up its mind on the HST and is now firmly focused on "selling" the tax to anyone who will listen. The time for submissions and petitions has therefore passed — Consumers and their condo corporations will be paying HST starting next July. It now falls to condo boards to prepare themselves and their unit owners to deal with the coming new reality.
We wrote about the HST back in March when it appeared imminent that the province would introduce this new tax to help offset massive multi-year deficits. We suggested back then that condo corporations begin budgeting for HST and establish a program of reducing expenses and increasing contributions to the common expenses and reserve funds. See that piece here.
With only ten months until the HST becomes effective, there is no time to lose.
What steps are you taking at your condo corporations?
The saga of the doomed luxury condo development at 1 Bloor in Toronto took an interesting turn earlier this month when the project was sold.
Great Gulf Homes announced that it had purchased the land at the corner of Yonge and Bloor Streets from developer Bazis International as part of a court-approved process to keep the project from falling into receivership. Bazis had initially purchased the land for $61 million but had defaulted on its loans before construction could begin.
Despite the insolvency of the developer, those purchasers who braved the cold and lined up outside for days in late 2007 to buy units at 1 Bloor won’t lose a dime of their deposits (reportedly over $70 million). They can thank section 81 of the Condominium Act, 1998, which provides that deposits paid for the purchase of proposed condo units must be held in trust by a trustee or a law firm. Section 82 provides that developers must pay interest on these deposits.
Though their deposits are safe, those who purchased units at 1 Bloor are wondering what kind of condo they are going to get for their money. The fate of the project won’t be known until after the sale to Great Gulf Homes closes in September but the new concept will probably be far less ambitious than the 80-storey, half-billion dollar skyscraper that was originally planned. GMA’s very own Gerry Miller shared his view on the project in this article in last Friday’s Globe and Mail.
Update (Sept 4/09): Kris Scheuer of the Town Crier reports on her blog that 1 Bloor purchasers are now being refunded their deposits.
Program details have been announced for the 13th annual ACMO / CCI Condo Conference, to be held November 6-7, 2009 at Hilton Suites Toronto/Markham.
Save the date now and plan to attend. Topics include:
I am looking forward to speaking at the “Aging in Place” session where a property manager, interior decorator and I will focus on why your condominium should accommodate aging residents and how to do that effectively.
Visit www.condoconference.ca for program, speaker, exhibitor and sponsor information and on-line registration.
Register by September 30 for early bird pricing and to buy four registrations and get one free.
Stark & Stark reports that the State of New York is considering legislation that will, if passed, require residential property managers to be certified by a state-approved certifying organization and then register with the state.
This approach may be an interesting hybrid between self-regulation and state regulation but, as with all legislative initiatives, the devil will be in the details (which can be seen here).
Sections 132 and 134(2) of our Condominium Act make it mandatory for condo corporations and unit owners to mediate many types of disputes before proceeding to arbitration or commencing litigation. Among the disputes that must be mediated are disagreements over the declaration, by-laws or rules.
Despite the fact that mediation is mandatory in declaration, by-law and rule cases, this step is often by-passed where the parties don’t agree on the selection of the mediator, as per section 132(1)(b) of the Condo Act. This is a shame since the case will then proceed directly to arbitration and, in some instances, to court. The cost, complexity and level of animosity between the parties all increase sharply as the dispute progresses through the various stages. Early resolution is almost always preferable.
In cases where mediation actually does take place, the likelihood of the dispute being resolved successfully depends heavily on a number of factors such as the skill of the mediator and counsel, the preparation and goodwill of the parties and, quite importantly, the ability of the parties to really listen to each other. Without proper preparation and anticipation of the likely concerns of the opposing party, mediation is often doomed to fail.
In a recent posting on the California HOA & Law Blog, attorney Beth Grimm shares her views on why mediation is the perfect way to solve condo disputes, why mediation often fails and what can be done to improve the odds of succeeding. Her comments are worth reading since they are perfectly applicable to condo disputes north of the 49th parallel.
Because mediation is mandatory for many condo disputes here in Ontario and since mediation represents an excellent opportunity to resolve disputes and heal divisions quickly and economically, board members, property managers and unit owners must equip themselves with the knowledge and tools to come to the mediation table to solve disputes.
Stay tuned in the coming weeks for more tips and insight into making the most of mediation.