Note that the Condo Corp Management answers provided below are the opinion of the writer. They should not be taken as legal advice. Consult a condominium lawyer if you need legal advice. Feel free to send us your questions, and we will do our best to add them to this list.
Condo Corp Management General Questions
Click on the links in the answers to learn more about each term
A condominium is more than just the high rise residential building. Condominiums are corporations that can be residential or commercial, high rise or low rise, townhouse, or even vacant of any structure. This is because a condominium is actually a legal entity that defines co-ownership of a shared real estate asset. Condominium operate under their own law in Ontario, and come in many different shapes and sizes.
A defining feature of a condominium is that it has common elements, and "units".
Yes. A condominium is a corporation, but under their own legal framework, and not under the Business Corporations Act. The Condominium Act, 1998 governs all condominiums in the province, although this law has been updated since then. Beyond this, a condominium is also a home, a community, and a neighbourhood.
Yes, in Ontario, there are four different types of condominium.
A condominium is a not-for-profit corporation, meaning its purpose is simply to exist and generate enough money to maintain itself, and provide a good life or investment for its owners. Small surpluses or deficits are acceptable on a year to year basis, but the goal of every condominium is simply to pay for its own existence.
The unit owners do. A condominium corporation is broken up into two parts: The units, which are fully owned by the owner, and the common elements, which are shared among all owners. In a high-rise, this means that your unit itself is yours alone, but that everything outside of the units, including corridors, elevators, land, and parking garage is shared between all of the owners. It gets a bit more confusing since the unit is connected to the common elements, but we’ll get into this later on. Condo Corp Management companies can help with any confusion on who owns what within a condo building.
Some condominiums choose to share amenities with other buildings, and pay a relative portion of the costs to maintain them. This could be something small like an outdoor pool, or something substantial like an entire fitness complex. Shared facilities will often have their own budgets, but will be funded through owners’ maintenance fees. An expense will be present on the corporations Income Statement, and will play a part in determining maintenance fees. Shared facilities are a great way for condominiums to have better amenities that they otherwise would not be able to afford, but come with their own set of challenges.
Questions from Condominium Owners
A townhouse condominium usually requires the owners to share ownership of the roads on the land that they occupy. In other words, the owners pay for the roads and other shared assets that the city would normally pay for in a regular townhouse development. So why pay property tax? Obviously, property taxes pay for more than just the roadways in from of your home, but shouldn’t there be a discount if owners are already required to pay maintenance fees? This is a question that we can’t answer here. Call your city councillor!
In most townhouse condominium corporations, the condominium itself is responsible for the roads within the development, meaning the City is not required to maintain them. If the roads are not being maintained, you should speak with your Condo Corp Management.
Unlike in an apartment building, a Condo Corp Management company does not own the building. They are hired by the Board of Directors, and may or may not have permission to make the necessary repairs. The issue may indeed be the management company, but could also be the Board of Directors, or simply just a lack of the necessary funds to do the repairs. As an owner, you have the ability to request documentation to see what the issue is, and why repairs are not being done. If there is no valid reason, you should consider getting involved and running for the board.
Condo Corp Management Legal Questions
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The Condominium Act, 1998 is the law that governs condominiums in Ontario. A condominium is technically a corporation, but does not fall under the Business Corporations Act. Instead, it has its own law. With very few exceptions, such as the Human Rights Code, the Condominium Act supersedes all other legislation with respect to a condominium. Meaning, if your building tried to pass a rule or a by-law that contradicted the Act, that rule or by-law would not be legal.
In addition the Condominium Act, the building must be compliant with a number of other laws, such as the Building Code Act, the Employment Standards Act (if there are staff), the Human Rights Code, Occupational Health and Safety Act, Accessibility for Ontarians with Disability Act, and a number of others. It is your Condo Corp Management’s job to ensure your building is compliant with all relevant legislation.
As an owner in a condominium, you are entitled to see a wide variety of documents relating to the finances and governance of the corporation, your Condo Corp Management company should be able to provide you with these. With the exception of other owners’ files and accounts, there are very few documents you would not be allowed to see. This is legislated under section 55 of the Condominium Act (1998).
Yes and no. "Pets" can be banned fairly easily by passing a new rule. Homeowners have the right to dispute the rule, but if it passes the rule becomes active. Current pet owners would have a strong argument to keep their pets, but new owners would not be allowed to bring pets in.
The same is not true of service animals. The condominium cannot ban service animals.
You do. Sort of. Since the building is not owned by one person or company, it’s the owners that actually run it. But only a few actually have a say in the day-to-day operations. Much like a small government, the owners elect representatives – a Board of Directors – to manage the affairs of the corporation. They are elected every year at the Annual General Meeting. These are unpaid volunteers from the pool of owners who have some knowledge that would be useful in running the building. Since the Board of Directors can’t be expected to know the details of condominium management, they often hire a Management Company to take on this role. The management company runs the condominium, but it is the Board that makes almost all of the decisions. The level of autonomy that a management company has depends on their management contract.
Since the Condo Corp Management company is the one who actually manages the corporation, it is crucial that the Board choose not only a good company, but the right company for your building. Assessing the management company comes down to much more than just price. Board members should look to the company’s reputation in the industry, their knowledge of condominiums (some companies operate rental buildings, but don’t know the specifics of condominiums), their business experience outside of the condominium environment, and their track record in terms of dealing with complex financial, physical, and legal issues.
A mid-sized condominium may have annual revenues of over a million dollars, and millions in assets (the building itself!) It is imperative that the Condo Corp Management company have the business experience and problem-solving skills to match these needs. To make it easy for you, just choose Brilliant Property Management 🙂
With the new Condominium Act, management companies must also have licenses and additional training in order to be able to practice. We welcome this news!
Yes, but it is a difficult process and can cause harm to the community. To remove a director, one must first requisition a meeting. At this meeting, a vote takes place to remove the director(s), which requires over 50% of the unit owners to pass. This is a difficult threshold to reach, which often requires the use of proxies and campaigning. As noted earlier, this can be incredibly harmful to a community and to individuals living in the building, and should only be attempted in worst-case scenarios.
Questions from Condominium Owners
Probably not. If the condominium’s Declaration states that the condominium includes a pool, it is not within the rights of the Board of Directors to change this without permission from the owners. In order to remove an amenity, the Board must first change the Declaration, which is a complicated (and rather difficult) procedure that requires your permission.
If the neighbour is someone who you can talk to, we would recommend speaking with them and telling them that the noise they create bothers you. If it is someone who you do not feel comfortable speaking with, we recommend talking with your property manager. It is the manager’s job to speak with the owner and resolve the problem.
If the noise continues and the property manager is aware of the problem, something has gone wrong. It may take a few weeks and a couple of letters for a manager to effectively change the behavior of an owner, but these changes are often possible. If the problem continues to persist, the manager may have to seek board approval to take matters further, including having legal letters written, and ultimately court orders. This however can take a lot of time. Remember that unlike a rental building, the board and management do not have a simple way to evict a difficult owner from their own home.
The most common reason a board member keeps winning is because they have the support of the owners of the building. However, if you and many others in a condominium feel that they are not doing a proper job, there are ways to become more active. The best way would be to run for the board yourself. Speak to other owners, and collect proxy votes from owners who cannot make it to the AGM in person to cast a vote. Once on the board, you can work with the board to make the changes you feel are necessary. If, however, it is difficult or impossible for any new owners to join the board, and the same members continue to control the condominium, there are mechanisms that can be used to remove directors.
Speak to the manager immediately! If it can be proven that they did indeed throw the cigarette butt, they would be responsible for the damage. This was a real question from a real homeowner. Lit butts can actually start fires, and are extremely dangerous.
Adding a new component to the building – in this case a new structure with a gym in it – is different than a normal Reserve Fund expense. The Reserve Fund is used for major repairs and replacements, but since this is a new component it does not meet this definition. Instead, this would be considered a capital expenditure, and the board would not be permitted to go ahead with this type of project without going through various steps that would include permission from the owners.
It depends if the renovation is simply replacing the old lobby with similar materials (a replacement), or if they are upgrading with new materials and furniture (an upgrade). If it is an upgrade, as almost all lobby renovations are, there are limits to how much they can spend without notification/permission from the owners. This is laid out in section 97 of the Condominium Act (1998). Large expenditures require notification to, or permission from the owners.
Finance Questions
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The annual audit is exactly what it sounds like! It is a full review of the corporation’s books, performed every year, to determine how the condominium is performing financially. The audit is performed by an independent third party, and the auditor shares the results directly with the owners at the Annual General Meeting. The audit is one of the legislated safeguards used to ensure that owners money is being spent wisely. It is the owners who choose the auditor directly - not the board of directors.
When talking about Reserve Fund expenses and major projects, we often use the term “component”. A component is simply a part of a condominium that will at some point require repair and replacement. Examples include such things as mechanical boilers, driveway pavement, roofing, windows, elevators, and even the corridors.
Maintenance fees may seem high, but they are actually made up of several parts.
1. Administration deals with the management of the condominium.
2. Utilities are the hydro, water, and gas that the condominium consumes.
3. Repair and maintenance includes all of the contracts and work done at the property.
4. Staffing includes any employees of the condominium.
5. The contribution to the Reserve Fund includes how much money is put aside every year to save for big projects.
The amount that gets spent on the first four categories are determined by the board of directors. The last category, the contribution to the Reserve Fund is determined by the Reserve Fund Study.
Maintenance fees are determined during the budget process. Several factors go into determining the correct maintenance fees:
- Operating Budget
- Reserve Fund Study
- Cumulative Profit or Loss
The operating budget looks at how much was spent in the previous year, and how much will be required to operate in the coming year. The goal is to have a zero balance at the end of the year, since condominiums are not-for-profit organizations, so only money that is needed will be collected from the owners.
A significant portion of the operating budget consists of transfers to the Reserve Fund. The amount that goes into the Reserve Fund is determined by the Reserve Fund Stud.
A final consideration is the cumulative profit or loss. Remember how we said the goal is to budget zero profit or loss? Well, in reality this rarely is the case. With so many variables and price fluctuations, it is common for there to be profits or losses each year. These are added up and form a cumulative profit or loss that shows up on the Balance Sheet. If a corporation has a large surplus or a large deficit, they may consider lowering or raising fees to reduce this amount.
Questions from Condominium Owners
Some projects are small and require very little money, while some are very large and can cost millions of dollars. There is no set limit to what a condominium can spend on a project, but there are rules that dictate how the owners should be notified when large sums of money are being spent. These are outlined in section 97 of the Condominium Act (1998). When a condominium replaces a component with something of similar material and quality, there is often no need for special notice to the owners, but when the board decides to upgrade a component, there are specific rules on how much can be spent with and without owners being notified.
You don't! But there is a process in place if someone doesn't pay, which can ultimately result in the condominium selling their unit (this is extremely rare). If an owner is late in paying their fees, the condominium can register a Lien on the property. This is not something that is done often, as the costs are very high for the owner, but in cases where the condominium cannot collect, they do have this option.
Condominium management companies take care of a good portion of the operation of the condominium. This can include the finances, the day-to-day operation, project management, staff management, and many other functions. Their jobs can vary between keeping the books and the occasional visit to a small townhouse complex, to effectively running a small town with a full time staff.
Because of the big discrepancy between condominiums, fees can vary quite a lot. As a rule of thumb management companies should be charging between $20 and $45 dollars per unit per month.
Maintenance fees can also vary a great deal depending on the condominium. The more staff and amenities, the higher the fees. Similarly, the more units in the building, the lower the fees. Age also matters, with older buildings needing more repairs, which drive up the price.
For example, a common element townhouse condominium would have much lower fees than a standard highrise.
A good way to compare fees is by looking other similar buildings online, and determining your price per square foot compared to theirs. If your fees are consistently higher than similar buildings, there may be room for improvement.