CCI-T Condovoice Fall 2022

THE LAST WORD: COVID’s Long-Term Financial Impact on Condominium Corporations How to Make the Most of Board Member Transitions • The Expanded CAT Jurisdiction

Publication of the Toronto and Area Chapter of the Canadian Condominium Institute • FALL 2022 • www.ccitoronto.org

Beyond the Newsletter Strategic Communication for Condominium Corporations

Callin’ in the

Condo Sheriff

The Court-Appionted Administrator

Trees &Your Community Strategies for Sustaining the Health of Your Trees and Reserve Fund

Trust in Me

The Pitfalls of Paying Purchase Funds Directly to Developers

AND

MORE!

CONSISTENCY, TRANSPARENCY AND CLARITY IN

CONDO LENDING

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Condovoice VOLUME 27 • ISSUE # 1 • FALL 2022

In Every Issue 3

President’s Message

BY MURRAY JOHNSON

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Message From the Editor

BY BRIAN HORLICK

56 Last Word Coming Out Behind

In This Issue

BY LYNDSEY MCNALLY

For Condo Owners 51 Trust in Me The Pitfalls of Paying Purchase Funds Directly to Developers

BY MATILDA LICI AND AVA NARAGHI

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Decisions From the Courts

BY JUSTIN MCLART Y, MICHAEL PROSIA AND JASON RIVAIT The Noisy Garbage Room, Nuisance Tenant and Attacking Dogs

11 Beyond the Newsletter

BY PATRICIA J. PARSONS Strategic Communication for Condo Corporations

13 Callin’ in the Condo Sheriff

BY JOY MATHEWS The Court-Appointed Administrator Condo Law Remedy is EXTREME!

17 Stretch Roof Life & Save Reserve Funds

BY MICHELLE WALLACE-CARSWELL Minor Roof Repairs Prevent Surprises and Early Replacement

21 The Landmark III Wins Yet Again

BY FARZAD LAHOUTI & ERIC LAkIEN What is an Award Winning Condominium,You May Ask? How About a Condo that has Won Two Accolades?

CCI Members News & Events 45 47 48 48 49

New Committee Member Profiles CCI Was There CCI Welcomes New Members Upcoming Events Word Search YOUR CONDO CONNECTION IN THE TORONTO, PEEL, YORK AND DURHAM REGIONS PROVIDING EDUCATION, INFORMATION, AWARENESS AND ACCESS TO EXPERTISE

BY AND FOR OUR MEMBERS.

www.ccitoronto.org

25 Navigating the Chargeback Matrix

BY YULIA PESIN Leaking Toilets, Fires, and Everything in Between

31 Condo Lending

BY EDMUND LEONG A Push for Consistency, Transparency, and Clarity

33 Trees and Your Community

BY NEIL JENkINS Strategies for Sustaining the Health of Your Trees and Reserve Fund

35 Making the Most of Board Member Transitions

BY SALIM DHARSSI How to Minimize Downtime Onboarding Newly Elected Board Members

39 Choosing the Right Winter Maintenance Company

BY GEORGE ARMSTRONG The Stakes are High – You Need to Become an Informed Consumer

43 The Right to Privacy in Condominium Buildings

BY BRADLEY CHAPLICk Corporations Need a Privacy Policy Specific to the Community’s Needs CONDOVOICE FALL 2022

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Canadian Condominium Institute/ Institut canadien des condominiums Toronto & Area Chapter 1 Eglinton Ave. Toronto, ON M4P 3A1 Tel: (416) 840-5346 E-mail: info@ccitoronto.org Website: www.ccitoronto.org 2021-2022 Board of Directors PRESIDENT: Murray Johnson, OLCM, CCI (Hon’s), LCCI Co-Chair, Conference Committee Member, Tarion Sub-Committee Crossbridge Condominium Services Ltd. VICE-PRESIDENT: Lyndsey McNally, OLCM, LCCI Member, Legislative, Communications Committees Member, Social Media Sub-Committee Co-Chair, Education Committee CCI-N Liaison CWB Maxium Financial SECRETARY/TREASURER: Brian Antman, CPA, CA Chair, Finance Committee, Member, Conference Committee, Member, Communications Committee Adams & Miles LLP Chartered Professional Accountants Board Members Francesco Deo, BA (Hons), JD Member, Legislative Committee Chair, Volunteer Resource Committee Deo Condominium Lawyers Bob Girard, B.Comm, ACCI Member, CondoSTRENGTH Committee Member, Education Committee Member, Finance Committee Member, Membership Retention Sub-Committee YCC # 50 Brian Horlick, B.Comm., B.C.L., LL.B., ACCI, FCCI Chair, Communications Committee, Member, Conference Committee Horlick Levitt Di Lella LLP Warren Kleiner, BA., LL.B. Chair, Legislative Committee Co-Chair, Ontario Caucus Member, Marketing Committee Member, Awards Sub-Committee Shibley Righton LLP Farzad Lahouti, MBA Member, Marketing Committee Member, CondoSTRENGTH Committee Chair, Awards Sub-Committee YRCC 798 Eric Lakien, MBA, PhD. Member, CondoSTRENGTH Committee Member, Marketing Committee Co-Chair, Education Committee YRCC # 798 Connie Pappas-Boccitto SRS, ABR, SRES, CCSP Chair, CondoSTRENGTH Committee Member, Social Media Sub-Committee Royal LePage Terrequity Realty, Brokerage Sophia Rojenko, B.Eng, EIT Member, Education Committee Chair, Social Media Sub-Committee Synergy Partners Lisa Kay, BA Econ Member, Communications Committee KayCondoGC Inc. Stephen Ilkiw Chair, Marketing Committee CondoHive / Bedford Hill Consulting OPERATIONS MANAGER - Meredith Lowry

President’s Message

So Long, But Not Farewell Time passes so quickly. I find it hard to believe that this will be my last President’s Message to you before we have our Annual Members Meeting in October. It seems like just yesterday that Tania Haluk passed the tiara to me and in the middle of a pandemic, I often wondered what I could contribute to our wonderful organization.

It will be Lyndsey McNally’s turn to take the reins for her two years as President and leader of the fantastically hard working and extremely talented volunteers that form your Board of Directors.

I think we did some really good things during my tenure, but that is a testament to the Board of Directors and the nearly sixty additional volunteers that tirelessly give their time to make condo living a better experience for all. At the time of writing we began planning our first return to in-person events for August and we all survived. I guess there is hope for us all yet.

working over the past year to prepare her to take on the role.

The longest sitting director on the CCI-T board is Bob Girard who over the years has provided considerable contributions to the Institute. Bob will not be running again this year and I would be remiss if I didn’t offer him my/our heartfelt thanks for all he has contributed. The Board, with the exception of Lyndsey, Brian Antman, Brian Horlick and myself, are all new in the last couple of years and I can’t wait to see what fantastic new programs and projects come from this fresh new Board…..they still have that new Board smell! I am also glad to say that under the direction of the many Committee Chairs and the lead of Francesco Deo, we almost cleared the backlog of volunteers on our volunteer waiting list. All our volunteers are the heartbeat that keeps CCI-T moving forward.

Our new association management company, Redstone Agency, is now taking the sole lead on the organization of the ACMO-CCI-T Condo Conference and I couldn’t be more excited about the conference and hope that you will all make an effort to attend. If you attend the conference, please search for me and come and say hello.

While I will no longer be President, I’m not going anywhere soon. I will continue to support CCI-T at the Board level and then at the Committee level. Additionally,of course, I will always be around to support directors, managers and professional supporters of CCI-T and the industry as a whole. So, for the last time as President; I’m Murray Johnson, and this has been your condo connection!

I look to the transfer of leadership to Lyndsey as a bittersweet end to my presidency. Being the President has continuously taught me a lot about leadership and volunteering, I will miss that every day. Having said that, I am excited about the future of CCI-T under the leadership of Lyndsey and we have been

Murray Johnson, OLCM, CCI (Hon’s), LCCI CCI-Toronto and Area Chapter President CONDOVOICE FALL 2022

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Editor’s Message

Condominium Authority Tribunal’s (CAT) Jurisdiction Has Expanded The Resulting Large Number of Daily Notifications From CAT to Lawyers/Managers/ Board Members With Respect to These CAT Applications Was Surprising Effective January 1, 2022, the Condominium Authority Tribunal’s (CAT) jurisdiction was expanded to include disputes with respect to nuisance involving noise, odour, light, vibration, smoke and vapour, as well as related indemnification provisions in condominium governing documents.

tices and messages that lawyers must respond to while dealing with a CAT application. In addition to the excessive frequency of these messages, the time required to log on to the CAT portal, review the notice, and respond, is substantially more than the time needed to read and respond to a simple email.

As expected, this expanded jurisdiction substantially increased the number of applications to CAT. What was not expected was the number of daily notifications from CAT that lawyers/managers/board members would receive with respect to these CAT applications.

Anyone who has been a party or has represented a party before the tribunal has experienced that his or her email inbox is inundated with notification emails from the tribunal. If you are a lawyer or manager handling more than one CAT application, then all the best to you in attempting to manage your inbox.

The CAT was created to deal with disputes between unit owners and condominium corporations in an efficient and cost-effective manner. Prior to the expansion of CAT’s jurisdiction, I would say that this purpose was met, but not anymore.

The expected legal costs relating to a CAT application (including all three stages but not including expert witness costs, if any) are now typically in the range of $10,000 - $15,000.

A significant factor contributing to high legal costs is the voluminous no-

Yet another problem is that CAT frequently operates with extremely short deadlines. Though most of the CAT members are gracious enough to grant extensions upon request, the frequent imposition of short deadlines can be taxing.

Lastly, the Rules of Practice (though amended recently) remain in need of further amendments pertaining to the admission and exclusion of evidence.

CAT applications have become too lenient in allowing irrelevant evidence

that has no bearing on the issues in dispute and that wastes time and legal resources in a manner that is disproportionate to the underlying dispute.

With that being said, the CAT has certainly assisted a large number of unit owners and condominium corporations to resolve disputes. CAT applications are not as cost-effective as we would have expected them to be, but still in comparison to an application before the Superior Court of Justice, litigants can save a significant amount of costs.

More members need to be appointed to the CAT, and the email notification system should be replaced with regular email communication and hearings by video and telephone (as opposed to in writing), as is the norm in other Ontario tribunals and courts.

Brian Horlick B. Comm, BCL, L.L.B., ACCI, FCCI CONDOVOICE FALL 2022

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Justin McLarty Partner Miller Thomson LLP

Michael Prosia Associate Miller Thomson LLP

Jason Rivait Partner Miller Thomson LLP

Case Law Update

Decisions From the Courts

In mid-2012, the Corporation, with the assistance of property management, undertook some informal testing of noise levels and conducted meter readings.

In mid-2013, the Corporation undertook certain repairs to the compactor; however, such repairs were not to Ms. Wong’s satisfaction. Thereafter, TSCC 1918 posted a notice to advise residents to not use the chute overnight. While this minimized the disturbance to an extent, it did not resolve the issue to Ms. Wong’s satisfaction.

In early-2014, TSCC 1918 installed a checkpoint alarm light at the security desk which triggers whenever the compactor is jammed, running too long or running at night. Locks were also installed on the garbage chute doors to prevent overnight access. The solutions seemed to address the issue until Ms. Wong began working from home in 2017. In early-2018, TSCC 1918 engaged an engineer who recommended installing cement block in

the garbage room for further insulation.

Other steps to reduce noise and vibrations were also undertaken at that time.

While the above steps minimized the noise, Ms. Wong continued to complain.

TSCC 1918 subsequently agreed to engage a soundproofing company at its cost. The soundproofing company determined that the noise and vibrations were excessive and provided recommendations to address the issue. TSCC 1918 consulted its legal counsel and a recommendation was made to peer review the report. Such peer review was done by an engineer and it concluded that the soundproofing company’s test was flawed and that the sound and vibrations were caused by a different issue.

In late-2020 additional noise testing was done by a different company and recommendations were made to address the issues. TSCC 1918 accepted this proposal but Ms. Wong did not agree that such proposal was adequate as she preferred the recommendations from the original soundproofing company.

Ms. Wong subsequently sought various orders in the nature of declaratory relief and damages under the oppression remedy. The question to be determined by the Court was whether the Corporation’s response to the complaints made by the unit owner were reasonable. Ms. Wong had the burden to prove that TSCC 1918 breached its statutory duties to maintain and repair the garbage system or breached her right to quietly enjoy her unit.

The Court held that the actions of TSCC 1918 were insufficient and oppressive. Of note, the Court stated that an “inexcusable length of time” had gone by prior to TSCC 1918 taking real steps to address Ms. Wong’s concerns. As a reminder, this matter had gone on for approximately eleven years. The Court noted that there were unacceptable gaps in time between the responses of TSCC 1918.

The Takeaway As a matter of law, the obligation of a condominium corporation is to do what is reasonable in carrying out its statutory duty of repair and maintenance. There is no standard of strict liability or absolute perfection on the part of the condominium corporation in carrying out this statutory duty. Further, unit owners are not entitled to perfect silence.

TSCC 1918 clearly took steps to address the concerns of Ms. Wong; however, there were gaps in such steps and missteps along the way. Specifically, at one point in time, TSCC 1918 advised Ms. Wong’s lawyer that TSCC 1918 would not take further steps to address the noise/vibrations “unless and until Wong rescinded this application”. The Court clearly took issue with this statement.

Additionally, condominium corporations must find meaningful solutions. If such solutions do not remedy the deficiency, then additional investigations and steps should be taken in a timely manner. Any delays could expose a condominium corporation to risk.

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ILLUSTRATION BY JASON SCHNEIDER

Wong v. TSCC No. 1918, 2022 ONSC 3409 Ms. Wong resides on the ground floor and next to the garbage room which contains a compactor and is the termination point of the garbage chute used by all residents.

Soon after moving into the unit in 2010, Ms. Wong experienced loud noise and vibrations emanating from the garbage room. Complaints were made by Ms. Wong to Toronto Standard Condominium Corporation No. 1918 (“TSCC 1918”) between 2010 and 2012.

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Condovoice Condovoice is published four times per year – Spring, Summer, Fall and Winter, by Redstone Agency on behalf of the Canadian Condominium Institute Toronto & Area Chapter.

EDITOR: Brian Horlick ADVERTISING: Calandra Muller ART DIRECTION & DESIGN:

Atlanta Visual Communications Inc. All advertising enquiries should be directed to Calandra Muller at (416) 840-5346 ext. 5 or advertising@ccitoronto.org If you are interested in writing articles for Condovoice magazine, please contact Calandra Muller at (416) 8405346 ext. 5 or calandra@ccitoronto. org. Article topics must be on issues of interest to Condominium Directors and must be informative rather than commercial in nature.

The authors, the Canadian Condominium Institute and its representatives will not be held liable in any respect whatsoever for any statement or advice contained herein. Articles should not be relied upon as a professional opinion or as an authoritative or comprehensive answer in any case. Professional advice should be obtained after discussing all particulars applicable in the specific circumstances in order to obtain an opinion or report capable of absolving condominium directors from liability [under s. 37 (3) (b) of the Condominium Act, 1998].

Authors’ views expressed in any article are not necessarily those of the Canadian Condominium Institute. All contributors are deemed to have consented to publication of any information provided by them, including business or personal contact information.

Consider supporting the advertisers and service providers referred to in this magazine, recognizing that they have been supporters of CCI Toronto.

Advertisements are paid advertising and do not imply endorsement of or any liability whatsoever on the part of CCI with respect to any product, service or statement.

Publications Mail Agreement #40047055 Return undeliverable Canadian addresses to Circulation Dept.

705 – 1 Eglinton Ave. Toronto, ON M4P 3A1 8

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Unreported Decision In 2020, a condominium corporation (“Corporation”) faced the problem of a tenant (“Tenant”) who was creating a nuisance for other residents of the building in the form of excessive noise. The conduct was objectively severe.

The Corporation received a number of complaints from other residents of the building about the Tenant, and the Corporation made significant efforts to resolve the matter informally through demand letters by property management and its counsel. With informal resolution having failed, the Corporation wanted to take legal action to have the Tenant removed from the building.

It is noted by background that the Tenant had a valid tenancy agreement with the owner of the unit where she resided, and the owner was in the process of attempting to evict her at the Landlord and Tenant Board. Pursuant to Fraser v. Beach, 2005 CanLII 14309 (ON CA), the general law is that it is the Landlord and Tenant Board which has exclusive jurisdiction to evict tenants from their residential premises, unless a statute provides otherwise.

The Corporation ultimately proceeded with an application under s. 134 of the Condominium Act, 1998, S.O. 1998, c. 19 (the “Act”) for an order to evict the Tenant, and in the alternative for an order for compliance against the Tenant.

The Court held that pursuant to s. 134(4) of the Act, a compliance order must be obtained prior to ordering the removal of the tenant from a condominium building.

After the Corporation obtained the compliance order, and the Tenant failed to comply, the Court ultimately granted the removal of the Tenant from the building, which was made enforceable by a private bailiff with police assistance.

gested that a condominium corporation is prohibited from removing a residential tenant under s. 134 of the Act, and that such removal can only be accomplished by way of application to the Landlord and Tenant Board. This position is not supported by the current law. The current law supports the right of a condominium corporation to remove a problem tenant from the building with the powers granted under s. 134 of the Act. It is noted that the Act is in the process of being amended, with the removal of s. 134, and the addition of s. 135.1 and s. 135.2.

These amendments appear to reflect the intent of the legislature to confirm a condominium corporation’s power to remove a problem tenant, while explicitly prohibiting a unit owner from bringing such an application. If a unit owner wishes to have a problem tenant removed, the Landlord and Tenant Board will retain exclusive jurisdiction.

In addition to issues involving the removal of problem tenants is the related issue of whether a condominium corporation can recover its legal costs for the application.

There is law to suggest such legal fees can be added to the common expenses for the unit, even in the absence of any fault by the owner (See: Metropolitan Toronto Condominium Corporation No. 933 v. Lyn, 2020 ONSC 196.)

MTCC No. 1260 v. Singh, 2022 ONSC 1606 Singh is a troubling saga of tenants who simply would not control their dogs. The tenants kept what were likely pit bulls in the unit. One of the dogs had previously attacked another resident and that resident’s dog, which resulted in an order from the City of Toronto that the dogs were to be muzzled in public.

The Court’s jurisdiction to remove a tenant under s. 134 of the Act has since been confirmed in other lower court decisions, including MTCC No. 1260 v. Singh, 2022 ONSC 1606. There is no known appellate authority yet on this issue.

The attack on another resident and their dog was simply the culmination of a long history of problematic behaviour on the part of both the dogs and the tenants.

The tenants frequently failed to keep any control over the dogs and other residents were harassed and frightened by the tenants and their dogs.

The Takeaway Some tenants’ rights advocates have sug-

The condominium corporation commenced a compliance application and ob-

tained an order from the Superior Court of Justice requiring the dogs to be removed from the unit. The application was commenced after the Condominium Authority Tribunal’s jurisdiction expanded to include pet issues.

The tenants did not comply with that court order and the Corporation subsequently had to enlist the help of the Sheriff and Animal Services to have the dogs removed. The tenants were belligerent throughout the process, including threatening the children of the Sheriff and threats to bring more dogs into the building and set them free in the hallways.

The Corporation had to return to court again, this time seeking the removal of the tenants. While the court would not grant an order at that time, it did order that the tenants were restrained from bringing any other dogs into the building without the permission of the court.

The tenants brought dogs into the unit once more and appear to have attempted to hide their presence. Despite the tenants’ attempts to hide the presence of the

The Corporation was able to present persuasive evidence to the court that established that the tenants had brought dogs back into the building, in contravention of the court’s previous orders

curring more frequently as delays at the Landlord and Tenant Board continue.

The Takeaway While the jurisdiction of the Condominium Authority Tribunal (“CAT”) has been expanded to include a dispute with respect to pets, including disputes with owners and / or occupiers of units, a compliance application to the Superior Court of Justice remains an option when the issue triggers the provisions of Section 117(1) of the Act.

dogs, the Corporation was able to present persuasive evidence to the court that established that the tenants had brought dogs back into the building, in contravention of the court’s previous orders.

Singh is an important decision which reaffirms the availability of the Superior Court to address activities or conditions that pose a risk of injury or illness to other residents or damage to the property, regardless of whether the broader categorization of that activity falls within the scope of CAT’s jurisdiction.

The court ultimately granted the Corporation’s request to terminate the tenancy.

As discussed in greater detail earlier in this article the termination of tenancies under Section 134 of the Act has been a contentious question and appears to be oc-

Singh also highlights the high threshold that must be met to convince a court that tenants are not suited for communal living, as an order to terminate the tenancy was not made until the two previous court orders had been violated. C V

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Communications

Beyond the Newsletter Strategic Communication for Condo Corporations

What Does “Strategic Communication” Mean?

The term strategic communication is most easily understood by examining its two components.

A strategy means articulating a longterm goal and delineating how that goal can be approached. Communication is often defined as a reciprocal process of exchanging information and ideas based on understanding shared meanings of words,

symbols and approaches. If that’s too academic for day-to-day applications, there’s a simpler way to look at it.

Strategic communication is goal-oriented, planned, deliberate and intentional. In action, strategic communication includes the following elements: a plan for the operational, day-to-day communication of informational material to specific audiences and a long-term plan for communication activities that will contribute to the successful completion of corporation activities and the development of positive community relations.

Posting minutes of meetings and distributing a newsletter occasionally do not constitute strategic communication. On their own, they will do little to enhance relationships or smooth the way to achieve Board goals successfully. Don’t misunderstand, though. Both Board minutes and well-planned and executed newsletters certainly can be important tactics in a communication strategy. But that’s the point: you need a strategy.

Avoiding Seat-of-the-Pants Communication Over time, a Board that faces few significant problems can become complacent

about its relationships with its important publics. If the monthly complaints to management are minor, the budget manages to get by without complaint, and there are no shouting matches at the AGM, a Board can think it’s running smoothly. This attitude is what writers call pantsing: writing or in this case, running a condo corporation without a plan. I call it the firefighting approach to communication avoiding proactive communication unless a fire breaks out.

For example, you might take the following views: • We won’t bother to develop a dialogue with our owners until they threaten to call a meeting to oust us.

• We don’t need to consider how we communicate with owners regarding the budget until we need to implement a special assessment.

• We don’t need to carefully consider how we word email correspondence with individual owners and residents until one threatens to sue.

As I have written before, “Many problems that organizations face with their relationships are a direct result of dealing with communication issues in a reactive rather than a proactive way.”

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ILLUSTRATION BY JASON SCHNEIDER

When film composer and conductor John Powell said, “Communication works for those who work at it,” he could have been talking directly to Board members in condo corporations. It’s probably safe to say that most individual Board members these days consider communication to be a high priority for their Boards, but successful Boards know something that unsuccessful ones don’t: it’s not enough to post minutes as required by regulation and occasionally slap together a newsletter.

Maintaining and enhancing good relationships with owners and residents is essential to the smooth functioning of both operational and strategic activities. And good relationships are predicated on a strategic approach to communication.

Strategic Communication Requires a Plan For over a decade, I taught the basics of communication and public relations planning in a four-year university program designed to prepare future corporate communication and public relations practitioners. Every year, when presented with cases, students wanted to jump into finding solutions immediately. Before gathering information or asking a single question, their reaction was to move directly to solutions. That illustrates the direct opposite of strategic planning.

Have you ever been confronted with a problem at a Board meeting only to find several directors leaping into the conversation saying, “We should do this,” or “We should do that,” before the Board has a chance to define the problem? And defining the problem isn’t enough, either. The Board needs to know, among other things, who is most affected by the problem and what the objective of a solution will be. Strategic communication requires that and more.

When it comes to communication, the following pre-planning questions are key: • Where are we now?

• Where do we want to go?

• How do we get there?

• How will we know when we arrive?

The answers to these questions for strategic communication planning require researching the current climate, developing objectives for where you’d like to be, defining the strategies and tactics for achieving

those objectives and evaluating how well you’ve attained those objectives.

What Does a Communication Plan Look Like?

A strategic communication plan is based on the four elements I discussed above.

Let’s apply these elements to a specific communication issue that arises yearly for every condominium board of directors: the annual budget.

It happens every year like clockwork. The Board nears the end of the fiscal year and begins the process of creating a budget for the following year. Successful budgeting requires three things: accuracy, fiscal responsibility and planning. But, during that planning process, does the Board consider how strategic communication to owners is included? (see table below) Developing specific objectives for a plan is key to maintaining focus. These objectives then provide the basis for developing targeted messages designed to imbue all communication tools regardless of the medium. Also, note that creating the tactics that will form the implementation can be an exercise in creativity. The primary consideration will be the Board’s knowledge of the demographics and preferences of its owner group. For example, a condo corporation with a younger demographic might be best served by providing much of that budget material via video rather than simply on a document and adding a private social media group for dialogue.

A Preliminary Communication Plan Might Look Like This: Audience Owners

Objectives 1. To increase owner knowledge about the budgetary requirements in condos 2. To achieve owner acceptance of the required increase in annual maintenance fees.

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Messages The board safeguards owners’ property values and financial contributions by taking its responsibilities seriously and following the budgetary requirements set out in the Condo Act.

Tactics Budget materials that include both a financial statement and a well-crafted explanatory document that provides a clear rationale for final budgetary decisions.

Budget town hall to provide owners with an opportunity to ask questions.

Evaluation Gauge owners’ reactions at town hall.

Conduct a postbudgetary owner survey.

Monitor unsolicited owner feedback for budget-related issues.

Finally, the evaluation step is the most often ignored aspect of communication planning. It’s essential for the Board to know what works and what doesn’t to avoid what has failed and to capitalize on the opportunity to apply what worked in the future.

Outcomes of Strategic Communication Planning One of the most beautiful aspects of a strategic process for communication is finding that a Board has significant support when more controversial issues arise. Building trust is one of the most important overall goals of communication planning. For example, when you find yourselves in the position of having to levy a special assessment, an owner group that already trusts the financial knowledge and skills of its Board will be far more amenable, providing this communication strategy is implemented well in advance, thus preparing the owners. Or if the Board is considering making a major change to a common element, such as repurposing an amenity room, prior communication and trust will go a long way toward smoothing that complicated process.

When considering communication as a strategic tool, condo boards need to keep three characteristics in mind. Communication must be:

TIMELY TRANSPARENT RELEVANT Strategic communication is a Board’s purposeful use of communication to achieve its objectives. A well-planned newsletter might well be a tool that helps achieve those overall objectives, but on its own, it does little more than pay lip service to a board’s responsibility to communicate with its owners. A board can achieve much more – it just needs to take the time to plan its communication activities.

Even Pablo Picasso said, “Our goals can only be reached through the vehicle of a plan.

There is no other route to success.” C V

Joy Mathews BPHE, BA (Hons.), MA, JD Rutherford & Mathews, PC Barristers & Solicitors

Court Appointed Administrators

Callin’ In the Condo Sheriff! The Court-Appointed Administrator!

WARNING TO READER: This Condo Law Remedy is Extreme! Use Only When Necessary!

What is a Court-Appointed Administrator?

Dysfunctional. Dramatic. Drastic. Diseased. These are some of the adjectives used to describe the extreme financial, social, and political circumstances that a condominium corporation finds itself in to justify the “remedy of last-resort” wherein a judge of the Superior Court of Justice appoints an administrator to take over all important condo decisions.

“Self-governance is the norm; administrators are the exception.”

The court has made it clear on numerous occasions that a court-appointed administrator is a remedy of last resort since the Condominium Act, 1998 (the “Condominium Act”) is a piece of legislation which supports a regime of self-governance by owners, not judicial interference. As aptly stated by the court in Bahadoor v YCC 82 (2006),

Although this remedy in the Condominium Act is available to “save” condominium corporations from a toxic governance situation, it is not easy to obtain. For example, in MTCC 710 v Owners of MTCC 710 the judge issued the following warning or “wake-up call” to the owners in light of financial problems and factionalism within the condominium community coupled with

significant governance difficulties: “….I am imposing a two week “cooling off period”. I encourage the unit owners to put aside their personal disputes and obvious differences and to use the next two weeks to meet informally to try to come up with a realistic plan to address the real financial problems that are staring them in the face.

Hard decisions must be made – either significantly cut expenses, or significantly raise common fees, or both. Inaction is not an CONDOVOICE FALL 2022

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ILLUSTRATION BY CLAYTON HANMER

Instead of the duly elected directors managing the affairs of the corporation, the court will appoint a representative who replaces all of the Board members and makes some (or all) of the decisions on behalf of the condominium corporation.

This serious remedy is analogous to that of a court-appointed receiver in a commercial, for-profit corporation context when a company is facing the existential threat of bankruptcy.

option. If the level of distrust amongst the unit owners is too high to permit reaching a solution, then perhaps they should think about appointing an administrator who can make the tough decisions for them. I will give the unit owners two weeks to engage in this kind of “reality check” and to explore a common solution.”

When Do You Need a Court Appointed Administrator? The Red Flags!

Nevertheless, if you are a concerned unit owner or Board member and believe that your community could benefit (i.e., be saved!) from the appointment of an administrator, then you will need to learn how to do this and when it is necessary.

Since each condominium community has its own distinct set of issues, the first step in this process should always be to consult legal advice, preferably from a lawyer who has expertise in condominium law, and seek guidance whether this is indeed the correct path to resolve your particular governance issues. Sound legal advice earlier rather than later can save you and your coowners considerable legal costs.

When is it necessary? Well, you want a list?

Here are some issues that have resulted in this remedy: operating deficits of hundreds of thousands of dollars, millions of dollars in mortgages, illegal use of reserve funds to pay for things other than major repairs and/or replacement, unaudited financial statements, city work orders, unpaid water charges, uncollected common expense arrears, underfunded reserve funds, lack of necessary repairs and maintenance, hostility and frustration amongst owners, serial requisitions to remove directors, verbal and physical threats, lack of adequate security, murders, overcrowding, widespread graffiti, poor garage lighting, misuse of operating funds, silencing of owners during elections, proxy fraud, and creation of division amongst owners.

The above is not an exhaustive list and Section 131 of the Condominium Act governs this process and requires that sufficient evidence is presented by way of a court application which is commenced in accordance with Section 134 of the Condominium Act. Your condominium lawyer will assist with reviewing and preparing affidavit evidence which will be presented to the court and 14

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should demonstrate the significant issues for it to conclude the necessity of an administrator on the basis that “it would be just or convenient, having regard to the scheme and intent of the Act and the best interests of the owners”.

The key part is the phrase “just or convenient” and, as mentioned, is not taken lightly by the court. In this regard, the court is permitted to order the specific role and powers of the administrator based on the evidence.

The administrator must act honestly and in good faith, and it must deal with or manage the property of the condominium corporation over which it has power with the care, diligence, and skill that a reasonably prudent person would exercise in comparable circumstances Whether or not you will be successful in an application for a court-appointed administrator is based on a careful consideration of the nature, causes and impact of events over time. Specifically, the court has found several problems in the affairs of condominium corporations which may justify the appointment of an administrator such as: 1. A demonstrated inability to manage the corporation; 2. Substantial misconduct or mismanagement; 3. The appointment of an administrator is necessary to bring order to the affairs of the corporation; 4. The presence of a struggle within the corporation amongst competing groups that impedes proper governance; 5. Whether the appointment of an administrator has any reasonable prospect of bringing to order the affairs of the corporation; and, 6. The costs-benefits of appointing an ad-

ministrator are reasonable based on the circumstances.

So, not all administrators are created alike and will vary from case to case.

The powers of the administrators may vary including the total length of the appointment term, the range of powers from narrow (e.g. managing the repair of specific common elements) to comprehensive (e.g. the administrators takes over all powers of the board of directors).

What will not change, however, is the fact that the administrators are officers and instruments of the court. Accordingly, the administrator must act honestly and in good faith, and it must deal with or manage the property of the condominium corporation over which it has power with the care, diligence, and skill that a reasonably prudent person would exercise in comparable circumstances.

When Enough is Enough? How Do You Change or Stop The Administrator?

Once appointed by the court, the specific wording of the court order is critical and can only be overlooked at the owners’ peril – in other words: read the court order!

For example, the court admonished an elected group of owners who were clearly misguided thinking that they were in control. First, the court order stated that the administrator’s power was as follows, “to manage the affairs of [the condominium corporation] as if the administrator were the Board of Directors….and in place of the Board of Directors…., whose powers be and are hereby suspended, until further order of this Court.”

The attempt of the elected board to remove the administrator fell on deaf ears as the court stated, “Let me comment on how the four moving unit owners described themselves. In their materials they styled themselves as the “Elected Board of Directors”. With respect, they are not. Since the appointment of the Administrator on August 28, 2006, the powers of the Board of Directors have been suspended. The court has not given permission to hold formal elections for a new Board of Directors. Accordingly, at

the present time no Board of Directors exists….elected or otherwise.” [emphasis added] Although in many cases the condominium corporation brings the application for a court appointed administrator, the owners can present their own story to the court and persuasively argue for their preferred administrator. It is noteworthy that the the legal test to have a replacement of an administrator is the same as that of the appointment. For instance, in MTCC 856 v. All Unit Owners and Mortgagees of MTCC 856 (2011), the owners were concerned that “we sense some connivance between the Board, management and the Administrator” which resulted in the court agreeing to the appointment of an administrator chosen by the owners.

Terminating the administrator will not be straightforward and requires consideration of the impact on other interested persons, including the corporation’s creditors and, depending on the circumstances, any entities such as fire or building services (if the building structure is compromised due to disrepair).

How To Avoid a Court-Appointed Administrator?

Retrospective analysis of previous court cases in which a court-appointed administrator was ordered yields very important and useful insights to help future condominium communities.

Here are some common themes: • Owner Apathy: A common background to most cases is owner apathy and lack of effective participation. A successful condominium relies on owners actively participating in the selfgovernance of the corporation. In this regard, the Condominium Authority of Ontario (see: https://www.condoauthorityontario.ca/) provides a useful database of very common issues that a typical owner and condominium corporation will encounter.

• Board Transparency: Maintaining the Condominium Act minimum disclosure obligations is just that: the minimum standard. Although not necessary, it would be useful to all owners that its elected board of representatives

engage the community and provide useful information on a timely basis to avoid owners’ anxiety and increase participation.

• Deferring Repairs and/or Maintenance: Unreasonably delaying or deferring major repair and/or maintenance of common elements is an easy way to create governance issues in a condominium corporation. If common element maintenance fees are also kept artificially low, coupled with delaying important maintenance decisions, serves only to postpone difficult decisions and leads to an adversarial environment for the future condominium community.

• Ineffective or Non-Existent Management: Condominiums have become sophisticated regulatory entities and the ability to self-manage may still be available for some communities, but most require the professional expertise of a licensed condominium property management company. Management companies, although licensed, are subject to market driven forces and not all managers have the same level of expertise. A property manager that is not attending to the needs of its community may cause harm that can only be measured and weighed in the future. The Condominium Management Regulatory Authority of Ontario (see: https://cmrao.ca/) regulates all licensed property managers in Ontario and ensures that certain industry standards in the condominium industry are maintained.

The above is not an exhaustive list of common problems which may erode good governance in a condominium. There is indeed no one issue that causes the erosion, rather a matrix of various unresolved issues. An engaged ownership and Board being mindful of the social and political milieu that creates a toxic condominium culture is the first step to avoiding the need for this dramatic remedy.

The remedy of a court-appointed administrator is not often used but much needed to protect all owners and is another tool in the toolbox of condominium self-governance. C V CONDOVOICE FALL 2022

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Michelle Wallace-Carswell Sales Manager Design Roofing

Condominium Maintenance

Minor Repairs Stretch Roof Life and Save Reserve Funds Simple Upkeep Items that Prevent Surprises and Early Roof Replacements

Maybe a roof replacement seems far off in the future, or maybe you’re trying to buy a few more years with band-aid repairs. Or maybe there is a problem that just hasn’t been detected yet. The one thing that is for certain: everyone wants to protect their investment.

The roof makes up a relatively small percentage of the physical material, but it protects 100% of the building. Most repairs are done because of water damage, whether it’s a sudden flood, or a slow leak that no one notices for years. When water hits the roof, it needs to be repelled away from the building or it will find its way to the roof deck, the ceiling, walls, carpets, even the basement. It can destroy the build-

ing structure right down to the foundation.

Water attracts vegetation which pierces through layers of the roof system with their roots; it attracts mould growth as soon as it hits any carbon-containing material. Pest infestations, electrical damage, hazardous conditions, the list goes on. Usually you can trace the problem back to one critical ingredient: water.

Regular Roof Inspections All this can be avoided, or at least minimized, by getting the roof inspected at least once per year. Routine repairs protect everyone’s investment by preventing materials from breaking down and failing, and damage spreading and becoming more and more serious. A roof maintenance plan adds years to the life of a roof.

Always get a professional roofing contractor to inspect the roof. They are safety trained for working at heights. They know better than anyone, what to look for because they have seen it many times.

Here are the main areas that require regu-

lar minor repairs to keep your roof in top shape and maximize its life.

1. Remove Debris from Roof Surface and Eavestroughs Debris throughout the roof surface prevents the free flow of water to the drains. It also absorbs moisture and weighs heavy on the roof over time. Typical debris found on roofs consists of leaves, tree branches, any object that can be picked up by the wind like plastic bags and packaging, things that are growing like weeds or moss, and anything from the roof itself, like lint from vents, piece of broken shingle or shards from an HVAC unit and such.

Eavestroughs are hugely important. When blocked by excess debris, they provide an excellent breeding ground for weeds and a perfect home for wasp nests and other small creatures. Water also erodes building material and the ground around it.

2. Ensure Proper Drainage Drains should be properly checked and cleaned. An ill-fitted drain or eavestrough CONDOVOICE FALL 2022

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ILLUSTRATION BY TOMIO NITTO

Finding ways to keep an adequate reserve fund is critical. Regular maintenance prevents major repairs and surprises down the road. We know this, right? With owners’ eyes on hallways, elevators, landscaping, and plumbing, it is easy to forget about the roof, that common area that covers the whole building.

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guard can do more harm than good. An experienced roofing technician can easily decipher the right protection from wrong.

They will know exactly which cover should be used in each situation.

Some people underestimate the importance of eavestroughs. They need to be attended to regularly because they protect people outside the building by funneling water away.

3. Repair or Replace Damaged Flashing Flashing is used to protect areas of the roof where major parts join, like the roof edge, large vents, chimneys, HVAC units, etc. It diverts water away from the areas where water is most likely to get in.

Over time, even galvanized steel roof flashing corrodes and needs to be repaired or replaced. Other common ways flashing gets damaged is by hail, hot temperatures, woodpeckers, and very high winds. Flashing could have small holes that are impossible to detect from the ground. They could even come loose and actually detach if neglected.

4, Examine Roof Surface Any surface, from shingles to granules to stones, needs to be looked at carefully because that top layer is protecting the roof membrane. Hot summer sun dries that outer layer and it expands in the heat. If it cracks, the layers below are exposed.

Sealant and caulking must be monitored on a regular basis to ensure that it’s not deteriorated to the point where you have splits and cracks.

That’s how water gets in.

An inverted, sometimes called upside down roof system is popular in the GTA. In this type of roof, the membrane layer is covered by roofing insulation and filter cloth and then either gravel ballast or paving stones.

Often the membrane itself is not UV resistant and having these layers above helps to protect it. If the roof membrane is damaged, those layers must be moved or swept back.

There could be broken down or damaged insulation, sometimes filter cloth is missing. This all requires a repair and the layers properly arranged. Without this simple repair, the building would lose heat and the membrane would be vulnerable to damage.

5. Reinforce Caulking and Sealant Sealant and caulking must be monitored

on a regular basis to ensure that it’s not deteriorated to the point where you have splits and cracks. That’s how water gets in.

Deterioration can be found at any roof penetration like skylights, vents, pipes and chimneys. It’s necessary that each penetration is properly sealed to prevent moisture and water ingress. Some vents don’t even have any caulking and need to be sealed.

Deteriorated sealant can be disposed before applying new caulking.

Rust is common on roof systems and is often found at the HVAC unit vents and gas lines. As part of a maintenance program, a roofing contractor would apply a protective coating to help inhibit any further rusting, or a yellow rust inhibiting safety paint if it’s a gas line. If neglected, this rusting leads to corrosion. Once corroded, a roofing contractor cannot repair it and the associated technician has to attend. This is a simple example of how a minor repair now saves time and money later.

Important Tips Safety comes first: If workers aren’t properly trained in ladder safety and hazard identification, the condo corporation is at risk. Anyone working on a roof must have proper fall gear and personal protective equipment. This protects the owners if something does go wrong.

Inspecting the roof from the ground can be helpful for checking downspouts and soffit,

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but even with a ladder, there is no way you can inspect all the crucial spots. Getting on the roof and looking closely is the only way to actually inspect it. There could be a rusted nail in a shingle or a drain clog you can’t see unless you’re above it. Drone inspections are very helpful, but you can’t feel with your hands or pressure test.

Weather and Your Roof The whole point of a roof is to protect you from the weather: That is the roof’s job.

But weather is harsh and it does cause wear and tear, even damage. Weather events are becoming more common.

The most damaging weather for roofs: 1. Hot blistering sun 2. Super strong wind 3. Hail 4. Temperatures fluctuate above & below freezing, repeatedly, within 4-6 weeks Sound familiar? This cycle of weather creates the “perfect storm” for roof membrane issues. The sun dries and expands the membrane, then wind blown debris and hail hit causing damage, the melting and re-freezing of ice in those damaged little nooks and crannies, all lead to the items listed above that need to be checked and refreshed each year so they can take on another round.

Preventing Roof Leaks Preventative roof maintenance involves a meticulous assessment of the roof, checking for any kind of deterioration in the roof

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Roof maintenance identifies small issues before they become much larger problems.

What would you prefer: regular minor repairs or an expensive surprise

and early roof replacement?

membrane. Small rips, tears and splits are easy to miss so it is important to have a professionally trained roofing contractor do the inspection.

A knowledgeable roofing contractor will look for nearby hazards that will surely threaten the roof when the wind rolls in.

Nearby electric lines and low-hanging tree branches that have stood the test of time will eventually weaken.

The Roof Protects So Much This handy list of reasons to take care of your roof: Roof Maintenance is Key Structural Consequences and Disruptions • Accelerated deterioration of the roof

• Frequent leaks and need for repairs • Structural damage due to leaks and rotting • Framing underneath the roof membrane • Building structure • Balcony membrane weakness Collateral damage due to leaks • Interior finishings, floors, walls and furniture • Light fixtures and fire alarms • Mold growth in carpets and other affected areas Increased Costs • Structural repairs • Emergency repairs • Replacement of damaged interior items • Inability to occupy • Increased insurance deductibles • Lower resale value Risks and Liabilities • Potential slip and fall conditions due to leaks • Failure to comply with Condo bylaws • Damage to tenants’ property • Roof membrane manufacturer warranty after a new installation A roof will not exist to its expected life without upkeep because weather affects it.

Roof maintenance identifies small issues before they become much larger problems.

What would you prefer: regular minor repairs or an expensive surprise and early roof replacement? C V

Farzad Lahouti Board of Directors Landmark III

Dedicated to the memory of our long-serving President, Bernie Betel 1936 to 2022

Eric Lakien Board of Directors Landmark III

YRCC 798 – Landmark III of Thornhill

And the Winner is... Wait, What, Again?

What is an Award Winning Condominium, You May Ask? How About a Condo that has Won Two Accolades?

Background Built in 1991 as the third building on a 24-acre site located in Thornhill, in the City of Markham at Bayview and Green Lane, Greywood Construction erected a first-class building, consisting of 12 floors, and 268 suites. Having planted a large number of trees, shrubs, and flowers and with lots of green space, the property can be favourably compared to a Garden

of Eden. Certainly, lots of space for our owners and residents to enjoy themselves in the park-like setting. Less than 10% of the units are rentals, which speaks to the fact that our owners want to live here.

There are very few units listed for sale, and when one comes on the market, it is quickly snapped up. Over the years, the five-member Board and management have carefully maintained and upgraded the extensive amenities our residents enjoy.

The Path to the Awards The COTY and COTD awards probed the following facets of the condo: • Community engagement • Governance • Communication • Education • Physical property management • Finances • Sustainable practices • Unique aspects Landmark was able to successfully demonstrate a high quality in each of these aspects. However, what we derived from

the awards meant even more to our community: • Enhanced spirit of comradery and pride among owners and residents • Community and government awareness of the condo • CCI recognition, including a Condovoice feature article • Sale listings cite the awards, a badge of quality and sound management • Increased resale value of units Perhaps most importantly, the application was used as a framework to diligently review and analyze all aspects of our condo and its management to see why we had success, and to ensure we would continue to succeed.

Board members with different skill sets, experiences and backgrounds have one important goal in common: make our condominium the best it can possibly be.

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ILLUSTRATION BY JAMIE BENNET

The answer, quite simply is, The Landmark III of Thornhill (the “Landmark”). Winner of two Canadian Condominium Institute – Toronto and Area Chapter (“CCIT”) prestigious designations: 2017 Condo of the Year (“COTY”)and 2020 Condo of the Decade (“COTD”). This article was written by the Board of Directors, (“the Board”) with the assistance of management and owners. [Disclosure: two of the Board, Farzad Lahouti and Eric Lakien are directors of CCI-T, having been elected to the CCI-T Board of Directors subsequent to the Landmark winning the COTY and COTD awards.] Let’s explore this condo and what the awards have meant to us.

L to R: Alex Vainshtein, Manager, Sami Hamam, Treasurer, Farzad Lahouti, Director, Stephen Pollishuke, Director, Bernie Betel, President, Eric Lakien, Secretary

top notch operational shape. The hard work in preparing both applications and related backup for the awards really paid off for us. Our Board has four aims – Safety [especially important throughout the pandemic], Communication, Transparency, and Operational & Fiscal Responsibility. The two awards we won certainly reinforced these goals to our owners – they also gave them external validation that we were acting in their best interests, and those of our owner community. They were thrilled to learn of our awards, and we’ve stimulated a great sense of pride of ownership! Not to mention making our condo a most desirable Markham address.

Community Engagement We noticed an increased pride of ownership and a commitment to support the Board and management. Let’s hear from some of our owners: “The Landmark III Board and property management team is very hands on and laser focused on managing our budget, ensuring top notch results on building projects, while keeping our fees to manageable levels. The numerous upgrades to our building’s amenities have resulted in a building on par with today’s newer buildings, making the Landmark the choice of mature buildings for prospective owners.”

JL “Imagine, for close to 30 years I had lived on a 4-acre retreat in the woods of Ancaster, in a beautiful home surrounded by forest, hills, a stream, and an enchanting 22

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array of birds and animals. The move to Landmark was something I feared, as it would involve moving into a condo apartment. To my delight, instead of a traumatic experience, the contrary occurred as I found a new and wonderful home, managed amazingly with a devoted board, a great staff, friendly neighbours, a great variety of excellent amenities and all in a beautiful modern building,...yes, I had found home.” JS “The upkeep and running of our wonderful building and surrounding three-acre park-like setting, along with our Spalike facilities, which includes a Swimming pool, Sauna, Gym, Tennis Court, Squash Court, Billiards Room, Party Room, Movie Theatre with reclining leather seats, Library and Guest Suite, are the envy of anyone visiting 7905 Bayview Avenue and a source of pleasure and pride for all of us residents. All this would not be possible without the superb management of our office manager Alexander Vainshtein, thank you Alexander.

We are grateful to all who contribute to the smooth running of our building; may we all continue to build on this place we call home.” CR “Living at Landmark has meant meeting my neighbours of various ages and cultures in our community. Playing tennis and pickleball with many new friends, taking advantage of the wide range of amenities, and just strolling our beautiful gardens are a bonus of ownership. I have full confidence in our Board, who works tirelessly for all of us.” EF

“I feel like I am living in a luxury hotel at a tropical resort with all the beautiful foliage and surroundings. The directors are great and the condo is managed impeccably.“ AB “I am impressed by the vision of the condo Board and it’s commitment to maximizing our resources for the benefit of all residents and not just a select few.” AS “Landmark is a beautiful building with many desirable amenities. We’re proud owners and thoroughly enjoy living in the building. The Board are focused, conscientious, responsible and is dedicated.

Landmark’s property management are second to none. Their maintenance program is proactive and the building’s infrastructure is kept in pristine condition.

The cleaning staff work hard to keep all areas of the building spotless. The finances of the building are exceptionally well managed and monitored. Budget projections seem to be accurate and the expenses are kept in check. The Board and management are transparent and we are always kept informed of all aspects of the buildings operation.” MK “First and foremost are the friendly people who live here and the same for the security and cleaning staff. The building itself is kept up to date and in immaculate condition due to an exceptional Board of Directors and a solid building Manager.

Also, at what other condo can you walk out the door and step into a beautifully maintained 24 acre park including a circular walking path?” MS

Community and Government Awareness Members of the Markham Council attended award presentation ceremonies, and even recognized the Landmark at a Council meeting. This community wide recognition has led to the Landmark, along with the other two Landmark buildings, having a full seat at the community table. Alongside local ratepayers’ organizations, we are involved in issues beyond our campus. We have a direct path to our local Councillor.

Real Estate Recognition The COTY award certainly has positive property value ramifications. The Landmark III received its first award in 2017 and its COTD award in 2019. Condo values in our building increased by more than 50% on average when comparing three years before and after the award was given even though there was a market value drop in the second half of 2017 until end of 2018.

While it is difficult to correlate a direct effect of a condo having received the award to its immediate property value increase, it can certainly be stated that the CCI-T award has an excellent market reputation effect. Real estate professionals use the award to further boast about the awardwinning condominium building in their listings and potential buyers consider the award an evaluation source to make a confident purchase.

Management We are very fortunate to have Alexander Vainshtein and his team at Malvern Property Management act as the condominium manager at Landmark. The awards reinforced his commitment to excellence. In fact, Alex was awarded the Association of Condominium Managers of Ontario Manager of the Year award in 2019. It was only fitting that a CCI-T recognized condo have a manager to match! In his words: “The CCI-T’s awards are very significant for me. The awards honour the full team: the board of directors, the residents and owners, Malvern Property Management’s team behind us and even me. The awards are also a result of the many competent contractors providing services to the building. As the condominium manager, I have to interact with all these people, and serve as a path to the Board who make

the final decisions. In summary, there are a host of people and companies that the awards honour. We all form a team, with our efforts united in the best interests of the Landmark community.”

Conclusion The benefits of our two awards are many.

Our owners and residents are indeed fortunate to have chosen Landmark III of Thornhill. Come up and visit us anytime! C V CONDOVOICE FALL 2022

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Yulia Pesin Lawyer Deo Condominium Lawyers

Publisher’s Note: A corrected version of this article has been republished in Condovoice Fall 2022 due to a printing error in Condovoice Summer 2022.

Insurance

Navigating the Chargeback Matrix Leaking Toilets, Fires, and Everything in Between

The condominium manager, Ms. Sophia Aubree, at the direction of the board of directors, issued a chargeback letter to Kai and Clara, seeking reimbursement

of the $25,000.00 deductible. Kai and Clara, however, were adamant that they cannot be held liable for the deductible amount. After all, they were not at fault!

How were they to know that their toilet valve was deteriorating and would breakdown on their weekend away? The dispute between Kai and Clara and their condominium quickly escalated, with both parties retaining counsel.

Many of us in the condominium industry know the above scenario to be a “condo classic”. Neither the factual circumstances nor the legal framework of chargebacks are new. Yet, the interpretation and application of chargebacks continues to cause much confusion for condominium managers, board members, and unit owners alike. Much of this has to do with the intricate and technical nuances of chargeback provisions and their

broad interpretations depending on the precise wording of the provisions in the Condominium Act, 1998 (the “Act”), the declaration and by-laws of the corporation. Below, we breakdown some of these technical nuances and dispel much of the confusion surrounding chargebacks.

Section 105 of the Act governs insurance deductibles. Subsection 105(1) of the Act provides that if a condominium’s insurance policy carries a deductible, the amount of the deductible shall be a common expense. This subsection applies to scenarios where the damage is either caused to a condominium’s common elements and/or originates from the common elements (e.g. hallways, stairways, lobby, recreational facilities, parking garage etc.). In this circumstance, the condominium’s insurance company will pay for the repair costs to the common elCONDOVOICE FALL 2022

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ILLUSTRATION BY CLAYTON HANMER

Kai Zachary and Clara Rose from unit 5819 decided to get away for the weekend, leaving their condominium unit unattended for two days. Unbeknownst to them, the toilet valve in their ensuite bathroom was deteriorating for some time. As the laws of the universe will have it, the toilet valve broke down during Kai and Clara’s weekend getaway. Water quickly filled the ensuite toilet and overflowed onto the unit’s bathroom floor.

Four hours later, Kai and Clara’s unit was flooded with water, as were seven other units below and four units adjacent to theirs. The condominium’s emergency remediation and repair costs for the water damage totalled over $100,000.00.

Thankfully, the condominium had water escape insurance coverage, albeit it carries a $25,000.00 deductible. As is common in these circumstances, a dispute arose between Kai and Clara and their condominium, as to who was responsible for the cost to repair the flood damage and to what extent.

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ements and/or any affected units, however, the condominium will be responsible for the cost of the insurance deductible.

The insurance deductible amount would be deemed a common element expense shared by all units.

lief that a condominium can only issue a chargeback to the Origin Unit if the condominium submitted a claim to their insurer for coverage. Thus, there is a common industry misconception that if a condominium chooses to forego submitting the claim to its insurance company Subsection 105(2) of the Act states that and instead pays for the repairs to the if an owner, a resident, or guest of a unit, Origin Unit outright, the condominium causes damages to the ownis barred from issuer’s unit, through an act or The wording ing a chargeback to omission, the amount that is Origin Unit. In of subsection the lesser of the cost of repairing fact, however, a con105(3) enables a dominium’s right to the damage to the unit and the deductible limit, shall be condominium to chargeback the Oriadded to the owner’s unit as a Unit for damages pass a by-law that gin common expense. Thus, subsustained in the Oriallows the gin Unit is not consection 105(2) of the Act, has two qualifications: condominium to tingent on the condominium submitting chargeback the the damages claim to (1) The chargeback can only be applied to the cost of Origin Unit for the its insurer. As long repairing the unit from the condominium cost of repairs as which the damage origipaid for the damages up to the cost to repair the Origin nated (the “Origin Unit”) and cannot be applied to of its insurance Unit and is able to esthe cost of repairing any tablish an act or omisdeductible sion on the part of the other units and/or common elements which were irrespective Origin Unit owner, damaged; and, or guest that of any act or resident either caused or reomission on the sulted in the damage, (2) The chargeback can only be applied if the corporapart of the owner, the condominium can tion can establish negchargeback the Oriresident, or guest gin Unit the cost of ligence on the part of the owner, resident, or of the Origin Unit. repairing it, up to the guest of the Origin Unit condominium’s insurby showing that an act or omission ance deductible. by the owner, resident or guest has caused and/or resulted in the damage. In Kai and Clara’s case, subsections 105(1) and 105(2) of the Act do not asIn Kai and Clara’s case, pursuant to the sist the corporation much. After all, as provisions of the Act, the corporation a result of the flood that originated in can issue a chargeback only for the cost unit 5819, eleven other units and the of repairs made to Kai and Clara’s unit condominium’s common elements were (but not for the cost of repairs to any of damaged. The repair costs to unit 5819 the other 11 affected units or the affected are negligible and well below the cost common elements if there is no insurance of the corporation’s insurance deductdeductible by-law). Furthermore, if there ible, compared to the repair costs to the is no insurance deductible by-law, in or- other units and common elements that der to issue the chargeback, the corpora- were damaged. In addition to that, the tion will first need to establish that Kai corporation has no evidence that Kai or and Clara either did something or failed Clara did anything or failed to do anyto do something, which had caused and/ thing which caused their ensuite toilet or resulted in the leak. valve to break and result in the flood.

Condominium professionals and unit owners are often under the mistaken be-

Luckily for the corporation, subsection 105(3) of the Act provides that a con-

dominium may pass a by-law to extend the circumstances listed in subsection 105(2), under which the condominium can issue a chargeback to the Origin Unit (from where the damage originated). Ms. Aubree, being the diligent condominium manager that she is, turns to the condominium’s governing documents for a search of a deductible by-law.

In today’s age, most condominiums have some form of a deductible by-law in their governing documents. Unfortunately, however, we often find that these by-laws are either poorly drafted or fail to fully extend the application of the deductible chargeback by removing all the qualifications listed in subsection 105(2) of the Act. Specifically, the wording of subsection 105(3) enable a condominium to pass a by-law that: (1) Allows the condominium to chargeback the Origin Unit not only the cost of repairs to the Origin Unit but also the cost of repairs to any other affected units and/or common elements, up to the Corporation’s insurance deductible amount (irrespective of whether the condominium submitted the claim to its insurer); and, (2) Allows the condominium to chargeback the Origin Unit for the cost of repairs up to the cost of its insurance deductible irrespective of any act or omission on the part of the owner, resident, or guest of the Origin Unit.

Thus, with a properly drafted insurance deductible by-law, all that the corporation will have to establish to issue the chargeback to Clara and Kai is that the flood originated from their unit. The corporation will not have to limit the amount of the chargeback to the cost of repairing only Clara and Kai’s unit, nor will it be required to prove any act or omission by Clara and Kai that either caused or resulted in the flood.

A properly drafted chargeback by-law that extends the application of a chargeback to the fullest limits permitted by subsection 105(3) of the Act will benefit a condominium corporation in a multitude of ways. For one, a properly drafted chargeback by-law will simplify Ms. Aubree’s role in applying the chargebacks.

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Ms. Aubree will know that anytime that damage occurs in the condominium that arises from a unit, she can chargeback the Origin Unit for the cost of the repairs to any portions of the building, up to the condominium’s insurance deductible. A well drafted chargeback provision will also allow the condominium to recoup larger and more frequent chargebacks from unit owners and, therefore, protect the corporation’s financial viability. Furthermore, a well-drafted chargeback by-law may also reduce the corporation’s insurance premiums in the long run.

deductible coverage. An insurance deductible covFor condominiums erage is a standard form that do not yet insurance policy that is available to unit owners have a chargeback to cover the cost of the by-law, we condominium’s insurance In Kai and encourage the deductible.

Clara’s case, the corporaboards of tion issued a chargeback the basis of the condirectors and on dominium’s well-drafted condominium chargeback by-law, which managers allows the corporation to chargeback the cost of to consider the $25,000 deductible to amending their Clara and Kai irrespecof their negligence corporation’s tive (i.e. an act or omission governing that either caused or redocuments sulted in the leak). Luckily, Kai and Clara have to include a an insurance deductible chargeback by-law policy, which will pay out the $25,000.00 deductCorporations that choose ible chargeback issued to to pass an insurance deductible by-law them by Ms. Aubree, on behalf of the conare also encouraged to inform and ed- dominium. Customarily, the deductible ucate their unit owners on insurance amount of owner-purchased insurance

deductible policies is $1,000.00 (versus the corporation’s insurance policy which carries a significantly larger deductible). Accordingly, a properly drafted chargeback by-law will close the gap on uninsured losses and help the corporation and its owners save significant costs over time.

For condominiums that do not yet have a chargeback by-law, we encourage the boards of directors and condominium managers to consider amending their corporation’s governing documents to include a chargeback by-law. For condominiums that have a chargeback bylaw already, we encourage the boards of directors and condominium managers to review the by-law and ensure that it extends the application of the chargeback to the fullest extent permitted by subsection 105(3) of the Act. A properly drafted insurance deductible by-law will quickly pay for its upfront investment by crystalizing the application of the chargeback, simplifying enforcement of the chargeback and maximizing the corporation’s recovery of chargebacks in the long term. C V

CI)

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Edmund Leong CPA, CA Tator, Rose & Leong Chartered Professional Accountants

Cover Story

Condo Lending A Push for Consistency, Transparency & Clarity

Let’s walk through the life of the condo loan and where it would impact the audited statements. When the borrowing by-law has been passed, the board can then engage a condo lender to lend the necessary funds to conduct the major repair. Typically, condo lenders will be paying the contractor directly for the repairs up to the agreed upon amount as set by the loan agreement.

As this may cross the financial year end of the corporation, the final amount of the loan may not have been fully advanced due to the progression of the repair. Property management accountants should be tracking the amount of the advances made by the lending company and in turn at the fiscal year end the corporation should disclose the amount of expenditures made in the reserve fund (more on this later) and at the same time, a liability should be booked to the condo lender for the amount advanced as a short term loan. The condo lender should be able to provide the progress payment

details both for property management accountants and the auditor to review. Note: disclosures should be made to the audited statements to indicate the terms of the loan and that the final loan amounts will be set up once the final repair work has been completed. The total loan should be disclosed as part short term loan and part long term loans. The short term portion of the loan represents the principal portion of the loan due a year after the financial statement date.

The reserve fund should now reflect the total expenditures made to repair the common elements and the loan balance should reflect the full balance owing to the condo lender. As you can appreciate, the reserve fund has been hit with a massive charge

sometimes in the millions with the repair work and can put a low running reserve fund into a deficit. The owners, managers, board will raise the issue as to why and how the reserve fund is running a negative balance. It has been our practice in this case to segregate the condo loan into a separate reserve fund called condo loan fund. The balance in this condo loan fund will be a negative figure (ie negative equity) and will correspond to the loan figure in the balance sheet.

The next confusing matter is how the monthly payments to the condo loan are dealt with amongst the statement of operations, statement of reserve and statement of condo loan fund. We have seen property CONDOVOICE FALL 2022

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ILLUSTRATION BY CARL WIENS

It is no wonder with record inflation, labour disruptions, supply chain shortages that condo lending has been more popular than ever. Condo lending is really the industry’s easy button when it comes to financing rapidly rising costs for major repairs and replacements without having owners go though large special assessments and brings needed repairs to the corporation faster than internally financed options. I have found that the downside of much of the lending is various parties’ understanding of complex accounting disclosures and presentation.

management classify the loan payments out of operations which is not factually correct as the loan is a reserve fund matter.

So let’s take a few steps back to figure out how the loan is paid. During the proposal process of the loan, owners are presented some “what if ” scenarios of how much their condo fees would increase as a result of this loan. Let’s be realistic as you cannot expect that loan payments cannot come out of thin air. The debt service will likely come out of additional common element assessments unless management and the board can carve it out of other expenses.

Where funding comes from the owners additional assessments, it is in my opinion that a new reserve fund study should be conducted by the engineers which factors in for the term of the loan’s increased funding for the debt service. The engineer’s study would have only accounted for the cost of the major repair or replacement and a new study would be needed to cover the cost of the interest. So if we have increased condo loan funds outflow where does that money come from? That would of course be higher condo fees and in turn higher appropriations to the condo loan fund.

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So let’s take it from the top with the statement of operations. The condo fees would have been increased and the appropriations to the condo loan fund increased as a flow though effect of the cash required for the debt service. End of story and no confusion that operations are paying for the condo loan.

Then let’s move onto the statement of reserve fund. The running balance in this loan, in theory, would also run alongside the engineer’s report for major repairs and replacements. The statement should also be positive equity and as well be comparable to the engineer’s 30 year cash flow plan.

We now move to the statement of condo loan fund which, as stated above, shows a large negative figure (negative equity) equivalent to the loan balance in the balance sheet or statement of financial position. Here is where we get to allocate principal and interest. We will see that the expense of this fund will be the interest portion of this loan and then the balance that gets dropped out is the principal

portion of the loan. This principal portion then reduces the negative loan fund to the ending balance in the loan amortization table. Owners, the board and management can see then with clarity that the ending loan fund agrees to the liability in the statement of financial position.

The convergence of Condominium Act, fund accounting, appropriations, disclosure, revised engineer studies, loan mechanics has made this article seem more complex than it is. However, where if the transactions are not properly tracked or disclosed consistently in the monthly financials or in the annual audit, it will cause boards, owners and management to lose transparency of the cash flows and as well create a high level of confusion. The confusion is enhanced with new and existing owners who have not had the opportunity to have the financials explained to them in detail. The auditor should enhance clarity by using good financial statement note disclosures and by explaining how the flow of cash moves from condo fee to debt service through all the statements at the annual AGM. C V

Neil Jenkins President of Townhouse Condominium Corporation and CCI-T Member

Our Environment

Trees and Your Community Strategies for Sustaining the Health of your Trees and Reserve Fund

Boards of directors and property managers alike are pre-occupied with many competing priorities. Tree health may be the furthest from one’s attention. For this author, the ice storm in December 2013 brought the subject of tree health to the fore: a limb from an ash tree infected with the Emerald Ash borer broke off and, luckily, fell away from his townhouse unit. Had it fallen in the other direction the result would have been catastrophic. The experience served as a wake-up call to pay greater attention to the conditions of trees in the community.

Since then, tree care has become a focus for this author’s condominium corporation.

Evaluating Tree Stock for Reserve Fund Planning The best place to start is to assess the current condition of your tree stock. This can be achieved through a tree inventory. A tree inventory (or tree survey) provides information about the location, number, type, and condition of trees on your property. The survey is usually conducted by a certified arborist. Trees and shrubs are tagged to identify their locations. The species and sizes are recorded. The condition of each tree is assessed to identify potential stresses placed on your trees. The assessment of its condition can be used to inform subsequent actions. Your arborist may recommend one or more actions: • pruning branches to provide clearance from buildings, • pruning to remove dead wood, • crown thin pruning to remove stress on limbs or to allow sun or wind to pass through; or • removing declining or dead trees Regular pruning done on an annual basis

will spread costs into more manageable expenses. Deferring or ignoring regular tree maintenance often results in a more costly and complex pruning activity resulting from a larger backlog of work.

The tree inventory can also be used to guide decisions for reserve fund planning.

The cost to replace a tree is comprised of several elements. First tree removal costs vary by the size, location, and difficulty.

Budgeting $500 to $1,000 per tree may serve as a rule of thumb. There may be additional costs to grind the stump. Stump grinding is the process of cutting the stump into a mulch to remove the tree from protruding from the ground. In addition to removal costs, your municipality may have regulations governing the removal of trees. This includes fees and reporting requirements prior to obtaining approval to remove certain trees. Finally, there is the cost to plant a replacement tree. Costs vary by size and species selection, which will be discussed later. The tree inventory is a useful resource that your engineer may CONDOVOICE FALL 2022

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ILLUSTRATION BY MONIKA MELYNCHUCK

Trees ought to receive greater attention from condominium corporations. They contribute tremendous benefits to our communities: improved air quality, reduced energy consumption, reduced noise pollution by acting as sound barriers, captured water run off to reduce flooding, and increased property values resulting from improved “curb appeal”. In spite of these benefits, trees are often overlooked assets for condominium corporations. This article seeks to inform fellow condominium directors with suggestions about how to manage your tree stock for the viability of the trees and the financial health of your corporation.

use to prepare your corporation’s next reserve fund study.

Succession Planning and Tree Replacement Strategies For many corporations your tree stock is the same age: trees planted as part of landscaping following completion of construction of your high rise or townhouse complex. Often times, developers plant a monoculture of tree species. This may have been designed intentionally to create a uniformity of the streetscape. Other times it may simply have been more cost effective to do so. In either case the lack of variety has more than one effect: the trees’ lifecycles will be similar; and they may be equally susceptible to disease. Therefore, it is incumbent upon Boards of Directors to devise a tree management plan that allows corporations to plan for gradual succession planning of your tree stock.

First and foremost, the best strategy is to sustain and extend the life of the trees you already have. Maximize your existing investments with proactive maintenance, such as: pruning, as well as mulching or aerating the soil, and watering trees regularly. These modest actions can extend the life of your existing trees. The benefit is that it allows for gradual, planned renewal rather than widespread replacement. The latter is expensive and will place significant demands on your reserve fund.

Next, the condition assessment from the tree inventory can prioritize trees in the worst condition. These can be ranked first for removal. Trees can be removed at any time. In the City of Toronto, for cases where regulations require a tree be replaced for one that is removed, they require that a tree be replaced in the same or

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immediately following year. Replacement trees are best planted in the fall or early spring so as to reduce the stresses placed by summer weather conditions. There are advantages for filing paperwork with municipal governments if applications to remove multiple trees are done at the same time. Your arborist usually can process this on your corporation’s behalf – since tree removal applications often require a report submitted from a certified arborist.

Arborists can also identify where the permit process is not required.

Consider the types of trees your community would like to plant as replacements.

There are a variety of factors to consider – both practical and aesthetic: • Choosing to increase diversity of tree species for both aesthetic and practical reasons; • Choosing the right size and canopy for the planting location; • Selecting drought- and disease-tolerant species; • Selecting trees supportive of wildlife (birds and pollinators) • Leaf colour, flowers, and bark texture for trees planted in prominent locations in your community; • Whether you want trees that bear fruit (they can attract pests); • Providing sufficient clearance away from buildings to reduce the impact of tree roots on foundations and pipes; • Avoiding planting under hydro wires or near fences or underground utilities Municipalities like the City of Toronto offer recommendations for street trees . York Region and the City of Mississauga have similar resources to support residents’ tree planting interests.

Lastly if you have open space in your community consider whether to add more trees to increase the tree canopy. Where your community has space adjacent to municipal streets, you can request free tree plantings from municipalities. LEAF (Local Enhancements & Appreciation of Forests) is an example of a non-profit organization which offers subsidized prices for multi-unit property owners like condominium corporations.

Calls to Action for Sustaining the Urban Forest Increasing awareness about trees and their benefits can engage residents to become more involved in tree care. There are a variety of resources to learn more about trees and the urban forest, including the aforementioned LEAF. One way to educate residents is to devote a section to an upcoming condominium newsletter about your corporation’s initiatives about tree care and the benefits to your owners.

Residents can take an active role in maintaining trees by watering them regularly.

For reference an earlier Condovoice Magazine article (Volume 25, Issue 3, Spring 2020) offered suggestions for tree watering. Individual townhouse homeowners can water trees planted on their exclusiveuse common elements. Invite high schoolaged residents to water trees on common elements. Recognize their contributions towards their 40 hours of required volunteer community service.

We are living through a rapidly changing climate. Caring for trees on our properties are specific actions to mitigate some of the worst effects of climate change. Beyond the environment benefits, proactive tree care may also benefit the financial health of your corporation. C V

Salim Dharssi CEO & Founder managemate

Managing Change

Making the Most of Board Member Transitions Minimizing Downtime Onboarding Newly Elected Board Members

Several months passed before I was able to meaningfully contribute. I thought to myself, could this time have been better used?

Boards have a tremendous obligation – they are responsible for managing the affairs of their condominium corporation (Condominium Act, s. 27(1)). When Boards are not at full strength, they fail to make the most of their resources. When they are understaffed, Boards have fewer people to plan projects, deal with resident incidents, work on committees, and oversee their property manager and other staff.

Being shorthanded makes it harder for boards to meet objectives, including completing maintenance and improvement work on time and on budget.

Board composition turns over frequently.

One or more seat on a condominium Board will turnover each year. It’s not uncommon for entire boards to turn over completely every three years. Some Boards will have Directors volunteering and being elected to serve multiple terms. This continuity helps, but it doesn’t eliminate the fact that other new Board members will come and go regularly over time.

If condo Boards can get newly elected or appointed Board members up to speed more quickly, they will benefit from being able to get more work done and at a higher quality level.

Here are three techniques that Boards and

property managers can use to get newly elected or appointed up to speed quickly: 1. Document Your Project Plans Large projects consume a good chunk of each Board member’s time. Board members spend time planning projects including determining the objective of a project, its scope, the planned timeline for beginning and completing a project, key milestones that need to be completed and a budget for each stage. Some projects may be high priority, while others will be medium or low.

Some projects will be in the planning stage for several weeks or months, while others will be in-progress, completed or inactive for future reconsideration.

Without a documented project plan, a newly elected Board member has no choice but to piece together the plan for and status of ongoing projects from multiple incomplete sources. These are mid-stream email CONDOVOICE FALL 2022

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ILLUSTRATION BY MAURICE VELLEKOOP

Do you remember your first experience as a condominium Board Director? Mine is still fresh in mind. I was added into email chains mid thread and before my first Board meeting, I received a package of seemingly random documents with an agenda and previous draft minutes. It took me several meetings to get up to speed on the building’s operations and ongoing maintenance work. It took several more to fully appreciate the larger projects that were in the works or on the horizon.

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threads, past meeting minutes and file attachments. Even with full access to these records, is it possible to piece together the entire plan?

Now consider that newly elected Board member’s experience if they were able to review documented project plans. They would easily be able to see what stage each project was in, what was recently completed and what is on the horizon. The new Board member would find it easy to get up to speed by reviewing the details and status of each project.

Another benefit of documenting project plans is that a Board is then able to link documents that relate to each project, to its corresponding plan. These documents could be engineering reports, quotes, and invoices. When done correctly, the project plan not only turns into a one-stop shop for getting newly elected Board members up to speed on large projects, but is also a handy reference for all Board members and their property manager.

2. Provide Mentorship to New Board Members Board member terms are staggered to make sure that in every Board there will be at least one or two directors who remain on the Board from the previous year. Moreover, some Boards will have directors with many years of previous Board experience – whether from the for-profit or other notfor-profit organizations. Other Boards may have directors who have served for multiple terms (i.e., 6+ years).

These more experienced board members are invaluable resources because not only will they have a wealth of knowledge about

their building’s operations and history, but they have a lot of Board governance experience. This experience equips these board members to run their Boards efficiently and effectively.

To get newly elected or appointed Board members up to speed more quickly, the existing Board members with more experience can mentor the newly elected or appointed Board members. The mentorship doesn’t have to be too time consuming and only needs to continue for the first 3-6 months of the new board member’s term. Mentorship can be as simple as scheduling weekly or biweekly chats over coffee or Zoom.

Mentorship will give the newly elected Board member a chance to ask questions and learn from the more experienced Board member, so that they can contribute more quickly than if they didn’t have time with their mentors.

3. Establish Committees for Smoother Transitions Boards can’t manage their condominiums alone. They are part-time volunteers who have lives outside of their board duties. Depending on their condominium’s size and its amenities, boards will hire a variety of on-site staff including cleaners, superintendents, front desk concierges, security guards, and property managers.

Condominium Boards may also form committees that are comprised of other owners and residents. Committees give Boards extra sets of hands for projects or other work that requires substantial planning or attention to detail. Common committees include finance committees, design committees, and special project committees.

Usually at least one director from the Board will join each Committee, usually as the Chair. This keeps a line of communication open between the Committees and the Board to ensure the Committee work is consistent with the Board’s needs and that work results flow back to the board.

Committees are an excellent source of knowledge for newly elected Board members. Newly elected or appointed Board members can meet with Committee members to get caught up on the Committees’ activities. Non-Board Committee members have less overall responsibility for their condominium as compared to Committee members who are on their Board.

So, the non-Board Committee members likely have more time to spend with new Board members. After being elected to the Board, new Board members can also join each of their condo Committees’ next regular meeting to learn about their mandate and work activity.

By forming committees, condominium Boards can get new directors up to speed more quickly by giving them more sources of information.

Condominium Boards that document their project plans, provide mentorship and form committees will minimize downtime when they are onboarding newly elected Board members. Boards that get their new members up to speed more quickly will see higher overall productivity. This directly benefits owners and residents living in their community because improved productivity improves the chance that maintenance and improvement work will get done on time and on budget. C V

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George Armstrong General Manager Monster Plowing Company

Baby It’s Cold Outside

Choosing the Right Winter Maintenance Company Winter in Toronto is an inevitable nuisance for everyone, but for the management and Board members of condominium associations, it’s a season of constant stress and pressure. Keeping a property cleared of snow and ice and enabling safe, 24/7 access is a full time job, and the consequences of failing in these duties are catastrophic.

Leaving your premises unprotected, or in the hands of a shoddy contractor can lead to accidents, personal injuries, and potential lawsuits.

The snow and ice management industry comprises many different companies of varying degrees of capabilities and trustworthiness, and choosing your contractor correctly is vital to establish an adequate level of service for your property. The demands of every type of condominium association and its lands and premises are based on the unique needs of the property, so it is of utmost importance to do your homework before signing your next snow removal contract. Your due diligence is required in order to ensure that you are entrusting the safety of your property to

a winter maintenance contractor that is well staffed, equipped, prepared, capable, reliable, and experienced. There are many important factors to consider before hiring your next snow and ice maintenance contractor, and some of them might not be immediately obvious.

Define your requirements Winter maintenance is a complicated operation, so make sure the contractor you choose is fully prepared and able to provide the level of service your property requires.

Your property needs to be reviewed in full detail, in order to create a comprehensive estimate of work and scope of service. No two properties are the same, and you need to go over the service of all parking areas,

driveways, walkways, landings, entrances, and steps as well as details regarding fine points such as snow piling, existing damage and any potential obstacles. How busy is your property? What exactly do you have in mind, in terms of your expectations when it comes to arrival times? How quickly do you need your contractor to visit after the snow stops falling? Do you expect bare pavement conditions at all times? Do you require service during the snowfall, if it is ongoing? Do they have backup equipment? Do they have access to a full team of staff? Do they even focus on snow and ice removal as a core facet of their business, or is this just a side gig? Is your contractor prepared to answer these questions, confidently and with a high degree of accountCONDOVOICE FALL 2022

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ILLUSTRATION BY REMY SIMARD

The Stakes are High so You Need to Become an Informed Consumer

ability in case something goes wrong?

A high degree of experience is necessary to monitor and forecast localized snowfall events, calculate strategic service routes and plans of attack, prepare the logistical response to varying types of weather, arrange the staff and equipment needed to provide the work, and manage the varied needs of multiple clients. Your contractor should be an expert in all things snow and ice. Ask them before signing any contracts, how exactly will their company meet the stringent demands of your property?

Do Your Due Diligence in Regards to Insurance Slip and fall accidents can happen on any property, and the average cost of settlements can be in the millions. Adequate liability coverage is an absolute necessity.

Winter weather presents every property owner with the risk of slip and fall lawsuits, and due to the prohibitive costs of litigation and personal injury settlements, a winter maintenance company with anything less than $5,000,000 of liability insurance is unacceptable. Many smaller contractors who are unable to acquire sufficient policies operate with inadequate or non-existent coverage, and it is imperative that as a prospective customer, you do your due diligence in making sure the company is properly covered for the work at hand. Make sure the company has the industry specific “snow removal” rider, and that every one of their employees is covered by the Workplace Safety & Insurance Board (WSIB).

Today, fewer insurers write policies for contractors engaged in snow removal.

Many contractors have been left without proper coverage or no coverage at all as a result. Contractors who face insurance issues are often still actively pursuing and signing new customers. It is only once a legal issue arises that it becomes apparent their coverage is inadequate or not present. Simply checking a paper or PDF copy of a company’s insurance policy is not sufficient due diligence from a client’s perspective. It is imperative that you contact your insurer to verify coverage, including permission for snow removal and winter maintenance work.

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for potential injuries, it is essential to provide adequate protection for people working on your property. To cut costs, some unscrupulous companies are completely uninsured and can even operate with illegal workers. There is a staggering risk for the customer in these situations. In the event that an ‘under the table’ worker is injured on your property, you may be liable for their injuries or damages. It is even possible for property owners and businesses to be liable for injuries sustained by their own employees while performing snow removal work. If you are considering hiring a company, you need to do your homework and find out exactly who they employ.

Have an Established, Properly Worded Contract The weather may be unpredictable, but a company that gives you a proper winter maintenance contract will allow you to know what to expect no matter what. It is important to note that not all snow maintenance contracts are created equal. An exemplary winter maintenance contract should be legally binding and detail all aspects of the scope of work, service times, level of service, and quantitative measures of weather events, as well as details and diagrams tailored to each property’s needs.

Make sure the contract specifies at what hour after snowfalls or after how many centimeters of snow accumulation service will begin, and what is done in the case of blizzards, ice storms, and freezing rain.

Avoid companies that offer a contract that looks like not much more than an invoice.

In the event of a dispute with your contractor or in the event of personal injury or damage to your property, a winter maintenance contract that is little more than an invoice or bill of sale will not protect you.

Contracts that appear open-ended and ill-defined may leave your property unattended should the contractor neglect their duties. Some companies offer open-ended contracts and pay-per-visit rates that may initially appear like a better deal compared to other companies that offer all inclusive fixed-rate packages that guarantee unlimited service in any and all weather outcomes. However, an open-ended, poorly worded contract may ultimately leave the client vulnerable to any possible charges at the contractor’s discretion, such as hidden

equipment costs or charges for additional services. It also provides little recourse should the contractor fail to show up at all, leaving you with the liability of clearing the snow and ice yourself. It’s important to remember that even though your contractor may leave you with a good personal impression, they will ultimately only be as good as their service contract.

Compare Parameters of Service When reviewing contracts, compare how different companies define what constitutes a serviceable snowfall. Some companies will only attend to snowfalls, but not to ice accumulation events, while others provide a full, comprehensive level of service for all types of risky weather. Some will provide service to all snow events that measure one centimeter of snow accumulation or greater, while others will intentionally have written into the fine print of their contracts that they will not plow snowfalls with any less than two, or even three, inches of accumulation. Historically, the Greater Toronto Area receives a number of light snowfalls each season between one and five centimeters of accumulation.

These light snowfalls still present a great hazard to the people who use your property, which is why all snowfalls of one centimeter or more should always be serviced and salted. It is always important to make sure your snow and ice removal contract does in fact include these considerations.

Ask About Their Employees No one wants their property tended to by untrained and unhappy staff members. A company that has an adequately-trained, dedicated, well-compensated, and legally hired snow removal team will deliver the best service, ten out of ten times. Having a team on retainer is essential to ensure that staff will always show up to the task whether there are several snowfalls in one week or none at all. Make sure there are more than enough employees to cover the amount of properties the company services. Having sufficient staff relative to properties served is crucial to excellent service.

A proper ratio of one worker for every five properties is ideal. However, some companies operate with a ratio as high as one to sixty, leading to long wait times measured in days not hours or even no service at all.

While a small contractor cannot operate a plow and simultaneously check the fore-

cast or answer phone calls, and an umbrella company may have outsourced their plow work and customer service to an individual who does not know all the intricacies of snow and ice management, a professional winter management company retains a fully staffed workforce even in periods of calm weather, ready to go in the event they’re needed. Small contractors without these resources and umbrella companies without this specialization are often left unprepared for unexpected snow events – and in Toronto’s winters, these happen frequently. Avoid companies that utilize subcontractors or hire day labourers through employment companies. These companies tend to be more focused on speed rather than quality, and sub-contracted employees are often less experienced in the nuances of snow removal. They are also more likely to lack proper insurance and WSIB certification. Make sure that all employees are WSIB qualified so that you will not be held responsible should any injuries happen during the clearing of your property.

Understand Their Prices We all hunt for bargains in our everyday purchasing, but snow and ice management is not something one should trust to the lowest bidder. The consequences of poor quality winter maintenance are too high, and unfortunately the industry is replete with scammers who will over-promise and under-deliver in order to make off with your money. Pricing of snow removal

No one wants their property tended to by untrained and unhappy staff members.

A company that has an adequatelytrained, dedicated, well-compensated, and legally hired snow removal team will deliver the best service, ten out of ten times contracts vary greatly depending on many factors, such as the size of the property, the intricacies of the work, or even the competence and integrity of the surveyor. If the quote sounds too low - it probably is.

Ask if the quoted price includes deicing as well as snow clearing, additional visits in periods of heavy accumulation, and all equipment costs. Understand how your winter maintenance estimate is calculated; you might be quoted per individual visit, priced according to the area of the prop-

erty, or given a fixed-rate all-inclusive price that takes care of your property for the duration of the winter. While flat rate pricing can sometimes appear more expensive up front, case studies have shown that it is almost always the most cost effective route. Every necessity is already priced in regardless of the amount of snow storms that occur throughout the season.

From the beginning to the end of the season, your property is covered. Should you need extra deicing done, multiple visits per snow event, clearing of windrows or blowing snow, or touch-ups, your rate will not change. With the unpredictable nature of Toronto’s weather, it is always better to know what you are paying upfront without fear of an ever-growing invoice. Look for value up front, not discounts. Seek guarantees in terms of service quality, instead of cutting corners. If it looks too good to be true up front in terms of your pocket book, it will very likely end up costing you much more money down the line.

Check Out Their Equipment A proper company should have a diversified collection of snow and ice management equipment that is well maintained, modern, and specialized for the task at hand.

Many contractors will cut corners in order to keep operating costs low. Plowing vehicles for commercial use are expensive, and manufacturers often have long waiting lists for them. Various snow plowing blades are available, from simple plastic blades

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to hydraulically operated stainless steel blades with adjustable wings and other features designed to remove the maximum amount of snow. In order to meet the needs of each property, a proper company’s fleet must include specialized equipment, such as deicer spreaders, haulage crews, dump trucks, snow melters, tractors, and utility vehicles. The company should also use eco-friendly ice control products that are less corrosive and act faster than regular road salt. Weather conditions in the winter can be extremely damaging to trucks and equipment, and breakdowns are inevitable. Without a backup fleet of vehicles, companies are at the mercy of independent repair shops that often suffer shortages and backorders. One of the most common statements from prospective clients we hear is: “My contractor’s truck broke and I went without service for two weeks while he fixed it!” A professional winter maintenance company must have at least one back-up unit for every five active units at all times. Winter weather is more difficult for small contractors because they don’t have the necessary resources at their disposal.

Many of their clients are left waiting for repairs because their equipment quickly becomes overwhelmed. Today, auto parts can take days, if not weeks, to arrive. A contractor without adequate backup equipment will leave your property vulnerable.

GPS tracking, live cameras and sophisticated algorithmic software to calculate the most strategic routes. A company that commands these resources and this level of expertise can only be forged by experience, dedication and cutting edge software at their disposal. When interviewing your potential snow removal contractor, make sure that your are properly informed of the technical prowess, knowledge and experience required to properly take care of your snow and ice on an emergency basis.

Treat Snow And Ice Management With The Respect It Deserves Proper winter maintenance is no casual feat. Anyone who watches the Weather Network knows that it is never possible to predict the weather with 100% certainty.

This is not the concern of the City’s public works, which requires snow to be cleared within 12-24 hours after every snowfall.

Your winter maintenance company needs to have a dedicated weather monitoring system to stay ahead of the snow and provide up-to-the-minute localized forecasting, and experienced analysts able to interpret the advanced data and identify impending ice attacks and surprise snow events. Timing is crucial in these logistics, and the company needs to have a streamlined staffing structure that enables teams to be dispatched at a moments’ notice throughout the winter. It must command expansive facilities strategically located to give access to the main transportation arteries of the city, and must be aided by

2) “How much, and what type of insurance do you have?”

Tip: $2 Million is not enough for snow removal; the answer should be $5 Million.

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Be Informed and Pro-Active As you can see, there is a lot to consider when selecting the right contractor. With so much on the line it pays to be informed and do your due diligence. Once a relationship is established with a successful contractor, not only will you provide safety and peace of mind for your residents but you will also enjoy the satisfaction of making a difference for the people that count on you.

Use the guideline questions below to help interview your prospective snow and ice contractors: 1) “How many properties did your company clear last year?”

Tip: If the answer is 60 or less, they are a one-man show.

3) “Are ALL your employees covered by WSIB?” Tip: Request a current issue of their WSIB clearance certificate and check its validity.

4) “How many trucks are in your fleet, and of those, how many are backup vehicles?” Tip: A ratio of one backup truck per every 5 service trucks is excellent.

5) “Do you sub-contract any of the work performed?”

Tip: Did you know that many contractors take on more work than they know they can handle, and will then sell off any extra jobs to the LOWEST bidder prior to the beginning of the snow

season? Beware of companies that have their headquarters located in a different city, or whose websites use stock photos. Successful companies love to show off their work, and how hard is it to provide some quality pictures?

6) “Do you have a 24/7 dedicated customer service team?”

Tip: The contractor’s answer will likely be: “Yeah, you can call me any time you want; I am up all night anyway!”

Remember, they will be operating the plow then asleep after the shift and will, in fact, not be able to speak with you. A dedicated and true customer team is a must.

7) “Do you provide detailed diagrams and descriptions of the areas of my property you will be servicing?”

Tip: Avoid disputes during the service season with your contractor; have a copy in writing of all areas to be serviced.

8) “Is your pricing all-inclusive and flat rate for the season?”

Tip: Don’t be fooled into signing a contract that ultimately will leave you open for extra charges, no matter how initially cheap they make it seem.

9) “What volume of snow does your company start plowing at?”

Tip: A proper snow service should clear snowfalls at an accumulation of at least one centimeter of snowfall, as well as freezing rain, otherwise your property will be left vulnerable to black ice, hazardous freezing, and a severe danger for slips and falls.

The Stakes Are High Hopefully this article has shared some new insights into the winter maintenance industry that will allow you to be better informed when you’re shopping for improved services this coming season. Like everything else, professional contractors that can properly get the job done are in high demand, and there is an overall shortage of quality services available on the market. Avoid disappointment, frustration, and legal issues by securing the services of a reputable company as early as possible. If you leave it to the last moment, you’ll be left out in the cold. C V

Bradley Chaplick Partner Horlick Levitt Di Lella LLP

The Law and You

The Right to Privacy in Condominium Buildings Condominium Corporations Should Have a Written Privacy Policy That is Appropriate and Customized to your Community’s Specific Needs

The common areas of condominium buildings are commonly referred to as a “semi-public” space. They are neither fully private, nor fully open to the public.

We begin with the case of hidden surveillance cameras in R. v. Yu. R. v. Yu In 2013, there were a series of retaliatory high-profile fatal shootings between rival criminal gangs in Toronto. This led to a massive police investigation, which culminated on May 28, 2014, with the arrest of 112 individuals for various offences including murder, drug and weapons trafficking, and human trafficking.

As part of their investigation, the police installed hidden cameras in the common areas of the condominium buildings that the suspects lived in. This was done with the consent of the Board of Directors or property manager, but without a judicial warrant. Some of the criminal defendants argued that these hidden surveillance cameras violated their constitutional rights. In 2019, the Ontario Court of Appeal released its decision, entitled R. v. Yu, in which the court considered the right to privacy in the common areas of a condominium building in the criminal law context.

The Court of Appeal described various condominium building common areas and considered whether there was a reasonable expectation of privacy: 1. In areas that were accessible to the general public, such as the visitor’s section of a parking garage, the

court determined that there was no reasonable expectation of privacy.

2. In areas that were routinely accessed by all condominium residents, such as the elevator lobby, there was a low expectation of privacy.

3. The expectation of privacy increased as you approached an individual dwelling. For example, there was a greater expectation of privacy in a common area corridor next to your condominium unit, as compared to the more commonly used areas of the building.

The Court of Appeal then stated that the hidden cameras installed in the common area hallways were unconstitutional, but not surveillance in areas accessible to the general public.

The court went on to state that covert recording is highly invasive of individual CONDOVOICE FALL 2022

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In this article, we will discuss the right to privacy in Ontario condominium corporations with a particular focus on common area surveillance. This article also includes practical tips for condominium Boards of Directors and managers.

privacy and that the Board of Directors and condominium manager did not have the legal authority to consent to the installation of hidden cameras on the common elements by the police.

In the writer’s view, this case should serve as a warning to condominium Boards of Directors and managers not to install hidden cameras on the condominium property. For example, hidden cameras ought not to be used to prove that a person is breaking the condominium’s rules.

R. v. Jarvis Privacy is not an “all or nothing” concept.

As we learned in R. v. Yu, the right to privacy exists on a continuum, especially in semi-public spaces such as common areas in a condominium building.

In R. v. Jarvis, a high school teacher was secretly and voyeuristically recording his female students with a video camera hidden in his pen. Mr. Jarvis was charged with voyeurism under the Criminal Code.

His lawyers argued that no crime had been committed because the students who were being recorded had no expectation of privacy while at school.

The Supreme Court of Canada overturned the lower court’s acquittal and found Mr. Jarvis guilty of voyeurism. Many of the Jarvis factors are applicable in the condominium context, but not all the factors will be relevant in every case.

In the writer’s view, the following criteria are most applicable to the condominium context as it relates to the installation of security cameras and other forms of common area surveillance: 1. Location: As in R. v. Yu, the closer to the dwelling unit, or some other private space, the greater the expectation of privacy.

than a snapshot. Is the recording in high definition? Can the camera zoom in to view small details? Does the recording include sound?

4. Content of the recording: Is the person engaged in an activity that would normally be done in private, such as getting dressed? Are intimate body parts shown in the recording?

5. Rules relating to the recording: Is there a written privacy policy stating, for example, who has access to the recordings and under what circumstances can the recordings be examined? Is the policy followed?

6. Purpose of the recording: Is the recording for a legitimate purpose such as protection of personal safety or protection of property?

On the issue of “what is a proper purpose?”, a privacy case from the Office of the Information & Privacy Commissioner of British Columbia, known as Re: Shoal Point Strata Council, held that the use of video surveillance for enforcement of condominium rules could be problematic in certain circumstances. In that case, the condominium directors were monitoring the cameras in the recreational facilities and were issuing fines to unit owners if any violations were observed. This kind of proactive monitoring of surveillance cameras was deemed to be excessive and unwarranted.

Practical Tips for Condominium Managers and Boards of Directors 1. In the writer’s view, condominium buildings with surveillance cameras should install signage indicating that the property, or specific areas within the property, are under video surveillance. It is preferrable that the signs be visible before the person enters the area under surveillance.

2. Awareness and consent to the recording: Are there signs indicating that the premises are under surveillance before you enter the area being recorded? Is the camera in plain sight, or is it hidden?

2. Condominium corporations should avoid the use of hidden cameras, except in very rare circumstances, and should avoid recording sound unless there is a legitimate need to do so.

3. Manner of recording: Continuous recording is more invasive to privacy

3. Condominium corporations should have a written privacy policy. Ideally,

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this policy should be prepared by a lawyer with relevant expertise. The policy would address procedures relating to video surveillance, as well as the collection and dissemination of owners’ and residents’ personal information. A copy of the privacy policy should then be made available to all unit owners and residents.

4. Boards of Directors should consider creating a Privacy Officer position on the Board of Directors who is tasked with ensuring that the corporation’s privacy policy is properly implemented, and that owners’ personal information is protected and kept up to date.

The Privacy Officer would also be responsible for investigating potential privacy complaints and responding to privacy-related questions from owners and residents.

5. Residents should be permitted to view surveillance footage relating to themselves, so long as it does not interfere with the privacy rights of other residents. For example, if a resident trips and falls in the condominium lobby and requests a copy of the security camera footage showing the fall, then this request should be granted. There may also be situations where a legal opinion is required before security camera footage is released.

6. Quite apart from privacy concerns, compliance with section 97 the Condominium Act, 1998 (the obligation to give notice to owners before changing the common elements) must be considered when adding security cameras if the cost of the project exceeds 1% of the condominium corporation’s annual budget.

If your condominium corporation does not yet have a written privacy policy, then consider contacting your condominium lawyer for a privacy policy that is appropriate and customized to your community’s specific needs. A detailed privacy policy will ensure that you have the necessary protocols for collecting, retaining, disseminating, and deleting surveillance footage of the property and other personal information. C V

member

NEWS New Committee Member Profiles

CCI-T Welcomes New Committee Members

Dene Cousins

in the magazine – and probably find a similar situation and how it was resolved. You can find a fellow manager, or lawyer, or accountant, or engineer to consult.

I joined CCI-T to help connect and engage with other condominium professionals.

It is a great tool for continuing education on many varied condominium topics.

Sometimes it’s fun, sometimes totally frustrating – but never boring.

I decided to volunteer to help provide my experience in the industry and I am currently a member of the CCI-T Mar-

keting Committee. I feel it is important to try and reach as many directors, property managers, and other condominium professionals to help CCI-T grow as an organization and make it the leading area to find the education and support needed as a part of the condominium community. C V

I have managed condominium corporations, high rise and townhouse properties, for over 25 years. I started with the turnover of a problematic building when my husband, a CPM Emeritus, asked me to help with – just for a few weeks.

Together, we formed a company, hired accounting staff and recruited candidates to be property managers for about 25 corporations over the next few years.

Since then, I have worked for the big three management companies and am currently with FirstService Residential.

I think the main problem for managers is knowing who to turn to for advice, when a thorny situation arises. This is where CCI becomes so valuable. You can look for articles

Chris Poland I started with Malvern Condominium Property Management in 2011 when I entered the Condominium Management field after leaving the fire protection field.

I’ve obtained experience managing all types of Condos including high rises, town houses, common element, and commercial.

In early 2022 I became a principal owner and Vice President of Malvern Condominium Property Management.

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member

NEWS

For upcoming webinars please see the CCI Toronto Events Calendar: ccitoronto.org/education-events/calendar

CCI Was There

In May and June CCI Toronto Hosted Two Timely Webinars Exploring the Evolution and Expansion of CAT and What it Means for the Future of Enforcement On May 19th CCI-T held the webinar entitled “Case Law Update: The Changing Landscape of Enforcement”, where Christina Ajith (moderator), John De Vellis (Shibley Righton LLP), Jason Rivait (Miller Thomson LLP) and Victor Yee (Elia Associates PC) discussed recent enforcement decisions through the courts and the CAT. They explored the evolution and expansion of the CAT and what it means for the future of enforcement.

The Florida Surfside Collapse One Year Later: How it Happened and How it Could Happen Here On June 16th, CCI Toronto hosted “Surfside Collapse, 1-year later, it could happen here!”. The panel included Brian Horlick (Horlick Levitt Di Lella LLP), Dean McCabe (Meritus Group Management Inc.), Lyndsey McNally (CWB Maxium Financial), Sally Thompson (Synergy Partners) and Stephen Skolny (BFL Canada). A year after the tragic collapse of a high-rise condominium in Surfside Florida, our panelists not only shared what happened, how it happened and how it could happen here, they also provided key learnings and takeaways that we can implement to reduce the risks of a collapse in our condo communities.

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member

NEWS

Odds & Ends

CCI-T Welcomes New Members Condominium Corporation Members: MTCC # 1263

Sentinel Security Inc. Brian Catarino

Aquabella Bayside Toronto Inc.

Individual Members: N. Jenkins E. A. Lynn D. Cousins S. Gordon S. Ilkiw P. De Marco-Cerullo

Business Partner Members: Restorex Contracting Ltd. David Petrina Care Lending Group Lindsay Martin

Professional Members: INA Construction Services Inc. Ilia Vangjeli Shibley Righton LLP Ava Naraghi Owens Wright LLP Al Daneshvar Kipling Residential Management Inc. Gowri Shakthi

Our new membership year begins July 1st, 2022. If you are interested in renewing, be sure to look out for our renewal notices. Please note, if your membership is not renewed for 2022-2023, this will be your last mailed issue of Condovoice. If you have yet to receive or have any questions regarding membership with CCI Toronto and Area Chapter, please reach out to info@ccitoronto.org

Upcoming Events: For upcoming webinars please see the CCI Toronto Events Calendar: ccitoronto.org/ education-events/ calendar 48

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NEWS

Annual General Meeting

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condominium

owners

Timely ideas, insight, inspiration and information of particular interest to condominium owners

Matilda Lici Associate Aird & Berlis LLP Ava Naraghi Associate Shibley Righton LLP

Insolvent Developers

Trust in Me The Pitfalls of Paying Purchase Funds Directly to Developers Building a condominium development is a massive financial undertaking. Any sudden fluctuations in the developer’s liquidity may adversely impact any number of parties with a stake in the development project. In an attempt to improve liquidity and fund the ongoing construction, some developers resort to asking purchasers to pay some or all of the purchase funds to the developer directly. Ordinarily, such funds would be paid by the purchaser into a trust account set up for the benefit of secured creditors, such as first mortgagees.

Two recent Ontario decisions shed light on the priority disputes that arise when an insolvent developer is unable to satisfy its obligations to secured creditors and the serious consequences befalling those purchasers who elect to pay purchase funds directly to the developer.

1. Equity will favour bona fide purchasers The protections afforded to condominium purchasers will vary depending on how far the purchase has progressed at the

time when a priority dispute arises. Those who have paid for their unit in full are more likely to garner the court’s sympathies.

In Centurion Mortgage Capital Corp. v.

Brightstar Newcastle Corp., 2022 ONSC 1059, the Court was dealing with a priority dispute between a purchaser who had paid the entire purchase price for a condominium unit and the remaining mortgagee of the condominium development. The developer, Brightstar, had pressured the purchaser, Mr. Rasmussen, to prepay the final balance of his purchase price ($270,320) to Brightstar. Brightstar had told Mr. Rasmussen that it needed money to complete construction of the project, and the balance of his purchase price could not be used for

construction purposes unless it was paid to Brightstar directly, rather than into the trust account of the deposit trustee. While initially reluctant, Mr. Rasmussen ultimately acquiesced.

Guarantee Company of North America (GCNA), the remaining secured creditor with an interest in the condominium project, claimed that its security had priority over any interests Mr. Rasmussen may have and he should not receive clear title to the unit. GCNA argued that Mr. Rasmussen had a valid claim for repayment of, what GCNA characterized as, his loan to Brightstar and he should (a) advance a further $270,320 into the deposit trust account in order to receive clear title and (b) CONDOVOICE FALL 2022

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ILLUSTRATION BY JASON SCHNEIDER

When developers divert sale funds to pay for their construction costs, they inevitably deplete the pool of sale proceeds available for when they later need to pay back the secured loans of mortgagees. Such deficits can impair a developer’s ability to close the sale of the condominium units and convey clear title to the purchasers of those units.

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www.dynamicpropertymgnt.com

sue Brightstar to recover his money back on the loan.

his favour and a vesting order giving him clear title to the unit was appropriate.

The Court dismissed that argument, finding that the risk should fall squarely at GCNA’s feet. GCNA’s interest was purely financial, whereas Mr. Rasmussen’s interest was both proprietary in nature (in that this was his home) and financial. GCNA was in the business of offering bonds and taking on, and managing, the risks of doing so. It had unlimited joint and several indemnity claims available against Brightstar, its affiliates and its principals. Additionally, there was no evidence that any of these entities and individuals were unable to make good on any liabilities they may have under their indemnities and guarantees.

By contrast, in C & K Mortgage Services Inc. v. Camilla Court Homes Inc., 2020 ONSC 5071, the Court considered whether the purchaser of a condominium unit, who had already paid a sizeable deposit but had yet to pay the full purchase price, had an equitable or proprietary interest that should take priority over the secured interest of the first mortgagee on the property.

The purchaser, Mr. Tan, paid $400,000 directly to the builder, Elite Homes, based on the builder’s assurance that paying a larger deposit to the builder directly would speed up the closing on the property. A receiver was subsequently appointed over the condominium project, and they sought to disclaim the Agreement of Purchase and Sale between Mr. Tan and Elite Homes.

The recourse available to Mr. Rasmussen paled in comparison. Mr. Rasmussen was simply the purchaser of a residential condominium unit who had made the final payment on his unit in good faith. He did not have the means to make the final payment for his unit twice. The Court found that equitable considerations were “entirely” in

Mr. Tan argued that if the APS was disclaimed, he would not recover his deposit and would suffer financial hardship. In contrast to Mr. Rasmussen, this Court was not as sympathetic to his plight. The Court

accepted “that Mr. Tan is a victim of the improper use of the $400,000 deposit he paid directly to Elite Homes in the belief that this payment would expedite the construction of the Mateo Property”. Nevertheless, the Court concluded that Mr. Tan “ran a risk when he paid $400,000 directly to Elite Homes” and would have to look to Tarion Corporation or other parties for recovery of his deposit.

The Court noted that if Mr. Tan had previously paid the full purchase price and attempted to complete the sale before the developer became insolvent, he could have sought an order of specific performance and may have been successful in enforcing a transfer of title. As a non bona fide purchaser, however, he was simply out of luck.

2. Courts Will Give Effect to Clear Contractual Rights and Obligations In addition to the proportion of the purchase price paid by each purchaser at the time of the priority dispute, the other key factor that impacted the different outcomes in these two cases is the contractual lan-

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guage within their respective Agreements of Purchase and Sale.

In Centurion Mortgage Capital Corp., Mr. Rasmussen did not breach any of his obligations under the APS when he advanced his final payment to Brightstar. The APS explicitly stated that the balance of the purchase price was required to be paid to the vendor (i.e. Brightstar) or “as the vendor might direct”. Therefore, Mr. Rasmussen was entitled to rely and act on Brightstar’s direction that the balance be paid directly to it. In paying for his unit in full, Mr. Rasmussen fulfilled his financial obligations under the APS and reasonably expected that he would be able to close the transaction and obtain clear title.

Notwithstanding that Mr. Rasmussen may have had specific knowledge of GCNA’s mortgage when he advanced the final payment to Brightstar, the fact remained that he had no contractual obligations to GCNA. He was not a party to any contract with GCNA, nor privy to the dispute between GCNA and Brightstar. The Court found that he had no notice that the man-

ner of his final payment would put Brightstar offside its obligations or be detrimental to any third parties, including GCNA. There was no evidence that he assisted or conspired with Brightstar to breach its obligations to GCNA or anyone else.

On the other hand, in C & K Mortgage Services Inc. v. Camilla Court Homes Inc., Schedule A to the APS explicitly stated that the APS was subordinate to any mortgage arranged by the vendor (i.e. the developer), and Mr. Tan would not have an interest in the unit until a Transfer/Deed of Land was registered in his favour. The Court distinguished this case from Armadale Properties Ltd. v. 700 King Street (1997) Ltd., 2001 Can LII 28461, in which the APS made no reference to a contractual provision negating the purchaser’s interest in land or subordinating it to the mortgagee’s interest (in addition to the fact that the purchaser was bona fide and the sale had effectively concluded prior to the receivership and bankruptcy).

The Court found that the mortgagee’s interest had legal priority over Mr. Tan’s

interest by virtue of the contractual provisions in the APS. A subordination of the mortgagee’s interest would run contrary to the terms of the APS. The Court of Appeal in C & K Mortgage Services Inc. v. Camilla Court Homes Inc., 2020 ONCA 817, affirmed the lower court’s decision, holding that Mr. Tan purchased a unit “that was subject to a prior mortgage” and the unit could not be conveyed to him unless the mortgage was redeemed.

Conclusion Those who purchase condominium units in insolvent or financially languishing developments are often the most vulnerable stakeholders: their financial stake in a single unit is comparatively small to that of banks, financiers, and other institutional security holders, yet they, as prospective homeowners, stand to lose the most when disputes about priority arise.

Before advancing any purchase funds directly to developers, purchasers should be conscious of the risks associated with this manner of payment and ensure that they fully understand both their contractual rights and obligations. C V

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Lyndsey McNally

OLCM, LCCI Director, Condominium Finance CWB Maxium Financial

The Last Word

Coming Out Behind

ILLUSTRATION JASON SCHNEIDER

It’s been two and a half years since “fourteen days to flatten the curve.” What a wild couple of years it’s been. Who would have predicted two years of lockdowns and restrictions that taxed everyone’s pocketbooks and mental health? In early 2020 we all knew that COVID-19 would have financial impacts on condominium corporations, but our thoughts were short-term. Will owners be able to afford to pay their condo fees with businesses closed? Are receivables and unexpected sanitation expenses going to create short-term cash flow concerns? How will we manage condo fee increases with so many community members out of work?

What we didn’t expect was the drastic impact of inflation and a struggling supply chain. These financial impacts will be felt by condominium corporations for a very long time. According to StatsCan, the Residential Building Construction Price Index increased by 35% in the GTA over less than 2 years (from Q1 2020 to Q4 2021). The Consumer Price Index in March 2022 was 6.7%.

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These statistics are going to have a major impact on condo fees, especially when we apply them to long-term capital repair plans.

Let’s break it down simply. If you have a $600 condo fee, with 50% going towards Operating expenses and 50% going towards the Reserve Fund. Your increase might look something like this: FUND

2022 CONDO FEE

INFLATION RATE

Operating Reserve Total Condo Fee

$ 300 6.70% $ 300 35% $ 600

2023 CONDO FEE

$ 320 $ 405 $ 725

This assumes that the condominium corporation was already adequately funded. But in the last two years, we’ve seen two reports indicating that we had an existing problem with the adequacy of our Reserve Funds in Ontario. The Auditor General of Ontario released a report in 2020 suggesting that many of our buildings built between 1980 and 2000 would require an increase to Reserve Fund contributions of 50%. The Canadian Institute of Actuaries released a similarly concerning report in 2022. So, let’s add another 50% to the Reserve Fund contributions from our table below: FUND

2022 CONDO FEE

INFLATION RATE

Operating Reserve Total Condo Fee

$ 300 6.70% $ 300 85% $ 600

2023 CONDO FEE

$ 320 $ 555 $ 825

It is a very real possibility that many condominium corporations will have to implement increases of between 40-50% to their condo fees to meet their ongoing capital repair obligations. This creates concern that with our new interest rate environment post-COVID (impacting/increasing mortgage payments), and the rising cost of simply living, that increases to monthly condo fees will be unaffordable for many.

We are just beginning to feel these pressures. Because condominium corporations update their Reserve Fund Studies once every three years, we need to be prepared to see the full impact towards the end of 2022 and into 2023 (when condominium corporations that completed studies in 2019 and 2020 update their current plans.

In this issue you read about the need to increase clarity, consistency, and transparency in the use of loans to fund capital repair shortfalls. The article is timely, as loans are becoming a more common, powerful, and crucial tool in keeping condo fees at affordable levels.

Deferring work isn’t an option. The only thing it accomplishes is increasing the cost of the repairs, thus increasing condo fees by even greater amounts.

Special assessments may create even more financial hardship on owners, driving those already feeling financially strained into an even more critical situation.

In today’s economy, loans are worth considering as an option that helps manage cash flow and buy more time to catch up.

But more than just a tool to manage cash flow, the process to pass a borrowing by-law requires owner engagement and education – education in particular is one of the most important tools that you can give your owners to minimize conflict in your community with respect to financial challenges.

While it looks like we’re finally returning to normal life post pandemic, we’re coming out a little behind. Let’s drive social and financial success in our communities by ensuring we are all appropriately educated about the financial options that exist. C V

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