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Canada’s Most Widely Read Condominium Magazine

March 2014 • Vol. 29 #1

Protecting property value Toronto market forecast Keeping up curb appeal Plus, what status certificates signal to buyers PA R T O F T H E

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Contents FOCUS: PROPERTY VALUE

12

Beware of no-pet rules, and other whole-building factors affecting individual unit sales By Michelle Ervin

16

Duty to disclose: Issuing status certificates By Barbara Holmes

20

Moving past a history of pests By Alice Sinia

28

Clean windows reflect on management By Jennifer Runyan

Departments

8

The interview Urbanation’s Shaun Hildebrand shares his 2014 forecast for the Toronto condo market

32

Legal A CARE-ing approach to mediation By Marc Bhalla

36

Management Why internal controls are critical By Judy Sue and William Stratas

40

Maintenance Remove graffiti before it becomes a game By John Kalimeris

42

Grading back-up generators after Toronto’s ice storm By Grant Farrow

48

Odour control: Passing the sniff test By Steve Hudson

52

Regulations Anticipating accessibility changes By Lynn McGregor

56

Smart ideas


Editor's Letter

Protecting property value

Publisher Steve McLinden Editor Michelle Ervin Advertising Sales Paul Murphy, Melissa Valentini, Sean Foley Senior Designer Annette Carlucci

The sidewalk sandwich board is to pre-construction

condos what the For Sale sign is to a single detached house. But after a condo is occupied, the excitement and urgency whipped up by the temporary sales centre long gone, prospective buyers have the benefit of time to research a building and “check under the hood,” so to speak. If a prospective buyer asked a current unit owner what it’s like living in your building, what would he or she say? Is the condominium corporation running like a welloiled machine? Or would a current unit owner allude to dysfunctional governance or poor management? These are questions worth considering, especially since the author of The Condo Bible for Canadians is advising prospective buyers to do precisely this type of digging before signing on the dotted line. For this, CondoBusiness’ property value issue, the cover story explores this and other considerations prospective buyers make with a view toward informing condo directors

Designer Jennifer Carter

and managers on how best to protect the marketability and resale value of individual units through their functions. Although curb appeal tends to be less important in high-rise condos than it is for a detached home, first impressions count. To put a building’s best façade forward, flip to this issue’s articles on graffiti removal and window cleaning. Plus, a critical power specialist recounts how Toronto condos left in the dark after December’s ice storm fared when forced to run on back-up generators for days on end. Condominium corporations may operate as non-profits, but their obligations are not unlike those of for-profit corporations. It’s important for condo directors and managers to not only ensure smooth day-to - day operations, but also maintain the overall value of the property to protect each owner’s individual share in it. Michelle Ervin Editor, CondoBusiness michellee@mediaedge.ca

Production Manager Rachel Selbie Contributing Writers

Marc Bhalla, Grant Farrow, Barbara Holmes, Steve Hudson, John Kalimeris, Meaghan Ketcheson, Lynn McGregor, Jennifer Runyan, Alice Sinia, Judy Sue, William Stratas

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THE INTERVIEW

Toronto's condo market performs a balancing act SHAUN HILDEBRAND, SENIOR VICE PRESIDENT, URBANATION, SHARES HIS FORECAST FOR 2014

You characterize the

22 per

cent decline in number of new condos sold

in 2013 as a soft landing. What do you expect the story of the new condo market to be in 2014? We’re not expecting any huge miracles out of the market; we’re expecting 15,500 sales in 2014, compared to just under 14,000 sales in 2013. So it is an improvement, but it’s still lower than longer term averages. We’re still coming off of very frenzied levels of activity that we saw for an extended period of time – we saw sales total more than 70,000 from the second half of 2009 lasting into the first half of 2012. And that type of volume creates more condos than the market probably needs right now, so the slowdown that we saw in 2013 helped to bring the market back into balance. We’re going to need more of that into 2014, but not to the same extent. We’ll be gradually be moving back up towards the 10-year average (17,727 new condo sales), but we won’t quite get there next year.

What contributed to the 12-per cent uptick in new condo sales in the fourth quarter of 2013? We saw project openings become more centralized, moving back into the core where demand has been strongest. Also helping to pick up absorptions at the end of the year was some of the discounting that we saw on unsold product throughout 2013. So not just introducing incentives, like cash back and free upgrades, but actually cutting prices on some of these units. This helped to improve sales at existing sites that have been active for some time. It had to do with some of the external forces as well. I think most people were expecting something severe to happen to the condo market in 2013. Then, as we saw that it didn’t and started to get a lot of positive signals coming out of the resale market – and even more so in the rental

market – it helped to restore confidence among investors and others who were buying new condos. How long will discounts from developers last? It’ll continue for the time being. Unsold inventory levels are still at a record high, or close to a record high. We ended the year at 19,189 unsold units in active developments (would-be projects that are in the pre-construction phase all the way up to those that are completing and occupying). There’s a very strong correlation bet ween higher unsold inventory levels and lower project openings as developers focus their efforts on selling off that inventory before they introduce new products, so I think that’s going to weigh on sales because new openings tend to drive a lot of sales activity.

Divergent outlooks “In the Toronto condominium market, the number of unsold high-rise units under construction has remained at elevated levels, although those in the pre-construction stage have declined from their peak in early 2013. Prices for high-rise units have remained flat, and sales have declined further in 2013. If the upcoming supply of units is not absorbed by demand as units are completed over the next few years, there is a risk of a correction in prices and construction activity. Moreover, if investor demand has boosted construction in the condominium market beyond demographic requirements, this market may be more susceptible to shifts in buyer sentiment,” says the Bank of Canada’s December 2013 Financial System Review. “In addition to the burgeoning supply of new units, the eroding economics of investing in rental properties are likely to put a significant damper on the region’s [GTA’s] condo market, especially the high rise segment. The cost of carrying an average priced condo has been exceeding the rent that can be earned on it. The combination of static demand and rising inventory of condos is likely to put downward pressure on prices over the next few years. Overall, condo prices are expected to fall on average by around 4% per year in 2014 and 2015,” says a March 10 TD Economics report.

8 CONDOBUSINESS | www.condobusiness.ca


THE INTERVIEW The number of rental transactions outpaced the number of resale transactions for a second year straight. What role do you expect investors to play in the Toronto condo market in 2014? I don’t expect to see any sort of major change in behaviour. If you take a look at the units that came to completion and were registered last year, almost a quarter of them were rented out – just through the MLS system – and only about five per cent were resold. If you think of how many other ways there are to rent out your unit, you can see that upwards of probably 35, close to 40, per cent of all newly completed units were actually rented out in 2013, so this indicates that most investors are longer term; they’re not in it for a quick flip. Their goals for price appreciation have stretched out as the market has slowed down. We only saw two per cent growth in resale prices in 2013 and we only saw 2.3 per cent growth in resale prices in 2012, so the ability to make 30 per cent within a few years just isn’t possible anymore. They’re finding that a good place to hold onto their units is obviously in the rental market right now. Rental demand in the GTA is running at probably at least a 20-year high right now. And even though we’re seeing this influx of new rental supply, rental demand has been able to keep pace, so that has helped to push rents up. Rents ended the year at an average of $2.37 a square foot, which was up about 4.2 per cent from last year. I don’t think we’re going to continue to see that type of growth, just because we’re going to continue to see strong levels of rental supply entering the market from investors, but I don’t expect any declines in rent, just more of a balanced market than what we’ve seen. Where does this leave the resale market? Total sales in 2013 were slightly higher than what they were in 2012, and they weren’t quite as high as they were in 2011, but they’re very closely to a historically average level, so they’re holding steady. I don’t see resale price appreciation picking up over the next few years. I think it’s going to remain very much where it has been, at around two per cent, and that’s because market conditions aren’t going to tighten up again. We’re not going to be moving back into a seller’s market.

We keep hearing that baby boomers have plans to downsize, but first-time buyers continue to dominate the market. When do you expect to see a demographic shift? First-time buyers are still going to be the driver of the new condo market; it’s an entry point for them to get into ownership. The average prices for condos are significantly below the average price of even a semi - detached home or a townhome within the city, so certainly

first-time buyers are going to continue to represent the majority of resale condo purchasers, too. But we’re st ar ting to see more people think about moving up within the condominium market because of high prices for single-family homes, commuting times, not wanting to leave their onebedroom and move into a single-family home in the 905. They’d rather perhaps move into a two-bedroom, or something a little bit larger, and stay within the city.

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THE INTERVIEW And then the downsizing phenomenon is not going to happen overnight. The shift in the composition of buyers in the resale market is something that happens very gradually, but we are starting to see an inflection point where first-time buyers aren’t necessarily the sole driver of activity anymore. What are some recent hotspots for condo transactions in Toronto? Most of the rental transactions occur in

newly completed projects because that’s where the highest turnover is. And so when you look at the high-volume markets that we saw in 2013, a lot of it has to do with where these projects came to completion. One example would be Liberty Village. In the downtown core, we saw some very highly investor-purchased projects come to completion and significant rental turnover occur in these buildings. CityPlace saw a lot of rental activity in

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2013. Harbourfront Market was a very strong market for rental activity as well. The Etobicoke waterfront is another market that saw a lot of turnover in the rental market – quite a bit in the resale market, as well, because it’s relatively affordable in comparison to the downtown core. North York City Centre is probably one of the biggest markets for rental or resale activity in the GTA, and that held true in 2013. What factors – for example, an increase in the interest rate – have the most potential to impact your current outlook for the condo market? We’re factoring in only modest increases in interest rates, and I think that’s what most economists are projecting. If we did see, for one reason or another, a deterioration in economic conditions or a sharp increase in interest rates, it would obviously alter our outlook, but that isn’t the base-case assumption that most people have right now, so we’re sticking with the consensus. As long as the population continues to grow, and the economy continues to churn out jobs, and interest rates remain relatively low, I don’t think there are any major forces that are going to impact the market in 2014. What is your response to those who still believe the condo market is due for a harsher correction? I don’t think that the market has the ability to collapse – I mean, it does – but it’s not going to collapse underneath its own weight. Last year we saw a record level of completions (just under 16,500 units); next year we’ll move even higher. I think that’s what has a lot of people worried, but also recognize that the market is very, very large – 19,000 completions doesn’t really represent that strong a growth in the total supply. When sales started to slow down after the mortgage rules changes came into effect (in 2012), supply moved in the same direction. Even though completions were moving higher, listings didn’t really grow, so that means that a lot of investors, a lot of owners, were withholding listing their properties because they sensed that market conditions were weakening, and this helped to self- stabilize the marketplace. That’s what we expect to be the case in 2014 as well. 1


cover story

BEWARE NO 12 CONDOBUSINESS | www.condobusiness.ca


cover story

O-PET RULES The St. Lawrence Market condo should have sold in days. Instead, it took months. The oversized (1,500-square fo ot ) one - b e d ro o m unit was an incredible renovated space in an older building with a rooftop swimming pool, as broker Erica Smith describes it. It was listed at $499,000 – good pricing at the time, she points out. There was plenty of foot traffic, but when agents put in offers, they would inevitably ask about pets. Once agents found out about the building’s no-pet rule, the offers would fall through. By Michelle ervin


cover story

Buyers will often have a cat or small dog, so no-pet rules can limit the pool of buyers for units in buildings with these bans, Smith says. Ultimately, the seller needed to get his equity out of the St. Lawrence Market condo to pay for costs that were kicking in at the new home he had purchased, so he sold for under asking. Smith is the broker of record at Stomp Realty. There, she and fellow broker Joy Paterson work with both buyers and

sellers, focusing on condos in Toronto’s downtown core. When working with buyers, step one for the brokers is to establish a budget and preferred location. Next comes what an individual unit and its building has to offer. Unlike detached homes, curb appeal isn’t as important in condos, she says. Gyms are the number-one must-have amenity for many buyers in the downtown core, Smith says. Other popular amenities

14 CONDOBUSINESS | www.condobusiness.ca

that will attract attention in listings include pools and rooftop patios with barbecue areas and lounge furniture, Paterson adds. More amenities typically means higher maintenance costs, and by extension higher condo fees. If a buyer is looking for a lot of amenities, Smith says, they will guide buyers to buildings with greater numbers of units, where those higher maintenance costs are spread across more owners. Despite a recent move away from concierge or security service, in a bid by developers to lower maintenance fees, the brokers have found that these services continue to be important to many buyers – especially women, Paterson says. The brokers tend to “shy away” from buildings that have known problems with leaks, Paterson says. However, they have seen motivated sellers successfully negotiate with buyers on such issues by, for example, including a dining table or window coverings in the deal, Smith points out. In the case of a special assessment, the seller might volunteer to pay it, Paterson adds. “We make all of our offers conditional upon our law yers looking at status certificates so our buyers don’t get into a situation they can’t get out of,” Smith says. Lance Lehman, a real estate lawyer at Malo Pilley Lehman, reviews status certificates. “One of the first things I always have to explain to clients is that they’re buying the unit that they’ve seen, but they’re also buying a share in the common elements,” he says. “So we’re concerned about not only that individual unit, but we’re concerned about the financial and physical health of the common elements, and we’re concerned with the risks that go along with the whole building.” Clients tend to zero in on whether a c o n d o m i n i u m’s re s e r ve f u n d s a re sufficient, Lehman finds, but that’s not exactly the right question – at least not for him answer. His role is to identify risks and explain them to his clients. What the real estate lawyer wants to confirm is that a condominium corporation is well-managed, part of which is earmarking enough money for the future, he says. That means checking that the corporation is up to date on its reserve fund and following recommendations made by engineers – the experts who are qualified to assess, for example, when the roof will need to be replaced and how much it will cost.


cover story

Other considerations for Lehman include: Are common element fees likely to increase? Is the condominium facing a lawsuit? If the condominium is facing a lawsuit, will it be covered by insurance? But, he says, “By the time people bring a status certificate to me, unless the status certificate is really problematic … the client is usually so committed to the purchase that, unless I really shoot it down, they’ll tend go ahead with it.” Dan Barnabic, author of The Condo Bible for Canadians: Everything You Must Know Before and After Buying a Condo, urges buyers to take due diligence even further. By that he means not only checking the financial and physical health of the building via the status certificate, but also knocking on the doors of current owners (or catching them on their way into the building). Questions Barnabic advises getting answers to include: Is the condo board functioning? Are owners satisfied with the property management company? Unfortunately, he says, “not that great of a number” of buildings in Toronto would meet all of the criteria he sets out in his 10 commandments of condo buying. Notably, he discourages buyers from purchasing in buildings that are heavily tenanted. “This is [an] absentee owner complex,” Barnabic says, “and as such, gives investors a red flag that this may not be as properly run a complex as it should [be] if all the owners are actually occupying the units.” Renters don’t have a stake in the wellbeing of the building, he explains, which can lead to their treating the common elements in a way that results in unnecessary repairs. Unless heavily tenanted buildings are located in high-demand downtown cores, or touristy areas, such as Miami Beach, they can become stigmatized, he says. Barnabic’s top tip for protecting the resale value of individual units is to pass a bylaw to limit rentals to 25 per cent of a building’s units. However, this type of bylaw has previously failed to be upheld when tested in the Ontario courts, so it may require legislative reform. T he consumer advoc ate proposes a numb er of refor ms to the c ond o system that would contribute to protecting property value. Among his re c o m m e n d at i o n s i s c o m p e n s at in g b o ard d ire c to r s fo r d o in g their j o b diligently.

“People get excited when they get elected to the board,” Barnabic says. “Over time, there are complaints, [and] the request to put more of your time into the running of the complex’s problems leads to disenchantment, lethargy, even disappointment, of the board members.” A new Condominium Act is expected to be introduced at Queen’s Park this spring as the culmination of an 18-month review by the current Government of Ontario. Whether these proposed reforms, neither of which

appeared in the Stage Two Solutions Report, could make it into the bill remains to be seen. In the meantime, these challenges don’t preclude the good governance of a condominium corporation, including protecting its financial and physical health. As well, board directors can weigh in on how and what amenities and services ought to be maintained and provided. And, of course, they could look into the feasibility of repealing no-pet rules. 1

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property value

Issuing status certificates W hen buying a resale condominium unit, purchasers need

BY BARBARA HOLMES

to verify and be satisfied with the financial status of the

condominium and not just look at the location, amenities and features of the condominium and the unit being purchased.

16 CONDOBUSINESS | www.condobusiness.ca


property value

The information relating to a condominium’s financial status will be found in the status cer tificate. Most condominium agreements of purchase and sale cont ain a condition which states that the purchase is conditional upon the purchaser’s lawyer receiving a completed status certificate from the condominium corporation and having a specified time period to review the status certificate. If the purchaser is not satisfied with any of the information contained in the status certificate, then the purchaser is entitled to terminate the transaction without any penalty. S e c t i o n 7 6 of t h e C o n d o m i n i u m Act (the Act) requires condominium corporations to provide a status cer tificate with respect to a unit to e a c h p e r s o n w h o re q u e s t s su c h a status certificate, generally, purchasers, mortgagees and real estate agents. The status certificate must be given within 10 days after receiving a request for it and payment of the $100 fee. Section

76 provides a long list of the material information that must be provided in the status certificate. T h e s t a t u s c e r t i f i c a te b i n d s t h e corporation as of the date it is given (or deemed to have been given, if not delivered) as against a purchaser or a mor tgagee of the unit who relies on the certificate. If a corporation does not give the status certificate within the requisite time period, it will be deemed that there is no default in the payment of common expenses for the unit; the board has not declared any increase in the common expenses since the date of the budget; and the board has not levied any special assessments to increase contributions to the reser ve fund. If information is missing from the status certificate, it will be deemed to include a statement that there is no such information. It is essential that the status certificate is properly completed with accurate and up -to - date information

a n d p r o v i d e d w i t h i n t h e r e q u i s i te time period, together with all of the documents required by Section 76 to be attached to the cer tificate. The following sets out what kind of information purchasers and their lawyers will be looking for. Common expenses T he status cer tificate must indicate when the nex t payment of common expenses is due, how much is due, if a unit owner is in default of common expenses and, if so, the amount of the arrears. It may also contain other added costs, such as any assessment against the unit for overcrowding; any insurance deductible amount that an owner is responsible for; costs of repairs to the unit and/or common elements where the owner is responsible and has failed to pay; costs, charges and expenses for non-compliance with an agreement allowing an owner to modify common e l e m e nt s . I n o rd e r n ot to a s su m e

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March 2014 17


property value

If the board is contemplating any

increases and they are not disclosed, then the purchaser may not be liable to pay for the increases. any liabilit y for any such expenses, a purchaser will either terminate the trans ac tion or require that all such amounts owing be paid off, in full, on or prior to closing. Surplus or deficit T he cer tific ate should also identif y the expected financial position of the corporation at the end of the current budget and specify an explicit dollar value for the expected sur plus or deficit. T he signific ance of this information is directly related to t h e t i m e o f t h e y e a r a t w h i c h the info r m ati o n is o bt aine d . I f the c o r p o r a t i o n’s f i s c a l ye a r- e n d i s December and the status certificate is

requested in March, the corporation will be unable to advise as to whether there will be a budget surplus or shortfall. If, however, the status cer tificate is requested in November, a much more accurate picture of the likelihood and amount of deficit or surplus should be available. Some condominium corporations include a statement that the corporation is unable to determine if there will be a budget surplus or deficit due to costs beyond the control of the corporation. Anticipated increases T h e c e r t i f i c a te w i l l a l s o n o te a ny anticipated increases in common expenses. This should include

18Untitled-2 CONDOBUSINESS | www.condobusiness.ca 1

increases that the board is contemplating and are likely, but have not yet been levied. If the board is contemplating any increases and they are not disclosed, then the purchaser may not be liable to pay for the increases. Reserve fund The reser ve fund information in the st atus c er tific ate re quires th at the exact dollar value of the total amount in the reserve fund as of a particular month end, 90 days prior to the date the certificate is issued, be inserted. Case law 1 2 suggests that if the board is aware of, or should be aware of, a deficiency in the reser ve fund that

13-11-11 10:00 AM


property value

w ill l e a d to a s p e c i al as ses sm ent , then this must be disclosed in the status cer tificate, together with the a nt i c i p a te d a m o u nt o f t h e s p e c i a l assessment, or the special assessment will not be binding on purchasers to whom that information was not disclosed. Legal proceedings, claims The certificate must indicate if there are any outstanding lawsuits to which the corporation is a party and any judgments against the corporation. If there is litigation, the status certificate should list the parties to the action, as well as the nature of the pleadings set out in the statement of claim and statement of defence. Some condominium corporations attach a copy of the pleadings to the status certificate. The status certificate should not contain any opinions about the likelihood of success of the lawsuit, a s t h e re i s n eve r a ny c e r t a int y of result when it comes to litigation. If the subject matter of the litigation is covered by the corporation’s insurance

(e.g . slip and fall on the c omm on elements), this should be disclosed. Alterations If the corporation has entered into a Section 98 Alteration Agreement with the unit owner or a prior unit owner, this should be disclosed in the status cer tific ate and a copy at t ached. If the unit owner has carried out any unauthorized alterations of which the board or management is aware, this should also be disclosed. Pets While there is no requirement to do so, some condominium corporations set out in the status cer tificate the c o n d o m i n i u m ’s p e t r e s t r i c t i o n s , e.g. whether pets are permit ted or prohibited; maximum number of pets all owe d; t y p es of p et s p er mi t te d; any size or weight restrictions. Even

though these provisions are set out in the condominium declaration and /or rules, having this information in the status certificate will, hopefully, ensure that any such restrictions are not inadvertently overlooked by purchasers who are pet owners or intend to become pet owners. Documents Section 76 lists the many documents that should be attached to the status certificate. Management and the board should be checking to ensure that the documents attached are complete and up-to-date. W h e re the board is unsure as to the extent of detail and information it is required to provide in the status certificate, the board should be consulting its legal counsel for guidance. 1 B a rb a ra H o l m e s i s a b a rri ste r a n d solicitor.

1. Olsen v. York Condominium Corp. No. 212 (1987), 1987 CarswellONt 3901 (Ont. Prov. Div.) 2. Norris v. Waterloo South Condominium Corp. No. 1 (April 1996), Doc. C239-95 (Ont. Small Claims Ct.)

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property value

Moving past a history of pest problems A condo manager knows that maintaining a pest-free environment is

BY ALICE SINIA

important for existing owners, but it’s also important to the building’s image. He or she should be prepared to answer questions from prospective

purchasers and renters about his or her building’s pest management program. Here are the five things condo managers need to think through to protect a property’s marketability from being adversely affected by pest problems:

20 CONDOBUSINESS | www.condobusiness.ca


property value

1. Understand a building’s risk profile Pests are attracted to any environment that provides three key survival elements: food, water and shelter. With the number of homeowners in a multi-residential building and turnover of residents, it’s easy for pests to be introduced and for infestations to occur and spread. New construction vs. older buildings Many newly built condos are particularly vulnerable to pests during, and shortly a f t e r, n e w c o n s t r u c t i o n . W h e n construction forces pests out of their natural environment, oftentimes they will try to access the property a few months later when they realize their home is no longer there. Insects such as psocids (booklice) are sometimes predominant shor tly after construction. They are attracted to, and feed on, temporary mold growth on undried wall plaster or sheetrock, par ticularly behind and in bet ween walls. Pests can also be brought into new construction on building supplies and drawn to the food debris left on-site during construction. Once a property is established – around six months post-occupancy – a condo manager may see a rise in activity from pests such as skunks and raccoons that discover a food source in the dumpsters outside or birds attracted to new roosting and nesting sites. New landscaping around the building can be a magnet for rodents and crawling insects. Consider pest management before and during new construction to prevent pests later. Older buildings are susceptible to settlement, cracks and crevices, wornout door sweeps, and screens and other

issues. Leaking pipes or broken shingles can create the access and source of moisture that pests seek. A pest management professional should monitor for these types of maintenance issues on a monthly basis during routine exterior inspections. Installing pest-monitoring stations for both new and older buildings can help to determine which pests pose the greatest issue. Knowing which pests are present allows a condo manager and his or her pest management provider to determine the best, most effective way to prevent or treat the problem. Low-rise vs. high-rise Rodents, flies, cockroaches and ants are the most common pests in both lowrise and high-rise properties – though factors like maintenance, sanitation and architecture of the building and human behavior c an impact specific risks. While the presence of rodents, flies and cockroaches are typically considered unacceptable, ants are typically thought of as a nuisance pest and often brushed aside. However, ants are the top pest problem across the country and can inflict painful stings, cause structural damage to buildings, pose health risks from stings and even spread dangerous pathogens. High-rise buildings are not immune from pests. Some wasps are known to infest as high as 50 storeys. Flying pests can be a real problem because they are attracted to lights. Some high-rise balconies also have water features that appeal to pests – birds especially. A nd don’t forget about dumpster chutes. Although they’re convenient for residents, the food residue can attract pests and provide gateways to higher

places. Flat rooftops can hold pockets of standing water which may provide breeding grounds for mosquitoes as well as invite birds. As long as food, water and shelter are present, pests will be too. An Integrated Pest Management (IPM) approach, which focuses on preventive measures, such as facility maintenance and sanitation, will reduce a building’s risk of infestations. 2. Document steps to resolve past problems The history and structural condition of a property will impact its current value and future sale - abilit y. W hile most homeowners can overlook smaller, visible issues – such as interior design choices or the presence of a few ants around the exterior – they are not as forgiving of larger issues such as a poor foundation or a pest infestation inside the home. To d a y ’s h o m e b u y e r s h a v e access to online tools to research a p ro p er t y ’s histor y. We bsites su c h as BedBugResistr y.com offer only a snapshot, while a home inspection will provide a clearer picture of the property’s current state. If pests or pest-related damage are found during the home inspection, expect the value of the home to decline. If a property has a known pest history and potential damage, provide records and documentation to show the potential buyer what has been done to resolve the issue and the IPM steps that are in place to proactively prevent future issues. 3. Clearly outline everyone’s role Is there rodent damage left unresolved by a previous unit owner that someone March 2014 21


property value

needs to repair? Is a cockroach problem coming from a common area that’s governed by the condominium corporation or from an individual unit? Is an ant infestation coming from the unit next door? Ensure a building’s pest management professional is addressing common areas, which are most likely the condo manager’s domain and responsibility. A good provider should have an open line of communication with a building’s residents and provide them with tips for reducing pests in their units. Most impor tantly, a condominium corporation needs to have a clearly written and communicated pest policy. 4. Communicate policies W hen it comes to pests, the most important thing a condo manager can do is have a pest management policy codified in the condominium corporation’s bylaws and be familiar with it. Make sure it’s specific about whose responsibility maintenance, remediation and repairs are, and sets out the process for repairs.

For example, bed bugs can be a real issue for residents, who may not want to pay for remediation in their unit if the problem originated in another unit. On the front end, make sure prospective buyers know what’s covered and what they’d be responsible for, and reinforce the policy with current residents throughout the year so everyone is up to speed and in agreement should an issue arise. 5. Encourage owners to report sightings An IPM program is only as good as the teamwork behind it. A condo manager, t h e b u i l d i n g ’s p e s t m a n a g e m e n t professional and residents need to work together to identif y potential issues before they become an infestation. It’s important to communicate that an isolated pest sighting may be a sign of a larger infestation and encourage residents to report any signs of pests immediately. Having a sighting log in a common area or online will make it easy for residents to report any pest sightings in a discrete way. Ask residents to pick up sample(s) of

22 Untitled-5 CONDOBUSINESS | www.condobusiness.ca 1

the pest sighted, if possible, for positive identification. (Effective control depends on positive identification of a pest.) Many pest management companies can also provide training and additional information on how to help prevent pest issues. Proactively addressing potential pest issues and having a pest management policy in place will help ensure that a condo manager protects his or her property for current and future owners and residents. 1 A lic e S ini a, Ph. D., is R esid ent Entomologist – Regulatory/Lab Services for Orkin Canada, focusing on government regulations pertaining to the pest control industry. With more than 10 years of experience, she manages the Quality Assurance Laboratory for Orkin Canada and performs analytical entomology as well as provides technical support in pest/ insect identification to branch offices and clients. For more information, email Alice at asinia@orkincanada.com or visit www.orkincanada.com.

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management property value

Remove graffiti before it becomes a game The Oxford dictionary describes

g ra f f it i as “w r it ing or d raw ings scribbled, scratched, or sprayed illicitly on a wall or

BY JOHN KALIMERIS

other surface in a public place.”

The key word is illicitly; usually, the tagger does not have permission to do the graffiti and therefore it is an act of vandalism. The tagger is damaging p r i vate p ro p er t y, an d the ow ner is doubly victimized by having to pay for the graffiti to be removed. Graffiti can be traced back centuries though histor y. In early times, it was used for political activism and speaking out about imperial injustice; now it is mostl y p ar t of the skateb o ard sub culture.

24 CONDOBUSINESS | www.condobusiness.ca

Many believe graffiti is the work of gangs, but gang graffiti is very rare and typically very threatening. Gang graffiti may read something like “187 Moss” (the 187 is an American criminal code for homicide; the name beside it is usually the street handle of the person being targeted). The police should be contacted whenever such graf fiti is observed or if graffiti is unusual. However, most graffiti is usually a tagger’s street handle and is hard to read or interpret. Taggers are of ten


property value

Taggers like two points of egress to get away from a location; adding a fence creates an unwelcome environment.

te e n s f r o m m i d d l e - c l a s s f a m i l i e s . Many carry backpacks with their spray cans, tips and markers and travel by skateboard. They increase their status among their peers by the number and location of their tags. High -risk tags, which carry the most currency, include those in hard-to-access locations on tall buildings. Deterrence The good news is there are ways to d e te r t a g g e r s , f r o m v a n d a l i z i n g a building with graffiti. M a ny b e l i eve t h a t c a m e r a s h e l p deter taggers, but cameras are often ineffective for this purpose. Cases in point: incidences of graffiti on police stations and embassies, facilities that usually have many cameras. Lighting and vegetation tend to be more ef fe c ti ve d eter rent s. Tag g ers like to work in the dark, so increased l i g ht i n g a n d b r i g ht , m ot i o n - s e n s o r lighting are very helpful in prevention. Bushes and thorny plants against walls also keep taggers away. Removing escape routes contributes to deterrence. Taggers like two points of egress to get away from a location, so adding a fence to limit them to one point of egress creates an unwelcome environment. Protective coatings, chemical barriers formulated to prevent ink or paint from penetrating porous surfaces, are highly recommended. These coatings allow for easier graffiti removal, jobs on-site staff can handle. Sacrificial coatings, such as a waxbased coating, are one -time use and have varying results. Sacrificial coatings also don’t allow for owner removal and almost always require the building owner to pay for re-coating after every graffiti incident.

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Removal If a building has no porous surfaces, the do - it- yourself approach is most effective. Keep primer and extra paint available to quickly cover up graf fiti sprayed on painted sur faces. Do not just paint over the tag. Feather out the paint over a larger area. Also keep a Spectrum_Condo_March_2014_FINAL.pdf store-bought graffiti remover on hand

for non-porous surfaces. In most cases, graffiti can be removed with a Home Depot or paint- store graf fiti - removal product. W hen graf fiti c annot be removed from glass, the tagger is most likely using an acid on the glass to create a white tag. (Graffiti on glass has become 1 14-03-20 12:51 PM a new form of expression for taggers.)

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The run lines (the acid is liquid and runs down the glass, whereas paint and ink do not) confirm that it is acid-burned and must be buffed out. Scratching a tag with a key or a drill bit is common but can also be buffed out now. In the past, glass would have to be replaced, a costly procedure. If a proper permanent co ating is applied to the building, removal can be as easy as applying soap and water or rubbing alcohol to the affected surface. Or, use professionals for these surfaces. Bear in mind that the damage that could be done to a building from inexperience could far exceed any estimated savings. Most graffiti removal companies have monthly maintenance programs that include all graffiti removal on inspection and call-ins. The best prevention strategy is to make sure graffiti is removed as soon as p os sib le, the re asoning for this being that tags are placed on a tagger’s daily route. A tagger will hit a property with graffiti before they will a property without graffiti. The tagger wants the tag to be observed and will avoid places that remove graffiti quickly. The graffiti returns less frequently if the graffiti does not remain on the building for an extended period of time. 1 John Kalimeris owns Graffiti Buffer and has been removing graffiti across Canada, from Victoria to Montreal to Toronto, and throughout Ontario, since 2001. He is certified in CPTED (crime prevention through environmental design) and has spoken to property management, rental property owners and several conferences throughout Ontario on the cause and effects of graffiti.

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property value

Clean windows reflect on management BY JENNIFER RUNYAN

The importance of window cleaning is

often overlooked when boards and managers allocate condo fees. It’s

easy to consider the windows and glass panels as purely structural, like the walls of the building; however, glass is a much more fragile material than brick, stone or metal. This knowledge is especially useful today, as many new condos are designed with all-glass exteriors.

28 CONDOBUSINESS | www.condobusiness.ca


TRI CAN LOGO property value 538

7544

532

The type of glass used for condo windows is highly porous and prone to damage, if not maintained properly and regularly. When exposed to the elements, these pores can accumulate microscopic debris, which, if not cleaned, can stain the surface of the glass. Acid, hard water, pollution, salt, rust, and calcium deposits in everyday air and precipitation can also damage the surface of the glass. Hard water stains are caused when rain water falls on prefabricated or painted surfaces, then leaches minerals from those surfaces and deposits them on the windows below as these hard minerals run down the building. Acid rain and pollution can leave residues on the glass similar to hard water stains; over time, these acid residues may etch the glass permanently. Windows that have metal-framed screens are susceptible to rust stains caused by oxidation. When left on the glass long enough, these deposits can be baked into the glass by the sun. Similarly, any animal excrement, when left for long periods of time in the sun, will leave stains which cannot be removed. These chemical stains and debris can permanently discolour and damage windows, contributing to diminished glass integrity and reduced energy efficiency. When the integrity of the glass is compromised by poor maintenance, the glass’ ability to regulate heat gain and loss is diminished, meaning higher heating and cooling costs. If windows or glass panels are already damaged by poor maintenance, there are certain chemicals that can be used to clean some stains; however, once the glass is damaged, it can only be fixed by replacing the glass. As property managers know, replacing windows and glass panels often comes at a high price. This is why all windows and glass panels should be cleaned twice annually at a minimum. When the building is near an ongoing construction site or the seasonal weather has been extreme, more frequent cleaning is recommended. When it comes to arranging the window cleaning, it is imperative that a reputable company is used. Window cleaning is a high-risk trade and can be dangerous, not just for the workers, but also for others on the site. Although worker safety is a main concern, workers from qualified companies will be trained in working at heights and the associated safety work procedures. Their risk exposure is mitigated by their experience on the job and adherence to these procedures, including wearing a full body harness that is tied off whenever window cleaners are within six feet of the roof edge, where the parapet wall is four feet high or less. Often overlooked by property management is the safety of residents, building staff, commercial tenants and the

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Chemical stains and debris can

permanently discolour and damage windows, diminishing glass integrity and energy efficiency.

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public who use the grounds under where window cleaners are working. Ontario Health and Safety Act (OHSA) Regulation 159 requires window cleaning companies to post clearly visible signage advising of overhead work beneath any suspended worker or platform. Property management should also advise residents, building staff, commercial tenants and the public against walking beneath workers. The property manager should always verify a prospective company’s insurance and Workplace Safety and Insurance Board (WSIB) status. Recently, the Ontario government, through the WSIB, has introduced Bill 119, which applies to the construction sector and includes high-rise window cleaning. This bill, effective Jan. 1, 2013, makes it mandatory for all contractors, including owner/operator companies, to be registered with the WSIB. As of Jan. 1, 2014, the WSIB was expected to star t cracking down on unregistered operators and the property managers who hire them. Penalties for unregistered contractors are no longer restricted to the offending company; proper t y management is now liable. This means any property manager who hires a contractor or company to do window cleaning without verifying their clearance can be subject to serious fines if the company is found to be operating without clearance. There is no shortage of companies in the industry that will quote an attractive low price, but property managers should research whether they have the necessary qualifications and experience to get the job done. Property managers should remind board members to focus on safety, resident privacy and customer service when it comes time to choose a windowcleaning company. Property management may unknowingly take on significant risk when the board chooses a company based purely on price.


property value

Should a loss occur on site with a company that does not have proper insurance and WSIB in place, both the condominium corporation and the proper t y management firm may be named in a suit. W hether they are proved liable or not, the costs associated with just defending a claim could be in the thousands. It would then be in the condo corporation’s interests to recover these costs through a claim against the proper t y management company, as property management would be the party responsible for not taking the proper steps to ensure the liability exposure of the corporation they are managing. Ultimately, the onus is on the property manager for obtaining proper documentation from the window cleaning company, but the condo board members should be aware of the legal ramifications as well. An added benefit of regular window cleaning is the image it presents to residents, visitors and the world. Clean windows, just like a well - maintained building, reflect on the proper t y management company. Here, residents can see their condo fees at work. 1

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legal

A CARE-ing approach to mediation Mediation offers tremendous value in a condominium setting

BY MARC BHALLA

when parties in dispute are required to co-exist in that community, as mediation presents an opportunity to consider that ongoing

relationship. Structuring a plan that sets expectations for future interactions may, for example, offer an advantage, even if the dispute is destined to be ongoing for years to come.

32 CONDOBUSINESS | www.condobusiness.ca


legal

All too often, parties risk making uninformed decisions by relying on

assumptions about their alternatives – including the time, cost and chance of success involved in proceeding to court. JermarkPIPE_Condo_Apr09.pdf

W hile c ond ominium c or p orations are, in some ways, like any other par t y par ticipating in mediation, in other ways they are different beasts entirely. Accordingly, it’s impor tant for condominium corporations to take appropriate steps to prepare. The following considerations will help to ensure a condominium board makes the most out of mediation. Contemplation An advantage of mediation involves bringing those in conflict together to discover, express and share different perspectives, insights and ideas. As a result, a condominium board can’t always know in advance the kinds of options that may be presented for resolving a matter. Novel approaches can come to light in the course of a brainstorming session as momentum is gained through the conciliatory approach. That being said, there is no harm in the condominium board first doing some creative thinking on its own. Think about some options that the condominium board may want to put forward and how it will reply to any that it may expect from the other side. It’s here that a condominium board can leverage the minds of those who will not be directly participating at the mediation. A discussion in advance can go a long way in terms of preparation and also serve to clarify the goal of mediating. Anticipation Many parties have not previously had much (or any) experience participating in mediation and may not realize that the process can vary significantly. Common concerns may include what to expect, who will be in attendance or what exactly the role of the mediator is. This writer has

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long advocated the idea that parties can accomplish more when they are comfortable as they mediate; clarifying stress-inducing questions beforehand can go a long way in preventing or reducing anxiety and sleepless nights leading up to mediation day. Representation In many instances, not all members of a condominium board will participate in the mediation session. There are several reasons for this – scheduling issues, perceived power imbalance concerns, even a lack of desire to participate; however, it’s important for a board to carefully consider who will represent the condominium at mediation. Instructing a property manager to “go it alone” or hand-selecting a particular director as the appropriate representative based upon the specific circumstances of a dispute are not unusual approaches, yet the approach taken can drastically impact how the mediation plays out. Choosing the appropriate person to represent the condominium corporation at mediation involves taking into account

whether an individual has the authority to make decisions or settle, their knowledge of the dispute, and the individual's past and future relations with the other parties. Exploration While it may initially seem contradictory, there is value to be gained in preparing for mediation by investigating and assessing a condominium board’s options should mediation fail to resolve the conflict. Taking the time to properly understand the reality of a condominium board’s situation (and those of others involved) ensures that the most appropriate decision is made as options are generated and considered through the course of mediating. Settlement only makes sense if it presents a better outcome than the condominium board’s next course of action to address the dispute. All too often, parties risk making uninformed decisions by relying on assumptions about their alternatives – including the time, cost and chance of success involved in proceeding to court, their legal rights and obligations, and the

impact that prolonging the resolution of the conflict will have on them. Similarly, the Condominium Act and/or the condominium’s declaration, bylaws and rules can impose limits as to the resolution. It’s helpful to be aware of such parameters going into mediation to avoid wasting time and money. A conciliatory approach to conflict Increasingly, the courts are directing condominiums to embrace a conciliatory approach to conflict, to attempt to mediate unless there is good reason not to. Whether it is mandatory to do so or otherwise, mediation presents an opportunity for condominium corporations. The “C.A.R.E.” process set out above can help ensure that a condominium board is sufficiently prepared to capture that opportunity. 1 M a rc B h a l l a i s a m e d i ato r. A s a n integ ral p art of the Eli a A ssoc i ates PC CONDOMEDIATORS.ca team, his p ra c ti c e fo c u s e s o n c o n d o m i n i u m conflict.

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Management

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By Judy Sue and William Stratas

private companies, internal controls are fundamental tools to

ensure that business activities and financial assets are responsibly and dutifully managed.

36 CONDOBUSINESS | www.condobusiness.ca


management

In recent times, many of the b i g g e s t s c a n d a l s i nv o l v i n g p u b l i c sector organizations have centred on deficient or absent internal controls. F o r ex a m p l e , i m p r o p e r c o n s u l t a n t billing practices at a major government agency revealed that certain insiders took advantage of weak super vision and vague internal policies to pad the pockets of their friends and associates. Consequently, most observers agreed that accountability should rest mainly w i t h t h e m a n a g e m e nt su p e r v i s o r s who failed to establish sound internal controls. S i m il a r c o n c e r n s a r e p r e s e n t i n m a ny c o n d o m i n i u m c o r p o r a t i o n s — but with much higher levels of risk, because most condominiums operate with deficient or absent internal controls over business activities. And when controls are absent, waste, theft, fraud and related financial risks may follow.

Operational controls defend against in the corporation (board members, waste and theft t h e m a n a g e r, a n d m a n a g e m e n t M anagement should implement a super visors or executives at the basic set of controls in condominium management company) that defines corporations to protect against various what constitutes improper conduct risks for waste and theft that can cost a n d t h e c o n s e q u e n c e s t h a t m a y tens of thousands of dollars in annual follow. This policy should also require losses. S ome p ossible examples of s e g re g a t i o n of key d u t i e s ( i .e. n o operational waste and thef t include: single person controls multiple critical misuse of consumable supplies; theft tasks) and should provide a channel for of to o l s a n d e q u i p m e nt ; s l o p p y o r whistleblower complaints raised by any dishonest compilation of work time - persons who believe operational waste sheets and payroll; and over- ordering or improprieties may be occurring. And of supplies (e.g. paint, cleaning fluids, boards also must hold management light bulbs) diverted for personal use or continuously accountable to enforce resale. These schemes could be carried t h i s p o l i c y w i t h o u t c o m p r o m i s e . out by property managers, corporation A d ilig ent c o n d o minium b o ard w ill employees, contractors, or even by always set high operational standards directors in collusion with managers and and require management to respect employees. and follow their policies for proper How c an one guard against these operational controls. r isks? C o n d o miniu m b o a rd s sh o u l d Here are some examples of strong require management to issue a written i n t e r n a l o p e r a t i o n a l c o n t r o l s i n internal controls policy to all insiders condominiums: Davroc_Condo_March_2014_FINAL.pdf 1 14-03-18 10:14 AM

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Management

In a majority of condominium corporations,

the only factor that may prevent wholesale fraud from occurring is the morals and conscience of the manager who handles the invoices as well as the board officers who sign the cheques. • M a n a g e r ’ s s i g n a t u r e p l u s s u p e r i n t e n d e n t ’ s signature, plus double-verified count, are required on all shipping manifests for delivered supplies; • Recorded video camera overlooks all activities at the concierge desk and loading docks; • The master key drawer or key cabinet is monitored by recorded video camera; • E m p l o y e e s t a f f r o o m s , re s t a n d storage areas are inspected by

management for contraband (alcohol, porn, drugs) at irregular intervals; • P r o p e r t r a c k i n g s y s t e m f o r deployment and recover y of temporary parking-garage pass-cards; • Frequent inspection of concealed and hidden spaces throughout common areas for contraband or pilfered items; • R o b u s t s i g n - i n / o u t s y s t e m implemented for resident parcel deliveries and pick-ups; • Concierge log book and superintendent log book are reviewed in detail by the

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property manager at least three times weekly, together with relevant building video recordings; • Directors inspect contractor work on the premises and verify that the manager is providing supervision of all required performance details. Financial controls defend against fraud and corruption Operational controls in a condominium corporation are obviously important, but internal financial controls are even more

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Management

Any attempt by a property manager to avert accountability or avoid specific answers to pointed questions involving money is a huge red flag.

crucial. In a mid-to-large condominium building, millions of dollars flow through management hands each year— but how much of that spending is properly super vised with strong financial controls? And how many condominium corporations implement even the most basic financial controls? Following an examination of num e ro us ins t an c e s of fr au d , i t is shockingly apparent that in a majority of condominium corporations, the only fa c to r th at m ay p revent w h o l es al e fraud from o c cur ring is the morals and conscience of the manager who handles the invoices as well as the board officers who sign the cheques. And thus the true vulnerabilit y of all condominiums becomes apparent—one bad manager and/or one rogue director, in a business environment with weak or absent financial controls, can cause significant losses over time. Many types of condominium fraud or corruption can proliferate when internal controls are weak or absent: placing family members on corporation payroll at inflated salaries; pilfering supplies for p ersonal home use; filing false claims for personal expenses in petty c ash; fraudulent reimbursement for credit card charges; ordering tools and appliances for personal use; skimming c a s h f ro m h o l i d a y - s e a s o n g r a t u i t y donations to staf f; and manipulating the annual budget in order to conceal i m p r o p e r s p e n d i n g w i t h i n i n f l a te d budget sub-categories. Here are some examples of strong internal financial controls in condominiums: • All corporation cheques, regardless of amount, require detailed review of back-up documentation by a director, plus the signature of a board officer;

• A l l s i g n e d c h e q u e s a n d b a c k- u p documentation are then reviewed in detail by a second board member before get ting handed back to management; • Directors review and understand all components of the monthly financial statement package prepared by management and pay par ticular attention to the cheque register, bank account statements and all expense variances; • Employees are made accountable for all work time on the premises and the safe -keeping of their tools, equipment and supplies; • T h e c o d e of et hi c s fo r d ire c to r s specifies disclosure of conflicts of interest and strong s anc tions for breaches of ethical conduct; • A whistleblower policy is created to provide a safe channel for reporting suspected misconduct in the condominium workplace; • The condominium’s annual budget is based on true prior-year expenditures in all sub-categories and not calculated as an overall flat-rate increase. Rogue property managers know how to bypass internal controls Condominium property managers who are experienced and skilled in fraud deploy a predictable series of ruses and ploys to circumvent financial controls. Many use psychological manipulation to intimidate directors who may pose dif ficult questions, such as “W hy is this amount so high?” The manager t h e n re s p o n d s , “ D o n’ t w o r r y, i t ’s b e en a p p rove d by b a c k of fic e,” o r “What’s the problem? You chose this contractor at the last board meeting.” By deflecting the question the manager avoids what could other wise be an

40 CONDOBUSINESS | www.condobusiness.ca

uncomfortable explanation about what m a y b e a n i nf l a te d i nvo i c e . S o m e managers may even act in an openly defiant manner and declare such questioning to be a personal insult. Any attempt by a property manager to aver t accountabilit y or avoid specific answers to pointed questions involving money is a huge red flag regarding management’s handling of t h e c o r p o r a t i o n’s f i n a n c e s . B o a r d members need to have a very strongly tuned ‘sixth sense’ regarding how their manager behaves (including non-verbal sig n als) w hen q u esti o ne d in d et ail about corporation expenses. A nother evasive technique occurs when a manager enlists a weak-willed director as an unwitting accomplice — or in some cases, a fraudulentminded director who has equal h u n g e r a n d d e s i re fo r c o r p o r a t i o n c ash. A ny directors who eng age in such misconduct take major personal liability risk and they also expose the corporation to massive potential losses, b e c ause r arel y are su c h re c i p ro c al frauds truly balanced in covert benefit— fraudster managers will almost always b e p o s i t i o n e d to s te a l f a r g re a te r amounts than any corrupt director. Another common evasive technique is when a manager presents a stack of cheques at a board meeting (or late on a Friday afternoon) and claims they require immediate signing. Any attempt to place time pressure on directors is a major red flag for the presence of questionable issues buried within that stack of invoices and cheques. In such cases, a delay of several days is rec ommended so that the b o ard c an conduct a detailed examination of all accompanying documents and determine whether there are underlying


Management

reasons for the manager ’s seeming avoidance of scrutiny. Management back-office controls also may be absent or deficient Management back- of fice procedures normally should be a source of strong f i n a n c i a l c o n t ro l s — b u t s o m e t i m e s those controls may be totally absent, depending on the management c o m p a ny a b o a rd h a s h i re d . M o s t boards presume that management’s b a c k- of f i c e a c c o u ntin g d e p a r t m e nt operates as a check or control on the fro nt of fic e at their b uil d in g . T hey expect that any expense anomalies from the on - site management office should be reliably caught by a vigilant back-office bookkeeping team. Surprisingly, that’s not always the case — some management backoffice personnel seem to operate with blinders, robotically processing cheque requisitions that have major anomalies or no back-up and showing little regard for prudent business practices. CPL_Condo_March_2014_FINAL.pdf 1

Trust is not a control A s a g e n e r a l g u i d e l i n e , i t i s ve r y important to remember that trust is not a control in condominium corporations. Do not rely on trust of a manager or trust of a board to safeguard against financial risks. If a management company lacks the resources to suppor t proper internal control procedures, and instead relies on inherent trust of its employees or sub - contractors, a condominium may face a significantly higher risk of falling victim to opportunistic thefts and frauds committed by insiders. A nd likewise, if condominium directors blindly trust their manager, and fail to hold the manager accountable because “everyone wants to get along as friends,” these major risks can easily be exploited for improper financial gain. A balanced, respectful and diligent relationship b et ween direc tors and managers always places business dut y ahead of presumed friendship. A nd that ’s how one should always 14-03-13 1:37 PM best maintain perspective when

im p lementin g ef fe c ti ve o p er atio n al and financial controls in his or her condominium. 1

Judy Sue is a Certified Fraud Examiner (CFE) and Certified General Accountant (CGA) with extensive experience in c o n d o m i n i u m fra u d i nve sti g ati o n s , financial record-keeping forensics, as well as recovery of fraud losses for victimized clients. She is co -founder, president and chief audit officer of Eagle Audit Advantage Inc., based in Toronto. William Stratas specializes in performance audits of condominium corporations, fraud technical forensics, and fraud deterrence/controls programs for condominium corporations. He is an associate member of the Association of Certified Fraud Examiners, and is co -founder and managing director of Eagle Audit Advantage Inc. Judy and William can be reached at help@eagleaudit.ca or 416-599-1212.

March 2014 41


maintenance

Why some generators worked – and some didn’t – during Toronto’s ice storm BY GRANT FARROW

This past December’s ice storm

is an event t hat many people in southwestern Ontario are likely to remember for the rest of their lives. As a result of seemingly endless

freezing rain, power lines and trees succumbed to the onslaught of ice buildup and caused widespread power outages across Ontario when felled, leaving some areas without power for more than a week.

42 CONDOBUSINESS | www.condobusiness.ca


Ambient_Condo_October_2013_FINAL.pdf

1 13-10-17 12:15 maintenance technology

In the event of power outages, condominium managers are tasked with keeping all emergency evacuation equipment running and functional so as to keep residents safe. Diesel and natural gas generators are used to back up power for this equipment (emergency lighting, fire fighter elevators, etc.) in case a building evacuation is required. CSA 282.09 regulations require condominium managers to keep generators up to date on a strict annual maintenance schedule that addresses all aspects of generators’ functionality and ensures that the equipment will perform when utility power is lost. The ice storm of 2013 pushed back-up generators to the limit, underscoring the importance of generator maintenance programs. A large majorit y of the back- up generators in condominiums performed without a hitch. (This is especially notable considering the scope and duration of the weather event and associated power outages.) Of course, this means a small minority of the back-up generators in condominiums stopped working temporarily or failed altogether. What follows is a look back at what happened and what can be done to avoid these hitches in the future. Diesel fuel Many generators quickly ran out of diesel fuel. In some cases, this was unavoidable due to both the length of the power outage and the sudden spike in demand for diesel fuel. However, in other cases, generators ran out of diesel fuel shortly after power failed. Keeping diesel fuel topped up in generator storage tanks is an essential good practice. Check the generator fuel supply weekly; if fuel levels are approaching 50 per cent, call the condominium’s fuel provider for a top up. This can be the difference between keeping buildings safe during a power failure versus leaving residents in the dark. Advance arrangements with fuel companies can reduce delivery times in emergency situations such as the ice storm. D iesel fuel also d e g rad es over time and c an re duc e g e n e r a t o r p e r f o r m a n c e a n d r e l i a b i l i t y, s o h a v e a condominium’s fuel supply tested annually (required by CSA 282) to ensure its quality. If a condominium is purchasing a new generator, it may want to consider natural gas generators as an alternative to diesel fuel generators. Outstanding repairs Multiple generator failures occurred af ter generator technicians had performed routine maintenance checks and recommended repairs. In some cases, the recommendations were not imme d i atel y fo llowe d u p and the g enerator s failed. Though budgets are always tight, acting upon repair recommendations from a condominium’s generator service provider is important to preventing possible breakdown. Aging generators Even when they are well-maintained, older mechanical devices such as generators are subject to reduced reliabilit y and performance. If a building generator is more than 20 years old, it’s a good idea to have it evaluated by a professional. During the ice storm, many generators that failed were installed more

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maintenance

than 20 years ago. Budgeting and planning for a replacement can play an instrumental role in avoiding future failures. Monitor generators Many preventable generator failures occurred during the ice storm. Check the generator frequently (ideally hourly) for alarms (low oil, temperature, etc.) and other red flags. Acting quickly and contacting a condominium’s generator maintenance provider for advice or a service call may help ward off engine damage that leads to generator failure. D u ring the ice storm, there were unfortunate cases in which alarms on generators were activated but nobody was there to see or respond to them. In some cases, the engines ran out of oil or coolant and catastrophic engine failure occurred. Though they may be out of sight for periods of time, a running generator should never be out of mind during a power failure. In cases where frequent generator checks are not possible, condominium boards and managers may consider sourcing equipment that enables

• • • • •

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• • • • •

During the ice storm, there were unfortunate cases in which alarms on generators were activated but nobody was there to see or respond to them.

the remote monitoring of a generator’s status and alarms. H o p ef u l l y, i t w i l l b e a l o n g t i m e before Ontario sees another ice storm like the one encountered last D e c e m b e r. B u t t h e re a l i t y i s , w i t h To ro nto’s a g i n g e l e c t r i c a l g r i d a n d extreme weather events on the rise, condominium managers are likely to

c ontinue to fac e p ower out ag es in the coming years. Keeping generators properly maintained will ensure better reliability when critical back-up power is needed. 1 Grant Farrow is Service Sales Manager for Total Power Ltd. in Mississauga, Ontario. He can be reached at grant@totalpower.ca.

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Maintenance

Passing the sniff test Alongside the pleasant scent of daffodils outdoors, the unpleasant

By Steve Hudson

smell of odours found indoors can rise with temperatures in the spring. Condominium managers who work in high-rise buildings are likely

familiar with the smells associated with stepping off the elevator into a corridor at dinner hour. Grease and cooking oils create particularly pungent odours. Other odour problems common to apartment-style complexes include pet urine and tobacco smoke.

46 CONDOBUSINESS | www.condobusiness.ca


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Spring is a great time to star t an odour control Maintenance Planning G ui d e, w hi c h is g e ne r all y l ai d o u t in a calendar or spreadsheet. A condominium manager may want to include an annual inspection of the HVAC system as par t of their odour control program, as well as a “sniff test” of all baseboards, outlets, corridors and other potential odour pockets. Recognizing an odour is only a first step; odour must be understood before it can be controlled. The permanent removal of odour is complicated. One product or system will not necessarily resolve ever y odour problem a c o n d o minium m an a g er en c o unter s . Some strategies a condominium manager may implement themselves to prevent, detect and remove odour. Equally important is knowing when to call in professionals. The biggest mistake in odour removal is the failure to locate the source of the odour. The intensity and source of the odour problem will influence its treatment. Everyday odours For pesky odours such as those caused from everyday living, property managers c an cho ose from a w ide range of deodorants that are available for purchase from odour solutions distributers. While deodorants are convenient, they tend only to “mask” or “disguise” odours and are temporary solutions. In the odour removal industry, the term “masking” means a method of disguising malodour with oils, gels or solid materials impregnated with stronger, more pleasant fragrances. Often these deodorant substances are readily available to condominium managers in the for m of freshener “discs” and sprays. They are generally ideal for washrooms, por t- a - pot ties, garbage rooms and chute rooms. Depending on the room size and air flow, these discs and sprays can last from three to six weeks. Tobacco smoke Most new apartment walls and ceilings are m a d e fro m d r y wall. D r y wall is generally quite porous and acts as an adsor bent (the abilit y of a material to h o l d o d o u r s). T h e m o re p o ro u s a s u b s t a n c e i s , t h e m o re l i ke l y i t

March 2014 48 48 CONDOBUSINESS | www.condobusiness.ca

is to adsorb odours. If an adsorption substance has been exposed to odourbearing particles (e.g. tobacco smoke), or if it has a contaminated stream of air running over or through it, it will adsorb those odours. To b a c c o o d o u r s a r e c o m m o n i n a p a r t m e nt - s t y l e l i v i n g . A s to b a c c o products burn, they produce stick y, odourous residues that visibly discolour surfaces such as walls and ceilings. As environmental tobacco smoke (E T S) residues rise and accumulate on both ve r t i c a l a n d h o r izo nt a l su r f a c e s , i t makes it increasingly difficult to manage with simple cleaning processes. T hermal fogging devices, odour counteractants, ozone, hydrox yls and time - release systems are processes often employed by the odour professionals for complete tobacco related o dour removal. G enerall y, a condominium manager will want to call in an odour professional in cases of long-term tobacco exposure. In severe cases, ETS can even get drawn into the HVAC system. Pet urine Carpet padding that has been saturated with cat urine is a good example of a primary odour source. Carpet that covers urinesaturated carpet padding is an example of a treatment barrier. Carpet padding acts as an odour sponge, absorbing and holding odour from liquids such as pet urine. An exception to this rule are newer brands of padding that offer a protective, plastic layer. Normally, however, the padding itself cannot be treated. If it is heavily saturated, it must be replaced. In severe u r i n e c o n t a m i n a t i o n , a variety of techniques may be employed, i n c l u d i n g d i s c a r d i n g c a r p e t u n d e rp a d d ing , using c ountera c t ant s, and cleaning and sealing sur faces with a non-porous sealing compound. Mould and mildew Mould and mil d ew p resent ser ious problems, especially in community living. Mould is a health risk and an indication that excess moisture is present. Problems with mould can arise from plumbing, septic sewage breaks, neglected roofs, as well as improperly ventilated bathrooms and laundr y rooms. Mould can occur


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Stubborn cases Elevato r s are other are as c o mm o nl y af fected by odours. Sweat, skin oils, dog and cat dander and even perfumes and colognes will permeate fabrics and carpet. The repetitive deposit of these types of odours can result in a build-up that standard cleaning will not eliminate. In some cases, the odour is embedded, rendering surface cleaning ineffective. Bio - decontamination of odours and outbreak control of pathogens are a growing challenge in communit y env iro nm ent s . A n a d van c e d fo r m of t e c h n o l o g y c a l l e d “p h o t o c a t a l y t i c oxidation� (PCO) is now being used in condominiums, hospitals, schools and office buildings to treat stubborn cases of airborne and surface contaminants. Some of these contaminants include Methicillin Resistant Staphylococcus Aureus (MRSA), Vancomycin-resistant enterococci ( VRE) and Clostrium difficile (C.diff). This unique technology creates a hydroxyl radical plasma gas which produces and exports ver y high levels of vapourized hydrogen peroxide and purified ozone out into treatment areas for effective surface decontamination, without posing environmental hazards. As long as odours are not re - introduced this technology eradicates odours of all types. By following a planning guide that includes spring maintenance, property managers can play a proactive role in preventing and responding to more serious odour cases that require special attention. 1

Steve Hudson, BA, MAATO, CAHP is the President of Hudson Restoration Inc., a group of property loss and environmental professionals based in Burlington, Ontario. The company services the insurance industry and the private sector across the GTA, and is the official service provider of BioSweep Toronto.

50 CONDOBUSINESS | www.condobusiness.ca SPG_Condo_March_2014.indd 1

14-03-07 10:06 AM


Building Lasting Change 2014 Exploring the Value of Green Building

Toronto, June 2-4 at the Metro Toronto Convention Centre

Attention Real Estate Professionals! Connect with the green building community at Canada’s largest green building conference and expo. A program that promises to inspire... This year’s program will address new information on the business case and performance of green buildings, but also embrace the broader value proposition of building green. Going beyond the operational savings, the focus will be on emerging benefits that are now becoming better understood such as: • Enhanced health and well-being; • Tenant attraction and retention; and • Innovation and job growth with linkages to enhancing corporate social responsibility, shareholder value, environmental quality, livability and international trade.

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Early bird rates in effect until April 15.

For information contact Sarah Burns sburns@cagbc.org.

Promote your company and its commitment to green building at Canada’s premier green building conference and exhibition.

Don’t miss out on this once-a-year opportunity to connect with your industry and learn about the most current trends and ideas in Canadian green building and sustainability.

www.cagbc.org/2014conference

Nowhere else in Canada can you reach a green building industry audience of this calibre. Leverage this unique exposure to reach your own sustainability goals.

For more information please contact customer service by email at info@cagbc.org or by phone 866-941-1184.


regulations

Anticipating accessibility changes The many changes introduced in

By LYNN MCGREGOR

Ontario’s new Accessibility Act are already in effect. The province is now making all of the necessary ‘built environment’ changes relating to the Accessibility Act through an addendum to the Ontario Building Code. Many users of space are quite anxious to understand what these changes will mean for their office and residential buildings.

T hese new O nt ar i o Buil d in g C o d e standards will need to be met in new projects, from Jan. 1, 2015, onwards. The province is not asking existing building owners to implement these changes – unless they are renovating their space, at which time they will need to integrate them. Herewith is a summary of only a few of the changes: 1. Ever y door way that is located in a barrier-free path of travel will need to have a clear open width of 3 4 inches. This means doors will be approximately 38 inches wide, depending on the hardware depth. And as doors will require the standard 24-inch access space on the hardware side of the door, this may well have an impact on corridor widths. 2. Power door operators will be required at the entrance doors and entr y vestibules of most buildings, as well as on all barrier-free washrooms. These controls must be operable with a closed fist, not simply one hand. 3. Tactile texture strips will be required as a way of warning anyone who is visually impaired of a change in the floor, be it a cut-out or a level change. These warning strips are to be placed in advance of the level change, not just on the edge of the level change.

4. Wherever possible, space will need to be designed to allow all people to access all areas. Even small areas such as hoteling workstations will need to be set up with the assumption that someone using an assistive device has the right to use the workstation with the same independence and dignity with which others use it. 5. Currently mandated handicapped stalls in public washrooms are often unable to accommodate larger assistive devices and personal assistants who are required to be in the stall with handicapped individuals. These stalls will need to increase in size to allow for a clear turning radius of 1,500 millimetres and specific “transfer space” of at least 900 millimetres by 1,500 millimetres. 6. When an individual’s personal assistant is not of the same sex as he or she is, they are not able to use the handicapped facility in the washrooms provided for a dedicated sex. To address this, the new standards will require a minimum of one private bathroom per floor or, in multistorey buildings, one private bathroom for every three floors. These private washrooms are not meant to replace the need for handicapped stalls in public washrooms; choice should be provided. 7. The percentage of condo units in every building that need to be designed to be

completely barrier free will increase from 10 to 15 per cent. This is far lower than what was suggested by stakeholder groups, but the province decided to take a gradual approach to the conversion. It is anticipated that in the next, 2016 Ontario Building Code, the percentage will most likely increase again. 8. The changes include new provisions for the hearing impaired. All smoke alarms will be required to have an audio and visual component. 9. Barrier-free drinking fountains in corridors and barrier-free urinals in men’s washrooms will become a requirement. 10. L astly, all mounting heights and c o nf i g u r a t i o n of g r a b b a r s a n d ac cessories in washro oms have been amended to be more effective for more people. For example, the diagonal grab bars beside water closets will be replaced with L-shaped configurations, as they have proven to provide better support. It’s important to note that these changes often result in more square footage being needed. But if clever planning and design is used, often these new code standards can be accommodated in very little extra space, by simply using space differently. 1

Lynn McGregor is a past president of ARIDO (the Association of Registered Interior Designers of Ontario), co-chair of its legislative review committee and the elected representative of the province’s Registered Interior Designers on Ontario’s Building Advisory Council. She has practiced in the area of corporate architectural interior design for more than 34 years, and is the owner of the McGregor Design Group, headquartered in Toronto (www.mcgregordesigngroup.com).

52 CONDOBUSINESS | www.condobusiness.ca


STUDENT HOUSING: MAY 6

NEW APARTMENT CONSTRUCTION: MAY 7

Join us at the 3rd annual Canadian Apartment Symposium Series REGISTER Experience unparalleled education by industry-recognized keynote speakers, moderators and panellists while networking with your colleagues at a series of networking events.

WHO WILL ATTEND:

WHO WILL ATTEND:

• • • • • • • •

• • • • • • • • •

BUSINESS CATEGORIES

Apartment Developers and Managers Condominium Developers and Managers Investors, Financiers and Appraisers Home Builders Architects, Engineers and Contractors Property and Facility Managers City Municipal Officials University & College Executives

JOB TITLES

CEO/President CIO COO Directors Founders Principals General Managers Vice Presidents Executive Directors

www.CanadianApartmentSymposiumSeries.com EXHIBITING & SPONSORSHIP: Paul Murphy P: 866-216-0860 ext. 264 E: paulm@mediaedge.ca

REGISTRATION & GROUP INQUIRIES: Carmen Bowe P: 800-898-0347 ext. 14 E: cbowe@rockadvisors.ca

May 6 & 7

The Sony Centre | Toronto, ON


SMART IDEAS

Love at first site

By Meaghan Ketcheson

The exterior of a condo, and the property it sits on, contributes to the first impressions of visitors and prospective residents. Popular site furniture, such as benches, may be perceived as nice to have, but it can be more than nice to have when used strategically. Herewith, a look at how site furniture can play a role in keeping properties clean and attractive. Placing waste and recycling receptacles in multiple locations around the property, including areas such as the parking garage and designated smoking zones, makes proper waste disposal an easy choice for residents and visitors. Cigarette butts are a pain to clean up and create a fire hazard when people dispose of them in a regular garbage can. Having a few ash receptacles strategically located on a property can promote proper ash and cigarette disposal, as well as encourage residents and visitors to smoke in designated zones. Dog waste receptacles that have enclosed bins with small doors will keep the sun out and the odours from escaping. Models with bag dispensers ensure residents and visitors who find themselves without a bag don’t have an excuse not to pick up after their pet. Urban condos don’t always have room for large gardens. Floral planters provide a smaller scale alternative. Modern designs can be matched to newer buildings, and traditional designs to older buildings. If a property has a large shared space, whether it’s a courtyard, barbecue area or rooftop patio, site furniture, such as benches and picnic tables, can make it much more usable. Look for durable and lowmaintenance options. Having a small space for bike racks near the entrance of a condo provides secure parking to visitors who don’t have access to the parking garage and residents who may be making a quick stop at home.

54 CONDOBUSINESS | www.condobusiness.ca

Meaghan Ketcheson is the Social Media and Marketing Coordinator at Classic Displays, a Mississauga-based company that produces enhancement products for towns and cities as well as commercial, retail and residential properties.


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CONDO March 2014