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Canada’s Most Widely Read Condominium Magazine

USE THE ACT TO BAN SHORT-TERM RENTALS IN RESIDENTIAL CONDO CORPORATIONS.

BILL 106

November 2015 • Vol. 30 #8

PROXIES SHOULD BE SUBMITTED BY DONORS DIRECTLY TO THE MANAGEMENT OFFICE.

IN REVIEW

Inside the public hearings on the proposed Protecting Condominium Owners Act

CONDOMINIUM CORPORATIONS SHOULD RETAIN THE RIGHT TO PASS A BYLAW WHICH PASSES STRICT LIABILITY DAMAGE ON TO THE UNIT OWNER.

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Contents FOCUS ON: DISASTER MANAGEMENT

14

Case study: When it rains, it pours By Kim Coulter

DEPARTMENTS

33

Governance Building a case for reallocating shared utility costs By Per Polderman

36

Lawyering up By Shlomo Sharon

40

Legal To indemnify or not to indemnify By Rod Escayola

44

Dangerous defects and professional liability By Megan Mackey

48

Communication Advertise your AGM By Sue Langlois

52

Maintenance The power of inspection analytics By Paul Amendola

54

Technology Save the date By Nicholas Gill

56

Development Noise control By Jeff Cowx

58

Regulations 72 hours By James Kennedy

FEATURES

12

B.C. offers flexibility for redevelopment By Erin Ruddy

20

How the CMSA would work By William Stratas

24

Public hearings By Michelle Ervin

IN EVERY ISSUE

10 62

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EDITOR'S LETTER /condomediaedge /condobusiness

Associate Publisher Mitchell Saltzman

/condomediaedge

Editor Michelle Ervin

Bill 106 in review

Advertising Sales Sean Foley, Stephanie Philbin, Rory McEntee Senior Designer Annette Carlucci Designer Jennifer Carter

In a province that is home to an

estimated 1.3 million condominium owners, the fact that only roughly 30 individuals spoke at the public hearings on Ontario’s proposed Bill 106 may be a testament to the success of the upfront consultation that went into drafting the Protecting Condominium Owners Act. For the uninitiated, here’s the Coles Notes version of the 18-month, three-stage review led by the non-profit Public Policy Forum: 1. Wide consultations illuminated five key areas for reform: consumer protection, dispute resolution, governance, finances and condominium management; 2. Working groups studied each of the five key areas for reform, which culminated in an expert panel report containing more than 200 recommendations; 3. Public Policy Forum brought the recommendations back to the public to solicit feedback. Through the course of the review, the government received more than 2,200 submissions. So, what could possibly be left to say about the proposed changes to the Condominium Act after all that? A lot, as it turns out. Many of the speakers were actively involved in the review, too. The joint legislative committee of the Association of Condominium Managers of Ontario (ACMO) and the Canadian Condominium Institute-Toronto (CCI-T) prepared a brief identifying 28 issues it believed could have unintended consequences. The issues ranged from as minor as a missing comma to as major as a provision that appears to hinder management’s ability to immediately enter a unit to mitigate damage in an emergency such as flooding. (Speaking of emergencies such as flooding, for this, CondoBusiness’ annual disaster management issue, we bring you disaster preparedness tips and a case study on a leaking roof.) This month’s cover story attempts to capture some of the commentary heard by members of the standing committee on finance and economic affairs before doing their in-depth analysis of Bill 106 and considering amendments. The provincial legislature may well have passed the Protecting Condominium Owners Act by the time this issue hits the streets, but this story is far from over. Much of the meat of Bill 106 is left to the regulations, which will take a year yet to write. And until the act is proclaimed into law, which will occur after the regs are written, the current Condominium Act (1998) remains in force. Michelle Ervin Editor, CondoBusiness WB_toronto Ad banner september michellee@mediaedge.ca

Production Manager Rachel Selbie Production Coordinator Karlee Roy Contributing Writers Paul Amendola, Erin Ruddy, Kim Coulter, Jeff Cowx, Rod Escayola, Nicholas Gill, Nancy Houle, James Kennedy, Sue Langlois, Megan Mackey, Per Polderman, William Stratas Digital Media Director Steven Chester Subscription Rates Canada: 1 year, $60*; 2 years, $110* Single Copy Sales: Canada: $10*. Elsewhere: $12 USA: $85 International: $110 *Plus applicable taxes Reprints: Requests for permission to reprint any portion of this magazine should be sent to info@mediaedge.ca. Circulation Department Maria Siassina circulation@mediaedge.ca (416) 512-8186 ext. 234 CONDOBUSINESS is published eight times a year by

President Kevin Brown Accounting Manager Samhar Razzak Group Publisher Melissa Valentini 5255 Yonge Street, Suite 1000, Toronto, ON M2N 6P4 (416) 512-8186 Fax: (416) 512-8344 e-mail: info@mediaedge.ca CONDOBUSINESS welcomes letters but accepts no responsibility for unsolicited manuscripts or photographs. Canadian Publications Mail Product Sales Agreement No. 40063056 ISSN 0849-6714

2015 OUTLINES CROPs.pdf

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All contents copyright MediaEdge Communications Inc. Printed in Canada on recycled paper.


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Organized chaos That climate change is causing more frequent extreme weather is well-recognized. Any naysayers need

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look to Insurance Bureau of Canada stats showing that insured damages from natural catastrophes have increased from negligible levels before 2009 to $1 billion a year. The job now is to figure out how best businesses, cities and homeowners can improve the resiliency of their properties. We asked disaster restoration experts: What is one tip you would give condo managers, based on your experience responding to the rising number of catastrophes caused by extreme weather events?

Don’t overlook location-based risks Know your risks; based on your location, you may be far more susceptible to specific types of losses. Flood maps and historical rainfall records can be strong indicators and are often overlooked. Engage a restoration partner to assist in this audit and prepare a response plan to minimize damages and downtime. During times of widespread catastrophic damage, having to deal with an unknown restoration partner can lead to an even larger catastrophe. Jim Mandeville, senior project manager, FirstOnSite Restoration L.P. – Large Loss North America

10 CONDOBUSINESS | www.condobusiness.ca


ASK THE EXPERT

Have experienced help on-call 24/7 Ensure the building has an experienced disaster restoration vendor available seven days a week, 24 hours a day. When a catastrophe hits, there is no time to waste. Look for a professional who specializes in disaster claims, and particularly water damages, to facilitate smooth and cost- ef ficient claim management. Having a specialist on call when emergencies strike will save time and money — not to mention, significantly reduce stress. MJW_halfPage_island_V2_BLEEDS.pdf

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Randall Linton, general manager, Interior Care

Equip 24-hour staff to respond immediately A building’s 24-hour staff need to have the phone number of a reliable emergency services contractor. The cost of dealing with, for example, a water escape of any size is directly proportional to the time taken to fix the source and begin the drying process. To be clear: Do not wait until morning. Do what is necessary to C stop the flow of water, then call an emergency M services contractor immediately. Y

Robert A. Nash, president, RespondPlus CM Disaster Restoration MY

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November 2015 11


FEATURE

B.C. offers flexibility for redevelopment A proposed a mend ment to B r it i s h C o l u m b i a’s S t r a t a Proper t y Act cou ld make it easier

BY ERIN RUDDY

for apar tment developers to scoop up prime real estate in B.C.’s hottest neighbourhoods. While current legislation calls for condominium owners’ unanimous

consent to dissolve a corporation, the new bill would lower that threshold to 80 per cent in a change that could take effect as early as the end of 2015. “This change to the Strata Property Act would make it easier for strata owners to sell off the entire building,” says Casey Weeks, vice president, investment, at Colliers in Vancouver. “We believe this will free up some prime redevelopment opportunities and allow for newer, better building construction.” Given that Vancouver’s first condominiums were constructed in the 1960s, unit owners are now facing tough decisions as their buildings age and depreciate. From the expense of unit repairs to the cost of upgrading common areas and amenities, often the financial investment isn’t worth the payoff as owners likely won’t recover those costs from the expected increase in value. “Many of the existing developments are three- and four-storey wood frame walk-ups located in prime traffic areas and near light rapid transit stations,” says Pat Williams, partner, Clark Wilson LLP. “These developments are strata corporations that can only be replaced if they are cancelled, or ef fectively destroyed. The change in legislation would allow developers to canvass existing complexes and enter into negotiations.” Williams says having the option to cancel the strata corporation by selling the building may be the best course of action for those facing costly repairs. “The option will likely result in a higher price being paid because the value is in the footprint that can accommodate a 20-storey building, rather than the existing three-storey building,” he says. Condo vs. purpose-built rental Even if changes to the Strata Property

Act do result in more opportunities for redevelopment, history indicates that the competition may favour condominiums over apartments. “In the City of Vancouver, all things b eing equal, condos will generall y outperform purpose -built rental,” says Weeks. “That said, given the success of their purpose-built rental incentives, we believe the City of Vancouver will continue to encourage the development of purpose - built rental through their rezoning policies.” W e e k s n o t e s t h a t , h i s t o r i c a l l y, the p rofit m arg in fo r c o n d o minium development has typically superseded the capitalized value of income created by purpose-built rental properties. “This has changed in recent years as the City has created incentives for purposebuilt rental buildings through their rezoning policies,” he says. “For instance, in the west end and in East Vancouver, the City will relax its parking stall ratios and provide additional density, to encourage development of purpose-built rental. These incentives combined with rising rents, a low interest rate environment, and an aging building stock are stimulating a boom in purpose-built rental properties in Vancouver.” Opposing the move Noting two recent high profile cases in North Vancouver in which buildings were developed before the current strata legislation (1966), Williams anticipates some opposition to the 80 per cent threshold. “Even if a unit-holder is getting a substantial

12 CONDOBUSINESS | www.condobusiness.ca

increase due to the value being in the footprint,” he says, “once the complex is sold the unit-holder must move out.” In both cases cited, Williams says a percentage of unit-holders did not want to move from their existing buildings due to ties to friends, family and children attending district schools. Many believed that if their corporations were dissolved and sold, they would no longer be able to afford to live in North Vancouver despite a substantial return on existing value. “Although the vote threshold will be reduced from 100 per cent to 80 per cent with the new legislation, the cancellation must be approved by the court,” he says. “Though a potential developer/buyer must persuade a court that their offer is the best one the owners will receive, we know that there will be individuals who will attempt to persuade the court that they are being unfairly prejudiced by having to move. Each situation will be decided based upon its own particular circumstances.” As per Williams comment, the proposed amendments will require the strata to obtain an order from the Supreme Court of British Columbia confirming the owners’ resolution. In deciding whether to make such an order, the court will be required to consider, among other things, the best interests of the owners and the probability and extent of significant unfairness to one or more owners or holders of registered charges. 1 Erin Ruddy is the editor of Canadian Apartment Magazine. The preceding article originally appeared on the REMI Network.


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DISASTER MANAGEMENT

CASE STUDY:

When it rains, it pours

Condominium managers and boards can diligently prepare for

BY KIM COULTER

emergencies — be they a burst pipe, sewer backup or power failure, to name a few — but catastrophic failures can stretch even the best of

plans to the limit.

T hese t ypes of disasters can af fect the life safet y of building occupants and usually the livability of the units on a large scale. In some situations, the cause and/or full extent of the failure are not immediately known. The role of the corporation’s engineer i s o f te n ke y, e s p e c i a l l y w h e n t h e c ause of the failure is unknow n or complic ated by ex tenuating factors. C o n d o minium c o r p o r ati o ns ten d to

rely on the engineer who is familiar with their building, often from doing their reser ve fund studies or other building rehabilitation services. Having immediate access to resources familiar with the building c an be critic al to reaching a timely resolution. Where there is an insurable loss, condominiums t ypically have the oppor tunit y to assign their preferred consultant to the file, as long as the

14 CONDOBUSINESS | www.condobusiness.ca

fees are at industry levels (i.e. hourly rates are commensurate to what insurers will pay). However, boards or property managers should confirm this with their insurer before engaging for engineering services. T his b enefit s the c or p orations if, after the insurer determines fault, the insuranc e c overag e for engineering ser vices ends. It means the same consultant can continue (if need be),


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albeit at the corporation’s expense. This way there is no discontinuity with the engineering ser vices from when the cause of the failure is determined through to its correction. The following case study highlights the merits of having the corporation’s engineer involved wherever possible, along with the procedures that led to a successful outcome.

Flooding A high-rise condominium corporation wanted to fix an ongoing water leak from the main roof, so the corporation hired a general contractor to replace the waterproof membrane flashings along the roof’s perimeter. The corporation left it solely to the contractor to determine the best repair method and materials to use, and the contractor completed the work without incident.

The mandate for the engineers was to: • Identify the cause of the leak quickly; • Arrange for a roofing contractor to perform temporary repairs; • Conduct detailed investigations and prepare a report for the condominium corporation’s insurance company; • Prepare the design drawings and specifications for the required work; • Obtain bids for the work; and • Administer the contract during the rehabilitation.

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However, just days after the contractor completed the work, a major rainstorm swept the GTA, and within two hours of the storm, penthouse-level residents started calling management to report flooding in their units. Management rolled out its emergency response plan, first c o nt a c t i n g t h e c o nt r a c to r t h a t d i d the roof repairs, as well as a flood restoration contractor, to at tend the site over the weekend. It soon became clear that the problem was not isolated, a n d b y M o n d a y, m a n a g e m e nt h a d brought in engineers familiar with the building.

Forensic report The losses were adding up quickly, ultimately totalling several hundreds of thousands of dollars, so it was critical to gain a clear understanding of why the leak occurred. It’s common for a property owner to replace leaking roofing flashings, but the engineers had questions about the method of installation and material used. At the same time, it was important to determine whether other factors contributed to the leak. After consulting with the manufacturer of the flashing material that was installed, the engineers established that it was inappropriate for the application. The engineers then inspected the material as installed and determined that it had failed to adhere to the adjacent surfaces. Finally, the engineers inspected of the remainder of the roof and perimeter walls to rule out any other factors that could have contributed to the flood. Since the firm had done the corporation’s reserve fund studies for the past several years, it had a solid understanding of the history of the common elements.

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DISASTER MANAGEMENT

A ssigning responsibilit y was an i m p o r t a n t p a r t o f t h e e n g i n e e r ’s assignment; so was quickly correcting the construction error. Some residents were relocated due to the water leak. Some damaged units had been sold and were about to be occupied by new owners. Temporary repairs were made, but they may not have been able to withstand another major rainstorm.

Rehabilitation Since time was of the essence, as the engineers conducted forensic reviews, they also identified roofing contractors that could bid on and immediately undertake the rehabilitation upon project award. It was of no benefit to have a company bid and be awarded the contract, then have the corporation wait weeks for the work to commence. The corporation likely paid a premium for this, but it didn’t have a choice. Under these

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circumstances, a corporation should consider project incentives to complete the work early and penalties for late completion or crew no-shows. The engineers fast-tracked the repair design/specifications and conducted a pre - bid meeting with the eligible contractors. The board awarded the contract and the project proceeded with regular work-in-progress reviews. Throughout the process, including the restoring of the units and common areas, the board, property manager, insurer, engineer and contractors communicated constantly. Keeping the unit owners informed was particularly important. The contractor and engineers successfully completed the work, with no leaks since. The contractor’s insurer retained its own engineers in the weeks after the flood. None of those engineers successfully challenged to the conclusions of the corporation’s engineers. One of the key lessons from this case study is that engineers who are familiar with a particular building are often bestpositioned to investigate the cause of emergencies such as flooding. Other lessons learned include that it’s critical to have in place an after-hours emergency response program guided by the property manager, and to have contractors who are immediately available bid on a rehabilitation project as soon as possible. A final lesson is to consider incentives to ensure the timely completion of what is typically disruptive work. 1

Kim Coulter is president of Cion|Coulter, Engineers & Building Scientists. He has more than 37 years of experience in the assessment and problem correction of multiunit residential, institutional, commercial and recreational properties.

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FEATURE

How the CMSA would work Following almost three years of BY WILLIAM STRATAS intense consultations with condo industry stakeholders and the public, the Onta rio

government in May introduced proposed reforms to the Condominium Act . After reviewing the proposed amendments to the

Act, many industry insiders expressed a high degree of positive acceptance of the contemplated changes as is.

20 CONDOBUSINESS | www.condobusiness.ca


FEATURE

By contrast, the proposed Condominium Management Services Act (CMSA), a new law introduced in the same legislative package, has earned only muted reaction from condo industry stakeholders. It’s little wonder that the industry is unsure how to react because the impact of the CMSA will be profound, both for condo management providers and for condo corporations. It’s clear that Ontario government officials have anchored the new CMSA solidly on principles of consumer protection. During their consultations, officials in the Ministry of Government and Consumer Services heard a litany of complaints from condo owners and directors about apparent misconduct, fraud and corruption c ommit te d by c ond o m an a g ement providers and rogue managers. These issues had also remained top of mind for several years following the notorious Channel Management frauds in 2009 as well as other recent misconduct incidents. In response, ministry officials sought input from various industry insiders with special knowledge, some of whom provided recommendations for effective anti-fraud measures. It’s clear that ministry officials were listening closely, as most of these recommended measures have been introduced as licensee regulations (sections 49 to 55) and enforcement provisions (sections 58 to 63) in the proposed CMSA. T he ministr y recognized that it’s impractical to impose a condo-cop-styled regime on the management industry, so the primary purpose of the proposed enforcement provisions is deterrence. Then, where necessar y, those same provisions offer real teeth to investigate alleged misconduct and protect condo corporations and their owners against fraud and financial corruption. Rather than discussing the proposed enforcement provisions in detail, the following hypothetical scenario will give a sense of the scope and effect of enforcement measures in the proposed new CMSA.

Hypothetical scenario under proposed CMSA A condo owner files a complaint with the Ontario C ondominium Authorit y about a licensed condo manager who is allegedly denying access to corporation expense records under section 55 of the Condominium Act. The authority’s files show that this management company has been the target of s e v e r a l c o m p l a i n t s a b o u t b l o c ke d records requests in various buildings, usually accompanied by legal letters a g a i n s t t h e o w n e r s . T h e s e re p e a t complaints raise red flags regarding the management company’s business practices. As a consequence, officials refer the m at ter to the au tho r it y ’s inspection division for fur ther examination. T he authorit y decides to make an unannounced visit to the management c o m p a ny ’s h e a d o f f i c e to i n s p e c t the site, pursuant to section 59(1) of CMSA. Without warrant or court order, the inspectors demand access to all paper and electronic records relating to the condos subject to complaints of blocked access to records [CMSA s. 5 9 ( 3 )] , plus all emails exchanged between head office supervisors and their site managers. In the course of inspecting these back- office files, inspectors uncover internal memos that suggest improper tampering of monthly financial reports. The improper tampering is apparently aimed at keeping client boards in the dark about condo funds that appear to have been temporarily diverted to the management company’s accounts to cover cash-flow shortfalls. The inspectors seize all of management’s computers and backup systems for forensic imaging and further examination [CMSA s.59(3) (d),(e)]. Inspectors also interview a pair of back-office clerks who solely handle data entry for the accounting system and who produce the monthly reports for November 2015 21


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their client boards [CMSA s.59(3)(b)]. These clerks provide oral statements that implicate senior management in the alleged cash diversion scheme. Inspectors discover a substantial amount of cash in a desk drawer in the CEO’s office, together with handwritten notes that appear to track disbursements of kickback payments to contractors. The cash is seized [CMSA s.59(3)(a)], along with all the management company’s files and records. A detailed inspection of the seized documents is conducted on the premises, with specific evidence taken offsite for further examination. Based on considerable evidence already collected, inspectors apply for a warrant [CMSA s.61] to gain access to two years of banking records of the management company, its CEO and three contractors whose names were discovered in the handwritten notes. The court-approved warrants are served to the banks and those records are delivered to the authority for detailed examination. The bank records prove that withdrawals from various client condos were deposited to the management company ’s account. T hey also indic ate that large c ash withdrawals were timed in a manner that appears consistent with the dates on the handwritten notes seized from the CEO’s desk. The authority then refers to previous mandatory filings of the management company’s audited annual financial statements [CMSA s.50(1)] and determines that corporate cash flow may indeed have been augmented by funds from client condos. Based on the evidence collected, and pursuant to section 64 of the CMSA, the authority orders a freeze on all the management company’s financial assets and bank accounts, plus those of its client condo corporations. Several days later, the authority recommends filing criminal charges against the management company and its directors, and suspends its operating license, as well as the license of the principal condominium manager and several of the company’s implicated site managers and regional supervising managers [CMSA s.43(1)]. Since the management company’s CEO had been designated as the principal condominium manager, he or she faces ultimate responsibility and consequences for the alleged criminal and civil misconduct [CMSA s.49(1),(4)]. Finally, upon conviction under the CMSA , the authority files a request with the court to obtain compensation from the management company’s frozen assets for the victimized condo corporations [CMSA s.68(1)], whose losses the authority documented and verified in subsequent investigative work. This hypothetical scenario illustrates the potential for the CMSA to, if and when it’s passed into law, provide a strong deterrent effect, with real force to protect consumer interests in situations where financial misconduct or corruption is suspected. With the broader legislative package at committee stage, where lawmakers consider amending bills before sending them back to the legislature for a final vote, it is critical for consumer protection that the proposed CMSA be adopted as is — and not watered down. 1 William Stratas is a condominium fraud examiner and managing director of Eagle Audit Advantage Inc.


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COVER STORY

OUR PURPOSE … IS TO ASSIST GOVERNMENT IN SEEING HOW THOSE WHO WORK WITH THIS LEGISLATION AND INTERPRET IT IN THEIR DAILY WORKPLACE AND COMMUNITIES WILL BE AFFECTED BY ITS CONTENTS AND IN PREVENTING UNINTENDED CONSEQUENCES THAT COULD, AND WILL, ARISE IF BILL 106 IS PASSED IN ITS CURRENT FORM. -Dean McCabe, past president of the Association of Condominium Managers of Ontario

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COVER STORY

THE PROPOSED CONDOMINIUM MANAGEMENT SERVICES ACT, PART OF BILL 106, IS ARGUABLY THE LARGEST AND THE MOST IMPORTANT DEVELOPMENT IN CONDOMINIUM LAW SINCE OUR FIRST CONDO ACT IN 1967, SO I STRONGLY SUPPORT THAT FEATURE OF BILL 106. -Chris Jaglowitz, partner, Gardiner Miller Arnold, and member of the Condominium Act review’s expert panel

UBLIC ARINGS

Emotional pleas and sharp BY MICHELLE ERVIN criticisms occasionally pierced through positive feedback and suggested amendments at public hearings on Ontario’s proposed Bill 106, the Protecting Condominium Owners Act.

November 2015 25


COVER STORY

On procurement

I WOULD If passed into law, the bill would overhaul the Condominium Act, establish the Condominium Management Services Act and amend other legislation including the New Home Warranties Plan Act. Its defining features include an alternative dispute resolution process, beefed-up consumer protection measures, stricter financial management rules, training requirements for condo directors and licensing for condo managers. T h e d r a f t l e g i s l a t i o n fo l l ow s a n 18 - month, three - stage Condominium Act review. Stage one involved public consultations, which resulted in the identification of five key areas for reform. Stage two saw a 12-person expert panel make more than 200 recommendations based on the work of groups assigned to the five key areas for reform. Stage three concluded the review by returning to the public for fee d b ack on the re c o m m e n d a t i o n s . U l t i m a te l y, t h e government received more than 2,200 submissions. The public hearings on the proposed bill occurred at Queen’s Park before the standing committee on finance and economic affairs, running most of the day Oct. 22 and continuing the afternoon of Oct. 29. The approximately 30 individuals

who addressed the committee represented a mix of condo owners and board directors, industry associations and professionals. A number of themes emerged from their c o m m e nt a r y, i n c l u d i n g unintended consequences, industry influence, unaddressed issues and positive feedback.

HOPE TO SEE THAT THE REQUIREMENTS INCLUDE CATEGORIES OF CONTRACTS THAT MUST GO THROUGH THE PROCUREMENT PROCESS, MINIMUM DOLLAR VALUES THAT WILL REQUIRE A BID, TERMINATION PROVISIONS AND RETENTION OF THE DOCUMENTS — THE TIME REQUIREMENTS.

Unintended consequences There is always a risk in reforming legislation that the solution to one problem might lead to the creation of new problems. The joint legislative committee of the Association of Condominium Managers of Ontario (ACMO) and the Canadian Condominium Institute Toronto & Area Chapter (CCI-T) prepared a brief identifying 28 issues that could result in just such “unintended consequences.” Dean Mc C abe, past president of ACMO, speaking in the first time slot on day one of the public hearings, introduced the brief to the committee. “ We would like to draw the committee’s attention to just a few of the issues that could be prevented with minor alterations to the bill, which we feel in no way alter the intended protections offered to unit owners,” he said. On proxies For one, Mc C abe raised concerns about the p o s si b l e inter p ret ati o n OUR RECOMMENDATIONS: of the Condominium PROXIES SHOULD BE SUBMITTED BY Management Services Act’s provision guiding DONORS DIRECTLY TO THE MANAGEMENT the turnover of

OFFICE. THOUGHT SHOULD ALSO BE

-Van Smith, condominium property management manager, Malvern Property Management

records when a condo board switches management firms. “The ‘immediate’ turnover of all records would effectively prevent the manager from preparing the financial statements for the final month of their management tenure,” said McCabe. “In addition, the use of the word ‘all’ could be strictly interpreted to mean that the management companies are not entitled to retain even copies of any material produced during their tenure.” Instead, the ACMO/CCI brief recommends deleting the words “all” and “imme diate” and d efining the timeframe for the turnover of records in the regulations. L aw yer M ario D e o, presid ent of CCI, speaking on day two of the public hearings, highlighted a few more of the brief’s recommendations. Deo welcomed a proposed change that would extend to owners responsibility for

GIVEN AS TO WHETHER PROXIES SHOULD BE SUBMITTED DIRECTLY TO THE MANAGEMENT OFFICE OR TO WHOEVER IS CHAIRING THAT MEETING. -Brian Horlick, senior partner at Horlick Levitt Di Lella, a condo law firm

IN QUOTES It’s difficult to capture all the detailed recommendations made at the public hearings on Bill 106. See the speech bubbles on the pages that follow for some more comments from the people who addressed the standing committee.

26 CONDOBUSINESS | www.condobusiness.ca


COVER STORY

damage they cause to the common elements and other units, but he added that embedding this power in the declaration will make it near impossible to enact. “The declaration of a condominium can only be changed by 80 per cent of the owners, which is highly unlikely to happen,” said Deo. “We think that condominium corporations should retain the right to pass a bylaw which passes strict liability damage on to the unit owner.” Industry influence A few speakers raised concerns about what role industry might play in bringing to life some of the bill’s provisions. Those provisions include mandatory training for condo directors and managers, as well as a condominium authority tribunal that would have the ability to settle certain t y p e s of d i s p u te s b et we e n c o n d o corporations and unit owners. Donna Lacourse, a condo owner with experience as a director and manager, asserted that the current training for condo directors and managers is inadequate, and expressed skepticism that the proposed changes would remedy the situation. “First, I need to get something off my chest,” she said. “I am not happy with the innumerable organizations who’ve appointed themselves stakeholders in the Ontario condo landscape. The truth is, it is the voting owners who are consumers; it is the voting owners who are the stakeholders.” Lacourse called ACMO’s education p r o g r a m a “g e s t u r e i n t h e r i g h t direction,” but said that it falls short

in delivering qualified condominium of “non-condo-owner stakeholders” in the m a n a g e r s w h e n i n d i v i d u a l s a r e process. otherwise unqualified — for example, if “I was disappointed, but not they lack computer or numeracy skills. surprised, that these two organizations’ She also said that proposed mandatory boards hired lobbyists at the expense of condo director training should come their members to push their own selffrom an “unbiased” source, which, in interested agendas,” he said. her opinion, ruled out CCI. L e P a g e p o i nte d to t h e p ro p o s e d Tom LePage, a condo consultant with condo authorit y and condo manager management experience dating back to licensing authority as positives in the JermarkPIPE_Condo_Apr09.pdf 5/1/09 4:00:12 PM 1982, voiced concerns about the influence n e w l e g i s l a t i o n . B u t h e c a u t i o n e d

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COVER STORY On the regulations

THERE ARE MANY ARTICLES IN THIS ACT THAT ARE WIDE OPEN, AND THEIR CONTENTS WILL BE OBVIOUS ONLY LONG AFTER LEGISLATION IS PASSED; THAT that, unchecked, industr y influence c oul d result in the new d ele g ate d a d ministr ati ve authorities taking on personas similar to Tarion. D r. R a n d y L i p p e r t , a p ro fe s s o r of criminology and sociology at the University of Windsor, added to this line of commentary based on his independent research on condominium governance. Lippert called attention to the “pretty vague” appointment criteria for the condominium authorit y, suggesting stronger language to ensure meaningful participation from consumers. “The board appoints the tribunal, so it’s really about getting the board right to begin with and not simply having people from CCI, who of course are wellintentioned, but they do represent only the industry and not your average owner occupier, for example,” he said. Note: The ACMO/CCI legislative brief indicates that CCI’s membership includes not only professionals and business par tners ser vicing the condominium sector, but also condo boards and individual residents. Unaddressed issues Some speakers asked the committee to confront issues that they asserted the

On codes of ethics

THERE SHOULD BE A CODE OF ETHICS FOR THE DIRECTORS AND OFFICERS OF CONDOMINIUM CORPORATIONS IN THE SAME WAY THAT BILL 106 SPEAKS TO THE CONDOMINIUM MANAGERS AND THE PRINCIPAL CONDOMINIUM MANAGERS HAVING TO COMPLETE A CODE OF ETHICS. -Charles

Smedmor, a chartered professional accountant specializing in forensic and investigative accounting

proposed bill fails IS, WHEN THE REGULATIONS ARE WRITTEN. t o a d d r e s s . Ta r i o n PERSONALLY, I FIND THAT A BIT OF A PROBLEM reform, which was BECAUSE THERE’S NOT ENOUGH THAT IS raised frequently by the NDP during second UPFRONT FOR SOME OF THE ARTICLES. reading, was one of them. Whether the bill accounts -Anne-Marie Ambert, condo owner, past condo for the needs of small board president and member of the Condominium Act review’s expert condo communities outside panel of To ro nto, s o methin g the P rogressive C onser vatives questioned during second r e a d i n g , w a s a n o t h e r. Plus, there were concerns condo landscape includes not only highab out whether the bill’s rises in Toronto, but also townhouses in consumer protection rural areas. One of the issues faced by measures go far enough. developers outside of the urban centre Barbara Captijn, a new homeowner is the 10 -year time limit for registering in Toronto, nodded to the bill’s positive phased condominiums. features before pointing to what she felt “If we wait for the act to come in its was a glaring shortcoming. Captijn, also full glory, which isn’t going to be next author of the blog Consumers’ Reform week, there are going to be a number of Tarion, called on committee members projects throughout the province, outside to seize what she described as a missed of Toronto, where the phasing is going opportunity to bring accountability and to have to stop because its 10 years has transparency to the agency tasked with come up,” said Robson. “Then you’re regulating the building industry. going to have to do separate condominium She cited cases of falling glass and c o r p o r ati o n an d p l an in the s am e million- dollar class- action lawsuits in development, and hope to heck they get asking for real deterrents to “shoddy along, and hope to heck that whoever construction.” “And I speak for many consumers here today, who don’t have the ability to come here, and I know that it’s extremely important to all of us,” she said, her voice breaking with emotion, “that you On disclosure please consider amendments to Bill 106 to address these gaps in consumer protection, which have to deal with the re g ul ato r of the building industry, Tarion Warranty Corporation.” Craig Robson, a representative of the Waterloo Region Home B u i l d e r s' A s s o c i a t i o n , which is a member of the Ontario Home Builders' A ssociation, underscored the importance of recognizing that the

28 CONDOBUSINESS | www.condobusiness.ca

IT IS IMPORTANT THAT CONSUMERS ARE ARMED WITH GOOD INFORMATION AND FACTS WHEN PURCHASING A CONDOMINIUM. FOR THIS REASON, WE SUPPORT INCREASED DISCLOSURE IN THIS SECTOR, SO CONSUMERS UNDERSTAND THEIR CONTRACTUAL OBLIGATIONS AND RIGHTS WHEN THEY FINALLY MOVE INTO THEIR UNITS.” -Joe Vaccaro, CEO, Ontario Home Builders’ Association


COVER STORY

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On dispute resolution

COVER STORY

drafted the documents put up the proper easements and cost-sharing provisions.” Engineer Sally Thompson, speaking in her capacity as first vice-president of CCI, acknowledged the bill’s efforts to reduce the risk of first-year budget deficits. (Thompson was also a member of the Condominium Act review's expert panel and worked in the ministry for five months on the act.) Those efforts include clamping down on the practice

of developers leasing or selling back to corporations components of the condominium. “B u t i t ’s i m p o r t a nt to recognize that when t h e f i r s t y e a r b udget understates the actual costs, when those costs go up, the new owners have to pay those additional costs every year, not just

ADRIO SUPPORTS THE RECOMMENDATIONS OF THE ASSOCIATION OF CONDOMINIUM MANAGERS OF ONTARIO AND THE CANADIAN CONDOMINIUM INSTITUTE...TO PERMIT PARTIES WHO MUTUALLY AGREE TO OPT OUT OF PROCEEDING TO THE CONDOMINIUM AUTHORITY TO MEDIATE OR ARBITRATE THEIR ISSUE PRIVATELY. -Susette Clunis, executive director, Alternative Dispute Resolution Institute of Ontario

once,” said Thompson, “whereas the accountability on the builder’s half — they have to pay for that deficit — is only a one-times multiple.” She recommended that the committee consider a penalty represented as a multiple of the amount of the first-year shortfall. The ACMO/CCI brief specifically suggests a multiple of three or more. Positive feedback Many speakers indicated general support for the bill before offering suggestions for amendment. Some speakers took the time to highlight what the government got right, point to provisions that should be passed without amendment and make the case for provisions that might be considered controversial. C atherine Murdock , president of ACMO, reaffirmed the association’s welldocumented support for the licensing of managers with regulatory oversight from a delegated administrated authority (DAA). S he hel d u p AC M O’s re gistere d condominium manager (RCM) program as the country’s “most advanced, detailed and widely recognized” platform for training condominium managers. She also noted that ACMO’s RCM program informed the educational requirements for manager licensing proposed by the expert panel in stage two of the threestage Condominium Act review. “ACMO looks forward to partnering with the newly formed DAA to provide reliable, knowledgeable professionals to fill the growing need of condo communities in Ontario,” said Murdock. William Stratas, managing director of Eagle Audit Advantage, urged the committee to adopt the enforcement and inspection

30 CONDOBUSINESS | www.condobusiness.ca


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COVER STORY On consumer protection provisions proposed in the Condominium Management Services Act as is, without any watering down. He said, “respectfully,” that some of ACMO’s recommendations for revision would have precisely that effect. Stratas pointed to a recommendation to delete a section of the Condominium Management Services Act requiring that management providers get advance consent from the registrar before changing its officers or directors. ”Proactive disclosure of these ownership changes at the corporate level is very important to prevent shell games,” said Stratas. “These games cannot be allowed to avoid and evade the accountability that happens when management companies know they’re doing the wrong thing.” The ACMO/CCI legislative brief maintains that notice of a change to the principal condominium manager should be sufficient. Its rationale is that some condominium management firms are subsidiaries of national and international parent corporations, and the directorship of those parent corporations wouldn’t affect the daily operations of their subsidiaries. Lawyer Chris Jaglowitz, a partner at Gardiner Miller Arnold (who was also a member of the Condominium Act review's expert panel), made the case for the proposed condominium authority tribunal,

ALTHOUGH WE’VE

addressing questions around PROVIDED THAT UNITS AND whether owners would get value for money. FACILITIES LIKE GUEST SUITES CAN NO Jaglowitz compared the LONGER BE SOLD OR LEASED BACK TO THE proposed fees to fund the CORPORATION, WHAT ABOUT WHAT’S INCLUDED tribunal to the legal fees shouldered by owners, IN THE UNITS, SUCH AS HVAC EQUIPMENT? WHERE’S in a variety of differentTHE FAIRNESS IN INCLUDING A SENTENCE, BURIED sized condos, when their IN 100 PAGES OF DISCLOSURE, STATING THAT THE corporations get ensnared in disputes. HVAC MAY NOT BE INCLUDED IN THE UNIT, BUT “It’s not unheard of for MAY BE LEASED TO THE PURCHASER? condos [with only a handful -Warren Kleiner, partner, of units] to engage in incredibly Miller Thomson LLP's divisive, usually destructive fights condominium law practice akin to blood feuds, where legal costs might reach six figures and unit owners in those small condos are assessed for tens of thousands of dollars,” he said. “If the condominium authority, with its included On owner-requisitioned tribunal that can quickly and meetings summarily decide the most

ARTICLE 46 ON important types of condo disputes — including about REQUISITIONED MEETINGS the propriety of meeting HAS TAKEN AWAY FROM OWNERS requisitions, about ruleTHE RIGHT THEY HAD TO CARRY OUT enforcement issues — REQUISITIONED MEETINGS WHEN A BOARD can operate on a levy of REFUSES TO DO SO FOR NO GOOD REASON a dollar- per- month per … UNTIL THE CONDO TRIBUNAL IS IN EFFECT, condominium unit, that, I submit, is fantastic value.” WHICH MAY TAKE UP TO THREE YEARS, At press time, it was OWNERS THEREFORE HAVE NO EASY AND unknown what amendments INEXPENSIVE RECOURSE. the standing committee on -Anne-Marie Ambert, condo owner, past board On timely access to finance and economic affairs president and member of the Condominium records might make to Bill 106 based Act review’s expert panel on the public hearings. The committee members SECTION 55 DOES REFER TO were due to submit REGULATIONS BEING PASSED, BUT am e n d m e nt s by UNTIL OR IF SUCH REGULATIONS ARE Nov. 3 and analyze PASSED, I THINK THE CONDOMINIUM ACT the bill clause by SHOULD STATE CLEAR TIME LIMITS FOR AT clause on Nov. 5. LEAST SOME DOCUMENTS … REFERRING TO A The Protecting Condominium Owners Act ‘REASONABLE’ TIME IS NOT HELPFUL BECAUSE could pass before the end of UNIT OWNERS, PROPERTY MANAGERS AND the year but won’t become BOARDS DON’T NECESSARILY AGREE ON law until it’s proclaimed into WHAT IS REASONABLE. force. The regulations that will fill in the details of the Act need -Reva Landau, condo owner with condo board experience to be written and approved first, which is expected to take at least a year. For now, the current Condominium Act (1998) remains in force.

Read about the latest in condo law at

32 CONDOBUSINESS | www.condobusiness.ca


GOVERNANCE

Building a case for reallocating shared utility costs Ma ny condomin ium boa rds and propert y managers worr y

BY PER POLDERMAN

about rising utilit y costs, and how these increasing expenses will affect maintenance fees. Higher maintenance fees have a negative impact on the desirability and market price of condo units.

November 2015 33


GOVERNANCE

LEGAL CONSIDERATIONS Nancy Houle, a partner at Nelligan O’Brien Payne LLP and leader of the firm’s condominium law group, sheds light on the legal questions raised by reopening utility cost-sharing arrangements: Before reopening agreements governing shared utility costs, a condominium corporation’s board of directors must determine whether there are any legal barriers that could affect the roll-out of any proposed change. For example, if a mixed-use condominium wishes to reallocate costs of the basis of actual use, and accordingly wants to install sub-meters, the board of directors must consider: • Do owners need to approve this installation? • How much will it cost to install meters, and who will foot the bill? • Does the corporation have the right to levy a special assessment to cover the cost? The Energy Consumer Protection Act sets outs that individual smart meters (also known as suite meters) can be installed “with the approval of the condominium corporation’s board of directors.” That means no vote of owners, per section 97 of the Condominium Act, is required to proceed. However, the Energy Consumer Protection Act does not address how this will be funded. In this lawyer’s view, this is not something that can, under the current Condominium Act, come out of the reserve fund; rather, it’s an operating expense, and accordingly, may need to be the subject of a special assessment. Utilities shared between condominium corporations are costs generally allocated either through the corporations’ declarations or via joint use or shared facilities agreements. If the parties to these agreements wish to reallocate shared utility costs, each of the affected condominiums will need to determine whether they need to amend any documents, whether they need to involve owners in the decision, and if so, what threshold of votes they require to move forward.

The best way to reduce utility costs is to not consume energy, but the heating and lights must stay on. There are ways to effectively manage, and reduce, energy use. In fact, utility companies encourage energy conservation measures through incentives. It becomes more complex when corporations share common elements, especially when the buildings are constructed over a multi-year period. These corporations may have concerns about how energy and maintenance expenses for the common elements they share are allocated. Condo declarations set the initial use and allocation split, based on the developer’s assumptions. But designs can change, and if reality diverges from the developer’s assumptions, the split may be unfair. In these cases, corporations may want to investigate allocation percentages to ensure they are based on actual occupancy and use. Without sub - metering, it’s hard to establish who uses what, but it’s not impossible. Installing a sub - metering system may be too big an undertaking for the sole purpose of establishing the

fair allocation of costs, but it may be necessary if the parties involved disagree. To proceed, all the parties (condominium boards) involved have to agree to pay to install and monitor a sub-metering system that may negatively affect their owners. An alternative is to engage an engineer that specializes in energy analysis to do a professional review. An engineer can estimate the actual energy use of each corporation as well as figure out which loads are fed from each corporation. This information can be used to establish a fair allocation split. In multi - us e b u i l d i n g s , d i f fe re nt occupancy types, such as commercial and residential, will result in widely varying energy consumption. It will greatly depend on the type of operation, load profiles, hours of operation, window density (window-to-wall ratio), equipment type, location, sun exposure and many other factors. When a question or dispute arises as to which corporation is responsible for what, and whether the split is fair and

34 CONDOBUSINESS | www.condobusiness.ca

reasonable, an engineer can provide a clear picture of energy use. The engineer will review utility invoices and mechanical /electrical drawings, which show how energy is distributed between the units and common areas. The engineer will then visit the site and, through observation and interviews of occupants and site managers, verify the actual site conditions. The engineer may find deficiencies and recommend ways the condominiums may be able to save energy or improve safety and occupant comfort. Additional engineering work may be required, but this is outside of the scope of the allocation review and can be addressed during an energy audit at the corporation’s discretion. The engineer may use modeling or actual (temporary or permanent) energy metering to determine projected/actual energy consumption. The engineer must follow a recognized standard such as ASHRAE to make sure the calculations are based on reasonable assumptions. ASHR AE standards establish a consensus for test methods and performance criteria. Using consensus standards allows the engineer to provide accurate calculations based on recognized benchmarks at a cost-effective rate. If the engineer does not follow recognized standards, the findings have to be based on information compiled by surveying the premises with measuring equipment, which can be a costly and lengthy process. In either case, all reports should be transparent enough for peer review. Nex t, the engineer will input the findings into a modeling tool such as Carrier’s Hourly Analysis Program (HAP). It uses ASHRAE standards to calculate space and zone loads 24 hours a day for design days in each of the 12 months. It also simulates air system operation in detail to determine cooling coil loads and heating coil loads, as well as other aspects of system performance, based on seasonal scheduling of occupancy, internal heat gains, and fan and thermostat operation. The energy model created can be used throughout the life of the building for various purposes, such as heat and cooling load analysis for changing windows, boilers or chillers.


GOVERNANCE FEATURE

Designs can change, and if reality diverges from the developer’s assumptions, the split may be unfair. LeacShield_Condo_November_2015_FINAL.pdf

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Af ter completing the review, the engineer should provide a report that is understandable to a non - engineer and all information collected should be compiled and supplied in the final report’s appendixes. Ultimately, the engineer will provide the client with the background information required to insist on a “fairer” allocation of shared expenses. With this information in hand, the condo corporation or unit owners can request a meeting with representatives of the other corporations in the complex, preferably including the master site manager. As a group, they can review the allocation split in the declarations and amend them based on the engineer’s findings. The engineer provides a professional opinion, but does not decide who will be responsible for what. It will be between the condominium boards and unit owners to settle on a fair and realistic split of shared utility costs (see sidebar “Legal considerations” for further guidance). The report serves as a guideline, providing all par ties with reliable independent information at a time when condominium corporations are grappling with how to mitigate the impact of rising utility costs on maintenance fees. 1 With a passion for energy conservation, Per Polderman, BBA, serves as a senior account manager at Mann Engineering Ltd. For close to 30 years, the leading e ne rgy m a n a g e m e nt c o m p a ny h a s specialized in comprehensive energy audits, engineering reviews, CHPHVAC design build and retrofit needs. He can be reached at 416-550-3275 or via ppolderman@mannengineering.com. November 2015 35


GOVERNANCE

Lawyering up Consider this scenario: At the first meeting of a newly elected condo board, the property manager

BY SHLOMO SHARON

advises the board members that they need to appoint a lawyer to represent and direct the corporation on any legal matters related to the condo corporation. In

response, one board member suggests that his brother-in-law’s daughter, who just graduated from law school, could assume this task. Since she has just started her own practice, he adds, she may not charge as much as other lawyers. Everyone in the room gets excited. This fictional scenario is one that has played out in real life, with slight variations, at many board meetings. 36 CONDOBUSINESS | www.condobusiness.ca


GOVERNANCE FEATURE

But wait a minute: Does this law yer h a v e t h e ex p e r t i s e t o a d v i s e t h e c o r p o r a t i o n? C o n d o m i n i u m l a w i s complex and constantly evolving with the l ate st c o ur t d e c isi o ns . A n d as more people choose to live in condos, new leg al issues, such as whether corporation documents permit the type of short-term rentals facilitated by sites such as Airbnb, emerge. Recognizing the changing landscape, the Ontario government is currently working on reforming condo law with the proposed Protecting Condominium Owners Act. For all these reasons, cor p orations require the advice of an experienced condo lawyer. An experienced condominium law yer should be able to provide the corporation with clear opinions,

p r a c t i c a l l e g a l a d v i c e a n d c re at i ve s o l u t i o n s to p ro b l e m s . I n i t i a t i n g a lawsuit is not always the preferred approach. Litigation can be very costly and the outcome is never certain. F o r ex a m p l e , a c o r p o r a t i o n t h a t is negotiating per formance audit deficiencies may think that going through the courts is the most practical avenue to take. However, it may take a few years to go through the process, with legal and engineering fees mounting ever y step of the way. An experienced condo law yer should be able to provide the most cost-effective approach, possibly by recommending n e g ot i a t i n g a s et t l e m e nt w i t h t h e d e c l a r a nt w h e re by t h e c o r p o r at i o n agrees on an amount and then takes responsibility for effecting the repairs. The lawyer would also ensure that the proper releases are signed without compromising any future issues the corporation may encounter. In addition to looking for an experienced condo lawyer, corporations should also consider his or her firm’s fee structure, response time and extra services. Fee structure Before appointing a firm, ask how it charges for legal advice: a flat rate or by the hour? Does the firm charge for every phone call or email? If a corporation sends an email or leaves a voice message, it may be charged for both, even if it received no reply. It’s common for a lawyer to record a five-minute phone call, or an email,

round the fee up to fifteen minutes of legal advice, and bill the corporation for it. At a rate of $400 per hour, that would cost the corporation $100. Note: A lawyer who offers a cheaper rate but lacks condo experience may cost the corporation a lot more in the long run. A lawyer without condominium experience will likely take more time to research and answer a question than a lawyer with condominium experience. Response time Also look for a law yer who will reply to the corporation within 24 hours, not four weeks later. Response times can be critical and expensive. To o f f e r a r e a l - l i f e e x a m p l e : A discussion arose during a board meeting, with regard to a unit owner that had distributed a confidential email to a number of other unit owners. The property manager and board members agreed that the board members required legal advice to deal with it. The proper t y manager called the corporation’s lawyer on her cell phone and was able to get the right legal advice in no time, which allowed the board to move for ward on the item. In this par ticular case, the law yer’s advice was to: 1. email the unit owner to request that he immediately refrain from distributing the confidential communications; and 2. email the other owners to advise that the communications were confidential and to request that they delete the e-mail chain immediately and not to further distribute same. November 2015 37


GOVERNANCE

It’s common for a lawyer to record a

five-minute phone call, or an email, round the fee up to 15 minutes of legal advice, and bill the corporation for it. half_page_residential_ad_PRINT.pdf

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Extra services Find out what other services the legal firm offers. Does it host seminars about condominium issues? A s new leg al developments occur, these seminars can be very helpful to affected condo corporations. Does the firm publish bulletins or maintain a blog which board members can choose receive via email or mail to stay informed and up-to-date? L ast but not least , t ake the time to meet with the prospective law yer. Don’t be shy to ask questions during candidate interviews. A questionnaire isn’t a substitute for a personality fit. To re c a p, the c or p oration shoul d consider fees structure, response time and extra services when appointing a lawyer. But above all, the corporation s h o u l d p r i o r i t ize c o n d o m i niu m l aw exper tise. A nd for that reason, the board in the hypothetical scenario cited earlier would be wise not to hire the cheap but inexperienced lawyer related to one of the board members. 1

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S h l o m o S h a r o n i s C E O o f Ta f t Management Inc. He can be reached at shlomos@taft-forward.com.

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T H E


LEGAL

To indemnify or not to indemnify? Those following the Durham Condominium Corporation No. 45 v.

BY ROD ESCAYOLA

Swan case — involving a virulent dispute between the corporation and a former director — will have to wait a while longer to find out who gets to pay the piper, so to speak. The Court of Appeal has referred the

question of costs back to the application judge. However, the case raises a larger question worth

considering in the meantime: Should condominium corporations indemnify a rogue director who has been ordered to pay costs?

40 CONDOBUSINESS | www.condobusiness.ca


LEGAL

The legal saga Swan, an owner and elected director, appeared to strongly oppose the corporation’s decision to retain a specific property manager. Tension at board meetings escalated and email communications took on threatening, insulting, confrontational and accusatory tones. One of the directors requisitioned a meeting of the owners to remove Swan on the basis that he had failed to “act honestly and in good faith” and that he had “failed to exercise the care, diligence and skill” of a reasonably prudent person. Swan commenced some seven defamation court proceedings (some on behalf of the corporation, some against it, but most against other directors and against the property manager). All of Swan’s claims were dismissed. He appealed all of those decisions. Swan was eventually removed as a director at the requisitioned owners’ meeting. In parallel, there was also a dispute surrounding a satellite dish Swan had attached to the common element roofs. The corporation eventually turned to the courts to have Swan declared a vexatious litigant. The corporation also sought an injunction prohibiting Swan from having any contact with the board and the property manager; a declaration that he had failed to carry out his duties with the required care and diligence; and an order to remove the satellite dish at Swan’s expense. Swan brought a cross-application seeking, among other reliefs, that some of the directors be removed and that he be reinstated as a director and as president of the board. The application judge made numerous findings against Swan but did not grant all of the reliefs the corporation was seeking. The judge dismissed Swan’s cross-application entirely. Who should pay? The key issue in this matter now turns on the question of legal costs. In the first instance, the corporation sought nearly $200,000 (on a full indemnity basis) or $126,000 (on a partial basis) against Swan. Swan sought to be indemnified by the corporation against any legal costs. Eventually the application judge ordered Swan to pay only $45,000 in costs (on a partial basis), which Swan appealed. Unfortunately for the corporation and its owners, the Court of Appeal concluded that it was unable to rule on the question of costs and referred the question back to the application judge (where the parties will undoubtedly have to incur more costs to have the matter adjudicated). The difficulty for the Court of Appeal was that some of the application judge’s findings were ambiguous. Although the applicant judge clearly found Swan to have failed to comply with his obligations, it was not clear whether (1) Swan had failed to act honestly and in good faith, or (2) whether he had also failed to exercise the care, diligence and skill of a reasonably prudent person. This, compounded with the language of the corporation’s indemnification bylaw, made it impossible for the Court of Appeal to render a decision on the question of costs. Lessons learned There is an increasing number of reported cases where directors are personally hit with costs awards. Because of this, directors will increasingly attempt to rely on the indemnification provisions found under section 38 of the Condominium Act. Section 38 provides that a corporation may adopt a bylaw indemnifying its directors against any

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Untitled-4 1

15-03-10 3:13 PM


LEGAL

There is an increasing number of

reported cases where innocent owners are left to pick up the tab following the actions of a rogue director liability and costs… provided that they are not adjudged to be in breach of their duty to act honestly and in good faith. In this case, the language of the bylaw appeared to have hindered the corporation’s case. Requesting that all directors sign a code of ethics and passing a well-written bylaw allowing for the disqualification of directors having breached it may help in situations such as this one. There is also an increasing number of reported cases where innocent owners are left to pick up the tab following the actions of a rogue director (see the decisions in Boily and Ballingall). While courts seem increasingly prepared to hold directors to a high standard of care, they appear to be hesitant to depart from the traditional

approach to awarding costs, which is the “winner takes all”. Indeed, traditionally, the successful party in a court case can expect the defeated parties to pay between 60 and 85 per cent of their legal fees. The problem with this in condominium cases is that it often leaves the innocent owners holding the bag. If a court only imposes on the rogue director 60 per cent of the corporation’s legal costs, then the corporation (and its owners) are left paying the balance of the corporation’s legal fees. Another inequity in the condominium setting exists as the result of the different treatment by the Condominium Act between owners and corporations. A corporation can claim and recover any additional actual costs against an owner in breach of the Act or of

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the governing documents. This means that the corporation can be fully indemnified if an owner breaches his or her obligations to the corporation, even if the judge does not award the corporation full costs. That is a good thing. However, when it is the owners who are forced to bring a corporation to court, they don’t have the same protection. Owners faced with a corporation that refuses to comply with its obligations must dig into their own pockets to pay the difference between their legal fees and what a court awards them in legal fees. Think of the recent Ballingall case, where the president of the board was found to have acted in bad faith and where much of the acrimony and the board’s dysfunction were attributed to his belligerence. The president was ordered to pay costs of $15,000 and the corporation was ordered to pay $35,000. This left the condo owners who brought the matter to court to pay the balance of their fees. Why is it that the corporation may be able to recover all of its fees against a rogue owner but that owners are not able to do the same against a rogue director? Bill 106 (proposed legislation aimed at amending the Condominium Act) is set to level the playing fields by allowing both owners and corporations to seek actual costs from opposing parties when they win a compliance order. 1 The preceding article is reprinted with permission from CondoAdviser.ca. Rod Escayola heads Gowlings’ Condominium Law Group and regularly publishes on Gowlings’ condo law blog CondoAdviser.ca. He is on the board of directors of the Ottawa chapter of the Canadian Condominium Institute and is the editor of its quarterly magazine (Condo Contact). Rod co-founded and leads the Condominium Directors Group, a group providing local condo directors with the required tools to collectively better manage their corporations. Rod also sits on the board of directors of his own condominium corporation.


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LEGAL

Dangerous defects and professional liability

Construction def iciencies are BY MEGAN MACKEY common in all types of construction, including condominium construction. One of

a condominium corporation’s most important tasks is to identify,

investigate, and resolve construction deficiencies.

44 CONDOBUSINESS | www.condobusiness.ca


LEGAL

When construction deficiencies arise, developers who stand behind their product will acknowledge the problem and undertake the remedial work. Some condominium corporations are able to have remedial work done through new home warranty insurance. Unfortunately, in many cases insurance is not available, developers are unwilling or unable to assist, and condominiums end up repairing construction deficiencies themselves. R e c ove r in g re p air c o s t s c an b e challenging for condominium corporations. The fact that the condominium corporation did not exist during construction limits the type of claims that condominiums can make. In some foreign jurisdictions, such as the U.K., contractors and professionals cannot be liable for construction deficiencies

unless they have a direct contractual relationship with the owner or condominium corporation. This is problematic in the condominium context because contracts relating to the design and construction of the condominium are signed and completed long before the condominium is registered/ created. Fortunately, Canadian courts have taken a different approach. In 1993, the Supreme Court of Canada decided that professionals can be liable for negligence, even in the absence of a contract. In the case of Edgeworth Construction Ltd. vs. N.D. Lea & Associates Ltd., the B.C. Ministr y of Highways retained an engineering firm to design specifications for a new highway. In a separate contract, the minister retained a contractor, Edgeworth, to build the highway.

Edgeworth later sued the engineers, claiming that it suffered damages because the engineering drawings contained errors. The engineers defended the lawsuit by claiming that Edgeworth could not sue them because there was no contractual relationship between the two companies. The Supreme Court held that the engineers could be liable to anyone who suffered damages as a result of their negligence, whether a contract existed or not. The engineers were liable for all economic losses that Edgeworth suffered as a result of the engineers’ mistakes. This Edgeworth decision dispelled the notion that claims for construction deficiencies in Canada could only be made under contract. It opened the door for condominium corporations to sue engineers, architects, and contractors directly for the costs to repair construction deficiencies. Just as important as the Edgeworth decision is the adoption by the Canadian courts of the principle that liability for repair costs can continue indefinitely. The limitation period for bringing a lawsuit does not begin to run until a deficiency is discovered, which could be many years after the condominium was built. In the 1995 case of Winnipeg Condominium Corporation No. 36 v. Bird Construction Ltd., a serious construction deficiency was discovered when a large section of exterior cladding fell off of the building 11 years after the condominium was registered, some 15 years after the building was constructed. WCC 36 paid $1.5 million to replace the cladding and eliminate a serious risk of harm. WCC 36 brought a lawsuit to recover its losses against the general contractor involved in the original construction, the sub-contractor who installed the cladding, and the architects who had prepared the plans and specifications. The defendants claimed they could not be liable because they did not have a contractual relationship with WCC 36. Expanding on the precedent set in Edgeworth, the Supreme Court of Canada held that anyone causing or contributing to a dangerous construction deficiency could be liable to reimburse an owner for the cost of rectifying the deficiency. November 2015 45


LEGAL

a construction deficiency, there must be a reasonable likelihood that the defect will cause injury. The liability is limited to the cost of repairing the dangerous defect or restoring the building to a non-dangerous state. Damages for aesthetic or ornamental issues are excluded. For example, in the absence of a contract, consumers who pay more to buy into a luxury building cannot recover damages if the building turns out to be less luxurious than promised.

The Bird Construction case confirms that in Canada, anyone who places a product into the stream of commerce, including a condominium building, owes a duty of care to those who use or will use the product. This means that negligent contractors, architects, and engineers alike are accountable to both current and future owners. This liability does have limits. In order to be liable for economic loss arising out of

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The definition of a “dangerous” defect is not as narrow as one might think. The recent case of Winnipeg Condominium Corporation No. 613 v. Raymond S.C. Wan et al illustrates that cost-saving measures can give rise to dangerous consequences. In a decision released earlier this year, WCC 613 brought a claim against a project architect to recover the cost of installing a waterproofing membrane on the main level of a common area parkade. The membrane was contained in the original architectural plans but was deleted by the developer, with the architect ’s knowledge, as a cost-saving measure. T he mis sin g m e m b r a ne a n d ot he r deficient waterproofing caused water to pool in the lower levels of the parkade. The undisputed evidence was that, after several decades, the deficiencies may cause the reinforcing steel to corrode and pose a threat to the safety of the parking structure and its users. The architects defended the lawsuit by claiming that the deficiency was not dangerous enough for liability to accrue in the absence of a contract. The Manitoba Court of Appeal did not accept this defence. As long as the defect may eventually become dangerous, the architects could be liable for the cost of repairing the deficiency, even if the danger was decades away. In Canada, the law has evolved and condominium corporations can, in certain circumstances, recover damages directly from the professionals who designed the project and the trades that built the condominium. Competent contractors and professionals need not worry about this liability. Work done in a competent manner is the best shield to liability. Deviations from the plans or specifications should be carefully considered. Presently, the law ensures that all industry players are held liable for their negligence, which assist condominiums that are unable to recover repair costs from their developers. Hopefully, the potential of direct liability encourages those involved in condominium design, construction and approval to accept accountability for their work and build safe, practical and quality buildings. 1

Megan Mackey is a partner at Miller Thomson LLP.


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COMMUNICATION

Advertise your AGM BY SUE LANGLOIS The annual general meeting (AGM) at a condo corporation is a big deal. It’s the one time of year where the board of directors meets with the rest of the residents,

explains what went on in the past year, answers questions, possibly elects some new members and, if all goes well, ends with all participants feeling satisfied and secure in the knowledge that their investment is in good hands. Keeping residents

informed and educated about all facets of life in their condominium is the best way to save time, save money, and increase property value.

48 CONDOBUSINESS | www.condobusiness.ca


COMMUNICATION

Does that sound familiar? If not, it should. The problem is, although the AGM is so important, many condo residents seem to be either unaware of its existence, or indifferent to its impact. This can be changed! It’s possible to run an AGM worthy of the minute taker’s time and see an informed and re s p o nsi b l e c o n s t i tu e n c y of c o n d o residents come forth to participate. All it takes is a little thought and effort to campaign for the desired result. The message The first step in any communication c ampaign is to set goals. In the case of the AGM, usually t h e g o a l i s s i m p l y to get seats in the chairs. Think like an a d ver tiser. W h at w ill c o nv in c e the resident to “buy what you’re selling”? In other words, why should they spend a couple of hours of their time at the AG M inste ad of somew here e l s e? T h i s i n f o r m a t i o n i s c r i t i c a l and, unfor tunately, is almost always overlooked by condo boards and their busy management teams. In addition, consider offering some definitions for words such as quorum and proxy. It’s important not to assume that the audience is familiar with all terms. L ast but cer tainly not least, be sure to share the date and time of the AGM. This entire group of content can now be referred to as “the AGM campaign”.

Start by making a list of reasons for residents to attend: 1. It’s your biggest investment — take care of it and have a say. 2. Come out and meet your neighbours. 3. It’s expensive to reschedule an AGM if quorum is not met. 4. If you have any questions, now is the time to ask them. 5. Your vote counts!

With this list of what the message is, the next thing to do is decide how to say it. The medium In condos, the u s u a l m et h o d s of communication are e m a i l a n d / o r tex t messaging, notice board (let’s hope you have a digital one — it makes life much easier!), door-to-door and, for the social media crowd, even Twitter is an option.

Then comes the content itself. If the condominium has a digital notice board that includes a content manager/service provider, use this as a starting point. The AGM “ads” designed for the digital notice boards can often be slightly modified and used as a PDF or image file to be included in the manager’s email blast. That means the email will be less text-laden and focus instead on visuals, which have a much better impact. (Not to mention it’s less work for the manager!) Tip: Keep messages in the series similar but with different coloured backgrounds so that the audience will recognize the theme. November 2015 49


COMMUNICATION

Social media pundits claim that, statistically, the best times to tweet are 8 a.m., 12:30 p.m. and 7 p.m. CONSULTING ENGINEERS

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The campaign P o st a notice for residents to save the date as many as three months out. On a digital board, this can be posted and stay up for a week or two, depending on what else the condominium has running. Just like a wedding, ask residents to save the date, then wait until it gets closer to show time to run the actual campaign. In the three weeks leading up to the AGM, the campaign should kick into high gear. Select a notice to post on bulletin boards, and switch it up with a different one ever y few days. Run the entire digital notice board campaign ads in equal rotation. Email a new campaign notice every couple of days. To get a higher email open rate, embed an image rather than including it as an attachment that requires the audience to take a further step. Email is great to remind residents of the date and time of the AGM. Aside from the original “save the date” email, send out an AGM reminder notice (complete with the location, date and time) three days before, one day before, two hours before, and 15 minutes before. Schedule this well in advance to avoid having to worry about it later. S ocial media pundits claim that , statistically, the best times to tweet are 8 a.m., 12:30 p.m. and 7 p.m. Simply tweet each item three times a day. It’s possible to use a scheduling tool such as Hootsuite to help with this. If possible, keep a copy of all notices o n t h e c o n d o m i n i u m’s we b s i te , and then prov id e a link to the site where residents can go to get more


COMMUNICATION

2300 Yonge Street, Suite 2900 Box 2384 Toronto Ontario Canada M4P 1E4

information. Also consider linking to other sources of info. For example, the Canadian Condominium Institute – Toronto (CCI -T ) has a video on its website about why residents should attend their AGM. This is a great way to further engage the condominium’s audience. After the AGM is over, it’s important to post the results of any elections, u p d ate re si d e nt s o n d e c i si o ns a n d ot h e r b u s i n e s s , a n d t h a nk a l l w h o attended, either in person or by proxy. The number one thing that residents want to know is what’s going on, so be sure to feed their curiosity. Keep them in the loop and coming back for more at next year’s AGM. 1

T F w

416 489 5677 416 489 7794 condolaw.to

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S u e L a n g l o i s i s t h e fo u n d e r/ C E O of Diginotice, a digital notice board c o m mu n i c ati o n s e r vi c e fo r c o n d o s seeking to improve their bottom line. A pioneer in the digital condo landscape, Sue was recently elected to the CCIToronto board of directors and serves on the communication committees for b oth C C I -Toronto and C C I - N ational. She contributed the Communications chapter of CCI-T’s Board of Directors’ Tips, Tools and Techniques. Sue can be reached at sue@digi-notice.com.

For more condo communication tips, visit

November 2015 51


MAINTENANCE

The power of inspection analytics

Bu i ld ing equ ipment and lo c at ion s mu s t b e r o ut i n e l y inspected for safety, insurance and

BY PAUL AMENDOLA

to meet requirements established

by code. Each inspection report is vital to a building’s overall operation. M a ny building m anag ement te ams conduct routine inspections, but not many collect analytics during their inspections. A naly tic s are a way of uncovering meaningful patterns in data that allow the user to quantify performance and recommend improvements. Compiling valuable data from inspection reports helps to capture a building’s overall health. Inspection analytics show

52 CONDOBUSINESS | www.condobusiness.ca

what was in order yesterday, what’s in order today and what will be in order five years from now. Collecting data There are two main types of analytics for inspections: portfolio and predictive. Portfolio analytics track the pieces of equipment and their locations within a building as well as the value of these


MAINTENANCE

Over time, data collected during inspections can reveal patterns

or trends in a building, such as a piece of equipment that requires attention during the colder months of the year. assets. Predictive analytics help forecast the future needs of a building’s equipment and locations, such as when inspections and maintenance are required and their associated costs. There are several types of data that can be collected during inspections, so it’s crucial to determine what’s important to capture for a particular building. For example, it may be useful to track items inspected, items remaining and how long it takes to complete various inspections. A building manager may also want to know how many deficiencies the inspections identified and how long it will take to resolve them. And it’s possible to capture when equipment requires maintenance (service dates) and when it requires full replacement (expiry dates). Inspection analytics can be done in two ways: reviewing paper documents and manually collecting the data or through automated software. Some software solutions collect the data during the inspection. When the inspection report status is completed (i.e. “missing,” “requires service” or “all in order”), the software saves the data and automatically inputs it into dashboards and graphs. Analyzing trends O v e r t i m e , d a t a c o l l e c te d d u r i n g insp ec tions c an reveal p at terns or trends in a building, such as a piece of equipment that requires attention during the colder months of the year, or damage to equipment during high-traffic times (i.e.

rush hour or tourist seasons). Identifying these trends is extremely beneficial, as it empowers building managers to make informed decisions that positively affect the bottom line, such as installing a particular system that will save money in the long term. By capturing the overall health of the building, inspection analytics allow the building manager to stay organized and identify areas for improvement. These areas for improvement might include adding additional water fire extinguishers on street level during warmer months to extinguish small fires caused by cigarettes thrown in the dry soil. Analytics also equip managers to mitigate risk, such as reducing the time it takes to replace a defective extinguisher, by tracking which areas require attention and how long it will take for deficiencies to be resolved. What’s more, inspection analy tics enable managers to assess the building team’s per formance — whether it’s completing inspections within an appropriate amount of time — which can inform training decisions. Equipment i n s p e c t i o n s t h a t t a ke l o n g e r t h a n expected can suggest to managers that additional training is required to explain the importance of timely inspections for compliance. It can also indicate performance issues, which may require the manager to have conversations with staff. Alternatively, this data may show managers that the staffing levels may need to be adjusted in order to meet the

inspection timelines. This will not only keep a building safer, but will also reduce its risk, ensure compliance and, in turn, protect the building’s brand. Analytics show building managers when each piece of equipment requires maintenance and the costs associated with servicing. Knowing when maintenance is required allows managers to budget in advance (budget forecasting), which in turn reduces the risk of equipment failures resulting in high stress and pricy emergency service calls. This information also allows managers to develop maintenance schedules for their staff and determine appropriate staffing levels when needed. This further decreases inefficiencies, and in the end saves valuable resources. Conducting inspections keeps buildings compliant and more importantly safe; inspection analytics offer a competitive advantage. Whether it’s staff optimization, maintenance planning, budget forecasting or reducing inefficiencies, inspection analytics are extremely beneficial. Most importantly, building management teams can save time and money, allowing them to focus on other tasks knowing that equipment is in working order. 1 Paul Amendola is chief executive officer of Rapid Evac Emergency Communications Inc., a firm that specializes in software s o l uti o n s fo r i n s p e cti o n a n a ly ti c s , employee accountability during evacuations and mass notifications based in Toronto, Ont. November 2015 53


TECHNOLOGY

Save the date Logging BY NICHOLAS GILL amenity reservations in a condominium can be a tedious day-to-day task for management and staff. And manual booking methods — such as pen, paper, and Excel spreadsheets — don’t often make the process easier. In recent years, however, technological solutions

providers have added automated amenity reservation

modules to their building management software to make reserving amenities as easy as possible. As its name suggests, an automated amenity reservation module automates the booking process. Management and building staff can use various settings within the mo dule to automatic ally track rules condominiums impose on amenity reservations, like blackout dates and ad vanced b o oking restric tions. Such rules are a consistent source of headaches: T hey of ten overlap and create a lot of “moving par ts” that make the booking process too complex, especially as larger condominiums with more units and more amenities become more common. This type of module also helps prevent common input- related errors, like double-booked amenities and dropped reservations, which can shake residents’ confidence in the reliability of the b ooking process and reflect negatively on management and staff.

54 CONDOBUSINESS | www.condobusiness.ca


TECHNOLOGY

Management and building staff can get the most out of an automated amenity reservation module by making full use of its features and modifying its settings to meet a particular building’s specific needs.

manager or staff member to book an amenity for multiple days. Residents also benefit from recurring reservations: T hose w ho r un a week l y c lu b, for ex am p le, d o n’t h ave to re p e ate d l y request a room every week they want to have a meeting.

Setting restrictions To p reve nt d o u b l e b o o k i n g , s o m e modules provide a “c alendar view” of all available amenities so staff can see which dates are open and which are booked. Others offer settings that automatically block staff from logging over l a p ping amenities or reser v ing them on blackout dates. More advanced mo dules allow m anag ement to set permissions levels restricting which staff can create or approve reservations.

Electronic payments To f u r t h e r o p t i m i z e t h e a m e n i t y reservations process, look for modules with electronic payment integration. Even today — well into the digital age — many residents still have to pay for reserved amenities with a cheque. As a solution, some building management s o f t w a re p ro v i d e r s o f fe r p a y m e n t options “inside” their modules that make paying for amenity reservations like buying movie tickets online. B ot to m l i n e , w h e n m a n a g e m e nt Recurring reservations M a n y m o d u l e s o f f e r r e c u r r i n g and staff make the most of automated modules, they can reservations, a feature that only requires amenity reservation CompleteBuildingServices_Condo_May_2015_FINAL.pdf 1 15-06-02 10:13 AM o n e a p p r o v a l f r o m a n a u t h o r i z e d save time, one of the most important

operational resources a condominium h a s . R at h e r t h a n ju g g lin g mu l t i p l e reservations or keeping a constant eye on double booking, management and staff can focus on improving other areas of their daily operations. In the short term, automated amenity reser vation modules can help decrease mistakes and increase booking rates. In the long term, they can help improve the overall living experience in a building, raising the professionalism of its staf f and making it a more attractive place to live for prospective buyers and renters. 1 Nicholas Gill is director of marketing and sales at BuildingLink Canada and former founder and president of both FrontDesk Inc. and SmartSimple Realty Solutions Inc. BuildingLink (buildinglink.com) is a world leading provider of residential highrise management software. For more information, contact Nicholas at ngill@ buildinglink.com or 416-570-4570.

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DEVELOPMENT

Noise control Most people care about the BY JEFF COWX acoustic performance of their building. It can mean the difference between hearing and

not hearing an upstairs neighbour walking around in high heels. Unfortunately, some construction or renovations fail to adequately ensure the occupants’ comfort, as evidenced by noise complaints. Choosing the right acoustical solution represents a substantial challenge. For a condo owner undertaking a renovation or a developer working on a new multi-family project, asking the right questions, at the right time, is crucial. Here’s a typical scenario: Mr. and Mrs. Smith want to change the flooring in their condo. The building they live in requires acoustic performance of FIIC (Field Impact Insulation Class) 62. During their search they discover an acoustic membrane claiming an acoustic performance which exceeds FIIC 62. They feel confident and proceed with the installation. The following week, their downstairs neighbour complains of hearing footsteps, so they ask an acoustical engineer to test their

flooring. The test reveals a rating of FIIC 5 4, well below the FIIC 62 required. What happened? How can the results be so poor? Flooring acoustics are far more complex than they appear. Indeed, it’s important to consider the following five criteria when choosing an acoustic membrane. What type of noise does the solution need to address? Airborne noises come mainly from radio, television, voice, crying or screaming children. They are waves carried by the air that make the surfaces and floors, ceilings and walls vibrate. Impact noises are caused by a shock or vibration, such as moving furniture, a person

56 CONDOBUSINESS | www.condobusiness.ca

walking with high heels, falling objects on the ground or a child running. They are transmitted by the vibration of the building structure, such as floors and walls. Airborne and impact noises have their similarities, but impact noises are far more complex to measure, classify and control. Because impact noises generate much more energy than airborne noises, they travel more easily and quickly through a building’s structure. To dissipate this energy, “decouple” materials as close to the source of the impact as possible. A resilient acoustic membrane is designed to eliminate this direct contact between materials. The membrane accomplishes this by absorbing the vibrations coming from the


DEVELOPMENT floor covering (a person walking, for instance) and stopping it from traveling through the structure and therefore from traveling to the downstairs neighbour. In a perfect world, floor coverings should never come into contact with the structure (substrate) and in essence float. How will the building structure type influence membrane choice? Before focusing on the acoustic membrane, it is imperative to analyze the type of building structure. For example, a building with an eight to nine-inch concrete substrate, without a suspended ceiling, can achieve an average rating of FIIC 32 on the concrete slab itself (without any floor covering). Add airspace of five to eight inches to this same structure, and the suspended ceiling makes it possible to achieve results around FIIC 66 to 72, with several types of floor covering. And thanks to drywall suspension technology, results almost as high can be reached on wood-frame structures. These few examples show how the nature of a building’s construction will have a decisive impact on a membrane’s acoustic potential, independent of the choice of floor covering.

without considering the nature of the building in which it will be installed. Therefore, it is essential to verify the conditions under which the manufacturer performed the published acoustic tests. Was the testing conducted in a laboratory (IIC) or in the field (FIIC)? Acoustic tests performed in a laboratory, under ideal conditions, will systematically provide more efficient results — often by up to five points — than field tests. Was the floor/ceiling assembly used during the acoustic testing the same as the intended installation? Factors that can dramatically influence published acoustic results for a given membrane include: the thickness of the concrete slab, the quantity and thickness of plywood layers, the use of resilient channel, the existence of a suspended ceiling, acoustical mat, etc. As an example, a suspended ceiling can increase results by up to 14 points. Ensure that the manufacturer used identical or very similar methods and floor/ceiling assemblies when it carried out acoustic tests carried out with the membrane under consideration.

What type of flooring will be used? It’s also important to know the type of What acoustic rating is required? T he N ational Building C ode (N BC) flooring that will be installed: glued or recommends an FIIC 55 as a minimum floating, engineered wood, nailed hardwood, rating to ensure a degree of comfort in condo vinyl, ceramic, etc. This information will buildings but has yet to impose this rating as dictate the appropriate acoustic membrane category for a particular building. Membrane an industry standard. Be cautious of acoustic ratings published categories include floated installation and by manufacturers. Acoustic performance, double-glued-down installation. If the flooring type is not considered, the as published by several acoustic membrane manufacturers, suggest that it’s possible to chosen membrane may be too thick, soft or achieve similar results regardless of the type dense. Also, the membrane’s mechanical strength may not be sufficient enough to of structure. However, it’s impossible to predict the absorb the energy from the natural variations We Do Blinds_OD15_OD Sixth page 2014-10-31of 3: the floor or subfloor. performance of an acoustical underlay

What mechanical criteria does the membrane need to meet? I t ’s e x t r e m e l y i m p o r t a n t t o t a ke mechanical performance into account when choosing an acoustic membrane. Make sure that the product meets the mechanical criteria (thickness, density, internal cohesion, etc.) of the chosen floor covering. This often overlooked aspect is just as important as the acoustic performance. Neglecting mechanical performance while choosing an acoustic membrane can lead to expensive failures such as deformation, delaminating, cracking or lifting of the floor covering — all of which have the potential to void the manufacturer’s warranty. Ultim atel y, achiev ing s atisfac tor y acoustic per formance depends on a combination of many complex factors. They include the type of noise to be addressed, the building structure, the required acoustic rating, the t ype of flooring to be used and the mechanical criteria the acoustic membrane needs to meet. It’s difficult to predict the acoustical performance of a planned but not yet constructed building. Nonetheless, this overview of questions to ask when selecting an acoustical solution should help guide condo owners and developers alike in their decisions. 1 Jeff Cowx, an AcoustiTECH sales & development representative, has worked in the construction industry for more than 20 years. AcoustiTECH offers complete in-house acoustic solutions for condominium construction/renovation projects. Jeff can be reached at jcowx@acousti-tech.com or 1-888-838-4449.

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REGULATIONS

72 hours

A massive f lood shuts down highways and cuts power across the

BY JAMES KENNEDY

GTA. A brutal ice storm leaves hundreds of thousands in the dark and cold during the holiday season. Road salt build-up from

a glacial winter causes hydro poles to spontaneously ignite and, once again, the lights flicker out.

58 CONDOBUSINESS | www.condobusiness.ca


REGULATIONS

G i ve n re c e nt i n c i d e nt s l i ke t h e s e, i t ’s n o l o n g e r n e w s t h a t ex t re m e weather events are on the rise. The forecast calls for more of the same; coupled with an aging, overburdened electrical grid, predictions also call for more prolonged, widespread power outages. And weather-related disasters that cause lengthy power outages hit people in multi-unit residential buildings particularly hard due to safety risks and the distinct possibility of evacuation. In a prolonged power outage, people who live in single-family dwellings can simply walk out a street-level door to relieve pets, get to work and restock groceries, bat teries and candles. R e s i d e nt s of m u l t i - u n i t re s i d e nt i a l buildings face the prospect of long climbs (potentially in the dark or neard a r k ) fo r e a c h o u t in g . I n a d d i t i o n , because their water source relies on electrically powered water pumps, hot and cold running water and operational toilets will quickly become unavailable. Garage doors are also t ypically rendered inoperable. Today, by law, back-up generators are required to power the bare minimum of services needed to safely evacuate residents in the event of a fire. There is no requirement to keep buildings powered and residents safely at home for any length of time in the event of a power outage caused by anything other

than a fire, such as weather- related disasters. That appears set to change. In light of the forecast for extreme weather as the new normal, new regulations governing emergency power for multi - unit residential buildings are on the way. Sustained occupancy standards in the works Municipalities and regulatory bodies are now officially acknowledging concerns about power resiliency in the face of extreme weather, and the vulnerability of p e o p l e i n m u l t i - u n i t re s i d e nt i a l b u i l d i n g s . I n re s p o n s e , re g u l a to r y bodies are seeking to formalize new standards that will require more than t h e b a re e s s e nt i a l s o f e m e r g e n c y p o w e r. A w o r k i n g g r o u p o f t h e Canadian Standards Association (CSA) is currently developing a new standard that will require buildings to provide “sustained occupancy� power. T h e d i f f e r e n c e? I n a n u t s h e l l , emergency power puts the sole priority on evacuating residents in the event of a fire. Sustained occupancy power keeps people safely and comfortably in their buildings for longer term outages that could be caused by any multitude of issues. Currently, under the Ontario Building Code, multi - unit residential buildings (buildings 18 metres or more above

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Regulatory bodies are seeking to formalize new standards that will

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REGULATIONS

grade) must have sufficient emergency power from a generator or batteries to power at least one elevator and fire ex tin g uishe r s fo r f iref i g hte r s . T h at — plus minimal emergency hallway lighting and ventilation — is just enough for residents to evacuate (according to CSA standard C282). There is no requirement to provide unit or common space lighting, heating or cooling, pump water to upper floors or reserve an elevator for residents’ use during a prolonged blackout where it would otherwise be safe to remain in the building. (That’s a lot of stairs for the elderly, people with mobility issues and other vulnerable populations.) T he intent of the new sust aine d occupancy requirements, still under development, is to mandate multi-unit residential buildings to provide power to more building services in a prolonged power outage. Sustained occupancy power would assure residents of hot and cold running water, heat, an additional elevator and common

building ser vices (such as a fully powered common room, garage access and more) for a minimum of 72 hours in an outage. Once in place, the sustained occupancy standard may be voluntary (like a L EED designation) or an addendum to CSAC282, making it part of the building code. Back-up power for prolonged outages Today, the majority of condominiums have diesel generators. While these generators can be reasonably effective at meeting the more limited emergency power standards, they may not be as well suited to the impending sustained occupancy standards. That’s because diesel fuel can deteriorate (because the equipment sits idle until it’s needed), the fuel will eventually run out and the equipment itself is rarely tested under load. A case in point: when the 2013 ice storm walloped Toronto days before C h r i s t m a s a n d c a u s e d w i d e s p re a d power outages, many property

managers scrambled to top up their diesel fuel but found themselves unable to get it due to high demand. Other proper t y managers discovered their diesel supply had deteriorated. A nd still other buildings’ generators had previously been red-tagged by the TSSA ( Technical Standards & Safet y Authority) for non-compliance with the Ontario Installation Code for Oil Burning Equipment (CSA B139 ON 06), making the transition to emerg enc y p ower complicated at an already complicated time. W hen a generator doesn’t c o m p l y, s u p p l i e r s a t w o r s t w o n’ t deliver fuel, and at best will not pump the diesel to the building from a fuel delivery truck, so fuel must be manually transported up the stairs or elevators. A new option, the combined heat and emergency power (CHeP) system, addresses the impending sustained o c c u p a n c y re q u i re m e nt s . I t ke e p s residents in their buildings with more than the bare essentials no matter how long a power outage lasts.

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REGULATIONS

The intent of the new sustained occupancy requirements, still under

development, is to mandate multi-unit residential buildings to provide power to more building services in a prolonged power outage. CHeP uses a natural gas microturbine. Natural gas is an approved fuel source under CSAC282, and an interruption of natural gas service is almost unheard of, so there’s virtually no risk of backup fuel being depleted. It also runs c o n t i n u o u s l y, g e n e r a t i n g a s m u c h as 80 per cent of a building’s day-to day electricity requirements for space heating, domestic hot water and more, s o i t ’s a l w ay s b e in g te s te d u n d e r

load. Essentially it’s like a boiler that generates electricity on a day-to - day basis, and within 15 seconds of a power outage automatically transforms into a reliable back-up generator. With all that wild and woolly weather and new sustained occupancy p owe r re q u i re m e nt s c o m i n g d ow n the pipeline, now’s a prudent time to evaluate a building’s approach to backup power. 1

J a m e s Ke n n e d y i s a p r i n c i p a l o f Toronto - based Magnolia Generation, whi c h s p e c i a lize s i n the mu lti - u nit re s i d e nti a l C H e P m a rket. M a g n o li a G e n e r a t i o n’ s t e a m h a s 15 y e a r s o f h a n d s - o n ex p e ri e n c e d e p l o yi n g microturbines into CHeP applications. F o r m o re i nfo rm ati o n , v i s i t w w w. m a g n o l i a g e n e rati o n i n c .c a o r e m a i l jkennedy@magnoliaenergy.ca.

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SMART IDEAS

The VAULTS North Calgary — Artist Rendering © VDC (CNW Group/The Vaults Development Corp)

Car condos get luxury spin A developer plans to rev up the standard vehicle storage unit with highoctane features such as spacious mezzanines as well as amenities including an owners’ clubhouse and wash bay

The Vaults Development Corp has announced plans to open its luxury storage condominium development, the VAULTS North Calgary, in October, 2016. The project features an owners’ clubhouse, large wash bay and 43 customizable individual units with mezzanines that start at 1,650 square feet. Units feature 24-foot ceilings, allowing items to be stored below the spacious mezzanines; natural light from large upper windows; large electric overhead doors that allow for flexibility with interior parking; and concrete construction for security. “Car storage condominiums have been available in North America for over a decade,” said Joe Mahovlich, president of Vaults, in a press release. “After visiting and researching different formats and locations, we set our sights on establishing a higher standard that would create an inspirational space while providing a secure storage solution.” The VAULTS North Calgary is close to Calgary International Airport and a 15-minute drive from Calgary’s downtown core. Unit pre-sales have begun. The developer also has plans for Revelstoke, B.C., South Calgary and South Winnipeg-based projects. For more information, visit www.thevaults.ca. The preceding news brief originally appeared on the REMI Network.

62 CONDOBUSINESS | www.condobusiness.ca


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