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Auditor General flags several condo sector oversights

Tuesday, December 8, 2020

An estimated 47 condo boards have experienced significant increases in condo fees, ranging from 10 per cent to over 30 per cent in the first two years after the condos were registered.

Ontario’s Auditor General Bonnie Lysyk revealed this and other major concerns in her first audit of the condo sector and its two regulatory authorities. “The existing legislative model for the condo sector does not address the risks that exist for condo owners and buyers,” Lysyk said in a press release.

She uncovered more proof that condo fees set by developers are played down to attract buyers. Three-quarters of about 690 condo owners who responded to a survey for the audit, experienced increases in condo fees; some more than 50 per cent in the five years up to August 2020..

Reserve funds were also under the microscope. As the audit uncovered, most condo boards did not have adequate amounts set aside in their reserve funds to plan for major repairs and replacements in their older buildings. As a result, they had to pay unexpectedly higher contributions by an average of 50 per cent over a period of up to 10 years to address the shortfalls.

Other findings show key concerns relating to the Condominium Authority of Ontario (CAO) and the Condominium Management Regulatory Authority of Ontario (CMRAO). As of February 2020, 472 individuals and companies did not hold licences but were listed in the Condo Authority’s public registry as providing unlicensed management services. The CMRAO does not proactively identify these unlicensed individuals and companies, she said.

Further, the CMRAO took limited action on nearly half of 200 of the owners’ complaints sampled. The review found that while 103 (51 per cent) of them were handled appropriately, the other 97 (49 per cent) were closed too soon, without the underlying issues, such as leaks and floods, being resolved in a timely manner.

Between 2018/19 and 2019/20, the CMRAO conducted only 18 inspections and six investigations, covering less than 1 per cent of more than 3,650 licensed condo managers and management companies in Ontario. Full inspections were not conducted for every case to verify whether other key legislative requirements, such as contract management, are followed.

Also revealed through the audit was that condo owners did not get part or all of the information to which they sought access in 21 (51 per cent) of 41 cases before the Condominium Authority Tribunal (CAT). In these cases, condo corporations were not required under the law to maintain information such as lists of staff employed by the condo corporation and support for the condo board’s approval of a contract renewal—information that is important to condo owners.

As of March 2020, 1,083 condo directors were serving between two to over 30 boards. Neither the Ministry of Government and Consumer Services nor the CAO collects necessary and basic information on condo board directors and the type of condo corporations they serve to help ensure all ownership interests are being adequately protected.

Lysyk concluded that mandates given to the CAO and the CAT are limited and do not sufficiently protect owners against everyday issues related to condo living. Many of the relevant 2015 amendments to the Act, that would provide more consumer protection, are not in force, she stated.

Both the CAO and the CMRAO do not yet have effective and efficient processes in place. The CAO, she states, cannot adequately protect the public interest and provide more public information. The CMRAO needs better methods to resolve complaints against licensees, conduct proactive inspections of the licensees or to actively identify unlicensed individuals and companies.

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