property management

Condos face crisis in property management

Addressing the talent crunch
Tuesday, December 3, 2019
By Armand Conant

In the past few years, we have all seen the growing shortage of condominium property managers. And as mentioned at the October 5th session of the annual Condominium Conference, many believe we are already at the crisis stage. But how did this shortage arise? Will it get better or worse?

There are several reasons this has arisen, all of which have come to a head at the same time.

By the numbers

Ontario has more than 11,700 condominium corporations. While a good number are self-managed – which, of course, is a very acceptable way of managing a building – most are managed by professional management.

That said, there are currently about 2,500 licensed managers, 1,500 of which are General Licensees, and an estimated 300 of these which are in upper management and do not manage specific buildings. This then means that there are only about 1,200 General Licensees for thousands of existing corporations. And with more condos coming on stream at a fast pace – the talent crunch is only intensifying.

Industry barriers

Historically, experienced managers have not been considered “professionals” when, in fact, they have provided high quality, experienced, professional management services. In other words, they often were not given the respect they deserved.

After pushing hard by the industry, the Condominium Management Services Act came into force on November 1, 2017, mandating the licensing of condominium property managers. At the same time, the Condominium Management Regulatory Authority of Ontario (CMRAO) was created to deal with all aspects of the licensing, training, governance, and discipline of property managers.

As a result of these initiatives, all condominium property managers, or anyone who derives income from providing management services, must be licensed. Someone new to the industry would be a “Limited Licensee,” and once the four mandatory courses have been completed and the manager acquired two years of experience, they would become a General Licensee.

Seasoned managers who did not have the required educational courses as of November 1, 2017, became “Transitional General Licensees” and are required to complete the courses by June 30, 2021. Those who do not, become Limited Licensees who are supervised by a General Licensee. Because of this, it’s not uncommon for managers to not take these courses and retire from the industry.

Lastly, managers must now pay an annual licensing fee. Although some management companies pay the licensing fee for their managers, many managers pay it themselves. As a result of this fee and the required courses, the general view in the industry is that there probably will be many Transitional General Licensees who will not renew their licence once the transitional period has expired, resulting in a further reduction in the number of experienced managers.

A matter of compensation

Although condo property management can (and should) be a rewarding career, it is stressful. Managers are always on the front lines and dealing with day-to-day problems and, in the writer’s view, salaries have historically not been commensurate with the work involved.

This is not to criticize condominium boards of directors or management companies. No doubt, boards are under enormous pressure from their owners to keep common expenses as low as possible; and in this sense, owner expectations can sometimes be unreasonable.

Consequently, in fulfilling their duties, boards work hard to keep the corporation’s costs as low as reasonably possible. This can result in professional services being forced to be too low. And while condo boards rightfully expect the best quality management services, sometimes the demand is for a General Licensee when their building could be managed by a Limited Licensee (under the supervision of a General Licensee). This expectation adds pressure on finding experienced General Licensees.

Sometimes, the situation above can be self-defeating in the sense that driving the costs artificially low or demanding a higher level of management (and thus costs) means that a corporation may have difficulty obtaining an experienced, qualified manager. This is another contributing factor to the shortage of managers.

Same job, more work

To complicate matters, the workload of managers has increased significantly with the reforms to the Condominium Act, 1998 (November 1, 2017). And, in many cases, there was not a reciprocating increase in management fees. These new duties include revised procedures for calling annual general meetings, the Periodic Information Certificate, Information Certificate Update, filing requirements with the Condominium Authority of Ontario (CAO), and more. Some new management contracts reflect the increased workload and, in many cases, the board works with management to ensure they are adequately compensated. However, in other cases, they do not.

As a result, despite significant work by community colleges and the Association of Condominium Managers of Ontario (ACMO) to encourage people to join the industry, there has not been a noticeable increase of people becoming managers.

An aging field

Adding to the issue is the fact that the industry is somewhat weighted in the older manager category. This means there are managers who are retiring and many who soon will be doing the same, including Transitional Licensees. Therefore, the supply of managers is reducing at both ends of the cycle.

As a result of all these forces and the shortage of qualified managers, manager poaching between companies is on the rise. While the movement of people to different companies is normal in every industry, the issue has become particularly acute in this industry given the current shortage. Anecdotally, the author has heard that there are also significant signing bonuses and other incentives being offered to entice experienced managers to change companies.

Filling the property management talent pool

We know this problem is here and that it is growing. So what can be done to reduce and eventually avert this problem?

Here are some preliminary suggestions:

  • Educate the condo industry of the need for qualified, licensed managers (recognizing that there will always be self-managed corporations), their role in protecting the building, enhancing the market value of units, and in helping in improving the condominium community.
  • Improve public awareness and promote the fact that property managers are, indeed, professionals.
  • Educate unit owners that managers and management companies are to be properly compensated (and some of their costs covered, such as licensing fees), which will attract people to the industry. Owners have to remember that you get what you pay for.
  • Find additional ways to entice people to join the industry, such as younger people looking to start a career or those thinking of changing their career.
  • Find ways to slow down the retirement or withdrawal from the industry.

The property management talent shortage will grow, and the problem will become more acute. It is not all doom and gloom, however, but rather an urgent wake-up call.  With a concerted effort by all of us in the industry, we will weather this storm and become an even stronger and more vibrant industry making for healthier condominium communities.

Armand Conant is a partner and head of the condominium law group at Shibley Righton LLP. He is past-president of the Canadian Condominium Institute (CCI), Toronto chapter, and chairman of the joint committee that prepared the legislative brief to the Ontario government regarding suggested amendments to the Condominium Act.

 

3 thoughts on “Condos face crisis in property management

  1. Really interesting read. As someone who lived in a loft condo at MTCC1177 90 Sherbourne St we found the property managers – of which the Board of Directors went thru several – were all wholly incompetent. In fact several of these condo management co’s were corrupt financially. They also seemed to spend far too much time harassing and bullying condo owners (their clients which they tend to forget) than in keeping the condo safe, accessible and warm even! Mind you it is also important to note that Condo Management co’s are often a reflection of corrupt and poor Boards of Directors . On a positive note, First Service and the Board of Directors at Upper House in Leaside are top notch so there are good managers out there.
    With formal schooling and training, removal of corrupt and bullying Boards of Directors and enhanced Provincial governance I believe there should occur enhanced #CondoManagement Co’s.

    • Hi Jane,

      Thank you very much for your comments. Our industry does have challenges, that’s for sure. I am very pleased to hear about Upper House and thank you for recognizing our team. While our investments in training and technology are critical, we appreciate and understand how important our front line teams are to the service experience! We have a fantastic team there at Upper House and I’m glad it’s showing. Thank you once again for sharing your experience.

      Mark D. Hopkins
      President
      FirstService Residential
      [email protected]

  2. In Muskoka we are extremely fortunate to have the expertise of MCRS. Owners Debbie Dale and Kristen Dale have done a tremendous job getting our condominium corporation in ‘ship shape’ after a number of years where a couple of incompetent and devious board members’ actions caused many problems including poorly thought out decisions, Condo Act infractions and manipulation of the previous manager. Debbie and Kirsten have brought a high level of management skills and diligence during a period of divisiveness amongst the owners.

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