Scathing Report of Condo Sector Raises Flags

Initial condo fees set by developers are typically understated to attract potential buyers.

This is according to Ontario’s auditor general, Bonnie Lysyk, whose 2020 annual report raised several other concerns about the condo industry.

Released Dec. 7, the audit revealed 73% of surveyed condo boards experienced significant increases in fees, ranging from 10% to more than 30% in the first two years after the condos were registered. Further, three-quarters of condo owners who responded to a survey for the audit experienced increases in condo fees — some more than 50% in the five years up to August 2020.

The audit also found the majority of condo boards surveyed did not have adequate reserve funds set aside to cover future repairs and replacements. As a result, they had to pay unexpectedly higher contributions by an average of 50% over a period of up to 10 years to address the shortfalls.

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

Further, although Ontario courts can impose fines for offences such as developer misconduct or condo boards not keeping adequate records, the government has not prosecuted an individual or corporation for an offence under the Condominium Act in the last 10 years.

Also revealed through the audit was that the management regulatory authority took limited action on nearly half of unit owners’ complaints. As a result, underlying issues, such as leaks and floods, were not resolved in a timely manner.

What’s more, owners did not get part or all the information to which they sought access in just over 50% of 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 more than 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.

The audit report 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.