One of the biggest rip offs in Condoland is found set out in the original Disclosure Statement where one specific line item “Property Management” exposes the depths of deception inherent in Condoland.
On average each and every condo building has in its budget somewhere around $250,000/year for “Property Management“.
These unlicensed and consistently unskilled (many on site property managers have never even owned or lived in a condo) “managers” consistently bring with them very little knowledge, skill or expertise.
And did I mention that they draw a quarter million dollars a year from your condo corporation for services that any administrative type person can easily supply? When you meet these people you see just how accurate this point is.
The logical question is “why are developers so generous in building-in this ‘fee for service’ agreement“, right into the actual disclosure statement.
The reasons are obvious and I’ve long advised newly formed condo corporations to terminate the property management contract of the existing company selected by the developer to have the management company loyal to only the condo corporation instead of the developer.
The developer keeps control of the condo through any “interim occupancy” and is responsible for the annual budget for the first year at which time they walk away with their marbles.
There is an “Efficiency Audit or Mechanical Audit or Technical Audit” held not before six months in that critical first year which leads the newly formed board of directors “negotiating” with the developer to remedy any and/or all deficiencies pointed out in the audit.
Now, have you ever heard anything so absolutely upside down as having you buy your home in a building that will invariably have deficiencies (if you look at the “horror show” that is Condoland you will know that this is “the way it is done“) that this novice, untrained volunteer board of directors must now “negotiate” the repair, restoration or delivery of “non-deficient end product” (that thing, you know the “home” that they were told they were buying).
And don’t, for a second, think that there is anything that you can do about it.
Less that 20% of owners of condo units attend the condo corporation’s Annual General Meeting. Every condo board is usually selected from those four or five volunteers that offer to run as board members.
To make any meaningful changes any owner would have to materialize (some how, without names, addresses, etc. of all the owners and some ability to reach out and communicate directly with them all) 60% of the owners to support the change.
So, get it straight, once you buy into a condo in Condoland (for those who haven’t followed me over the past couple decades of covering Toronto, Florida and other “Snowbird” destinations) you had better know that “there is nothing in your control that can materially affect the way your major investment (your home) is controlled let alone managed“.
In Toronto and throughout Ontario, for example, there isn’t even a “Sunshine Law” where all board activity has to be conducted out in the open. In Toronto’s Condoland your only invitation to meetings, decisions and changes is limited to the Annual General Meeting (“AGM”).
Another key awareness that you’ve got to hold close is there is literally no meaningful oversight or regulation when it comes to residential condo construction.
With commercial towers you have only one “client” who is usually a mega-corporation who intends to own and lease out space.
The scrutiny on every aspect by every supplier and contractor is extreme as that “one client” will not use your company again should it not deliver world class workmanship and quality.
The simple awareness that there is no such regulation which leads to no such attention to detail to be found in residential condo construction exists.
Any idiot (and yes I’ve met a number of highly educated idiot developers) with money can become a developer.
I’ve sold units for a Toronto pantyhose maker turned developer at 1001 Bay who knew absolutely nothing about construction and even less about attention to detail or any attention focused on the poor individuals that ended up buying units there.
I saw a third generation of a family business pour foundations for a hotel only to learn that they could not build a hotel on that site.
I’ve seen lawyers and silver spoon sons along the lines of Donald Trump stumble through failed buildings after failed buildings and get away with it specifically because the entire condo game is rigged against the consumer in Condoland.
Condos have become commodities and the end-user “owner” got pushed aside decades back!
I felt so sorry for the consumer back in 2000 that I swore off of selling for developed and launched Condoland’s first condo specialty web site simplycondos.com.
Despite it becoming outrageously successful for a dozen or so years, I have been forced to live with a bad taste in my mouth.
I gave up representing buyers in Condoland because the game was and is so distastefully rigged against consumers that I simply no longer wanted to be involved in feeding the lemmings to the cliff.
My motivation at the time was financial. The consumer was simply being shafted financially and I no longer could chase income for myself by endorsing Condoland.
Consumers continue to speculate today at upwards of $800 per square foot for entry level condos (regardless of the selling price they all get the same lack of attention to detail, quality, sound attenuation, etc.).
That’s how nuts this game really is!
I’m a big believer is the laws of “supply and demand” and despite what anyone tells you, Condoland is sitting on a shadow inventory of unsold condo units with a constant stream of new condos coming on stream at a pace that I saw back in 1989 when the market “crashed”.
Do I think we may relive ’89. You betcha! If not for artificial economy based on our government buying-down interest rates, we would have awakened to the fact that we are there already!