Just When You Think You’ve Finally “Gotten There”, It Starts All Over Again

This is something that I’ve discovered first hand in most condos that I’ve invested in over the years.

Consumers, after being “shafted” throughout the purchase process, and shafted with respect to the physical product that they end up getting, when the finally do get control of their community from the developer you “get it in the head again“!

With our Oakville Case Study, this builder (“Sunrise Homes“) has done a couple things right and a whole lot of things wrong.

Let’s just say “integrity” is nowhere in Sunrise Homes’ DNA.

But their ineptitude and singularity of vision to “get the money and get out of Dodge” coupled with their proven lack of common sense and willingness to lie their through each circumstance as it arises.

I’ve got a day to day lie log of communication with these people.  The sad thing is that there is no mechanism in place to at least make them live by some acceptable standard!

In residential condos there are none!

So, earlier this week I told you that we had our “turn over meeting” and I “locked horns” with the Regional boss of this property management company, who came off so stunning rude that I simply had to confront him on his attitude.

Quite honestly, I found him arrogant and disrespectful to the the owners present at the long await turn over meeting.

Now, I’m not an accountant, but then that’s why condo corporations hire accountants (as opposed to having property management companies rule).

Condo buyers are not sufficiently educated or experienced to hope to be able to protect themselves from the well oiled machines of developers and property managers, so when buyers/consumers attend these “Turn Over Meetings” they are simply “steamrollered” into going along with the status quo, and you can believe me the status quo isn’t in the buyers’ best interest!

I became known for my, across the board advise to new formed and forming condo boards to terminate every contract undertaken by the previous board (controlled by the builder/developer) immediately upon getting control of all records of the corporation and all documents referred to within the body of the Package of Documents.

I have an email dated December 2014 in which I disclose to the builder that the documents “inaccurately say I have received all documents when I had not“, one of which was the property management agreement and for which (along with the “Rules“) I made a formal request.

His email back to me assured me that he would deliver a copy of the management agreement “prior to Occupancy“.

He had failed to honour this undertaking to me.

Two weeks prior to the turn over meeting I received a call from this property manager who alleged to me that he had originally been hired (as disclosed in the email correspondence above) in December 2014 (this was before I had purchased) but that the developer, after entering into the management agreement “went silent for about 18 months“!

He clarified by saying that “the builder had ‘self-managed‘ the development and condo corporation (and property management I’m assuming – potentially a number of conflict of interest issues here!) and he was the President of that newly formed condo corporation.

Developers and builders know how to navigate this game.

They include very lucrative annual contracts for their selected property management company and you can guess why and it’s not to protect buyers!

The “Declaration” advises buyers/owners to “self-manage their community after the first year” (during which time the builder subsidizes the compensation to the property manager – he’s locked into the first year budget anyway).

Then, in year 2 the budget is “short” the cost of the property manager thus maintenance fees shoot up.

I’ve written before about high rise condos in Toronto paying a property manager upwards of a quarter million dollars a year, for what in my opinion is a $50,000/year job!

We requested all documents, financial statements, etc., at the turn over meeting and were assured that they would be forthcoming yet in over a week they were not.

This tells you a lot about your property manager and should send off alarm bells!

The distasteful thing here is that (allegedly) after eighteen months or so of “self management” (where the property management company says the “did not hear from the builder“) Sunrise Homes (the Builder) re-establishes contact with them (this is according to the Regional representative’s presentation at the Turn Over Meeting) in December 2016 (just weeks before the Turn Over Meeting) and enter into a brand new Three (3) Year contract with the original board (it became clear why the builder renegade on his promise to send the contract to me as required under the Agreement of Purchase and Sale.

All of this consumer bashing and no-one to even complain to!

And they call that protection.

The Condo Act does address this very issue but most consumers are unaware, uneducated and usually uninterested (to their own peril).

Clause 111.(1) & 111.(2) clearly state :


111.(1)  Subject to subsection (2), a corporation may, by resolution of the board, terminate an agreement for the management of the property that it has entered into with a person before the owners elected a new board at a meeting held in accordance with subsection 43(1);
111.(2)  To terminate an agreement, the board shall give at least 60 days notice in writing of the date of termination to the person with whom the corporation entered into the agreement;

With our POTL consisting of just 18 homes and the condo component limited to simply the road and 3 street lights and a sidewalk, there clearly is no need or call for a property management company, especially when their new attempt at a budget introduces a 50+% increase in maintenance fees (and that’s before the Reserve Fund Study which usually doubles maintenance fees over the first 3 years in high rise condos)!

The very fact that this three year contract was “slid into place ahead of our turn over meeting” is, to me as a board member “an unacceptable betrayal” by a company legally obligated to represent the “best interests of our condo corporation“.

So you can see, if your newly formed community’s board of directors is not experienced or do not know what to look for (and how would they?) then they are shuffled off into a future of being “controlled” by this type of property management company who apparently hold no legitimate commitment to the owners.

I’m Charles



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