Responding To A Reader’s Request Re: “Terminating Developer’s Property Manager At The Turn Over Meeting”


Here’s something that I really enjoy doing as it insures me that what I’m blogging about means something to the broadest array of readers and reflects something that is very relevant in today’s Condoland.

Here’s the request:


I seem to remember a few years ago an article by you about management companies and how new boards should change the developer’s management company once registered.
Would you be able to tell me where to find it or maybe write a new article stressing how important it is for new boards go get their own management companies, lawyers, etc.
I cannot believe how many boards get manipulated by the developers and their management companies. When I say something I am being a pain, so I would like to have something from someone else, especially a person who knows about condos, to send to a few people.    Thank you

Now, I wrote extensively on this issue for years (as the reader’s request says), and if there is any way to get your newly formed condo corporation off to a good start, this is rule #1.

For those of you who are not local to Ontario real estate, Condoland brings with it a very unique characteristic, whereby the developer can “require you” (legally) to take possession of your condo unit when it and the rest of the building is not completed!

So you bought your dream home and ended up living in a construction site!

The halls may not have carpets and the elevators will be clad with plywood with graffiti (rude sketches  and jokes scribbled there by the construction workers, who dominate the elevators for months and frequently up to a year!

Your unit need only have a functional bathroom and running water.

Before you move in you are required to “sign off” on a PDI (“Pre Delivery Inspection”) to identify any “deficiencies” that your well-trained eye (they usually won’t even let you bring in someone to help you with your PDI)

The whole (illogical) concept of “Occupancy” is a topic for another day.

This reader is asking about a decisive step that any rational and unbiased newly formed “volunteer” condo board (usually inexperienced board members) should take to set the newly formed condo on the right track.

You’ve got to know that the developer has hired the property manager of its choice to enable them to continue to exploit the ridiculous situation that is “occupancy“.

That property management company wants and fully intends to get future contracts from the developer so ask yourself:  “who are they most likely to be loyal to, the new board or the developer“?

This is quintessentially a “Conflict of Interest” and your condo board needs its property manager to represent the best interests of the owners.

Condoland has numerous cases of property management companies stealing, taking kick-backs, and exploiting the owners in various creative ways, so finding an ethical, credible property management company is no small challenge.

Another significant thing that newly formed condo boards have to immediately take a close look at is the ridiculous amount of money the property manager is to be paid.

Frequently developers line their pockets with lofty compensation packages.

Our disclosure statement showed almost a quarter million dollars a year for a service that legitimately should run the condo corporation around $50,000.

Check out a rental high-rise and find out what they pay for someone to manage that type of residential high-rise and you’ll see these numbers clearly defined!

Our condo with it’s annual quarter million dollar property management bill gives us an inexperienced guy and an assistant (what the hell takes 2 people to manage a 500 unit condo?) and you’ve got to ask yourself  what cost justifies the huge compensation package.

Well, the two of them don’t.  They get salaries of probably $50,000 and $30,000 so $80k goes to direct compensation for manpower and the balance goes to the company that places these two there.

And what’s worse, our property manager is one of more prolific rule breakers, frequently standing outside smoking in a clearly market “No Smoking” area (talk about setting a “Standard”).

So, to directly address the reader’s question.

Step number one in building a solid foundation for your condo corporation by terminating the contract of the developer designated property management company.

They can be invited to submit their proposal along with other companies from which the ultimate selection will be made.

And you want to be specific that in hiring them, they will hold a legal “fiduciary” obligation to the owners and no longer to the developer.

There a big issues like the “Mechanical Audit” that have to be addressed within the first year of Registration and you don’t want the developer’s “shill” sabotaging the condo corporations efforts.

The only way to move forward from day one is “terminate the contract” AT THE TURN OVER MEETING (many of these contracts need notice and if not executed at the meeting may not be terminate(able) at least without penalty to the condo corporation!

So, to E.M. (today’s write in topic) thanks for your request that I address this.

The more questions asked, the safer your condo corporation and investment will be.

The more comments submitted at this site, the more diverse the dialogue.

I’m Charles


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