Toronto Condo Buyers Need an Updated Condominium Act
Stating that the current 10 year old Condominium Act doesn't adequately serve the needs of todays Toronto condo buyers/owners, a joint committee of the Canadian Condominium Institute and the Association of Condominium Managers of Ontario recently delivered its recommendations for change to the Minister of Consumer Services.
Condominium Director Education should be mandatory
The directors of most Toronto Condos often control corporation assets worth millions of dollars, yet most of the time they're volunteers without specific skills in condominium governance. It just makes sense that they should take an introductory condominium directors’ course. At the very least they should have a basic knowledge of the expectations and responsibilities of their positions.
Developers Deliberately Underfund Toronto Condo Reserve Funds in the First Year
Calling it 'one of the most serious deficiencies in the Act' the committee states that the current wording allows developers to contribute only 10% of the corporation’s operating budget to the reserve fund in the first year. They go on to say 'this is never sufficient...falsely represents the cost of condominium living...puts undue financial stress on new purchasers and engenders discontent in the condominium community when fees do rise in subsequent years to properly fund the reserve fund.' They recommend 20%. New Toronto Condo buyers are fuming!
Ontario New Home Warranty Plan (Tarion) should apply to Condo Conversions
Many Toronto condo buyers don't know or understand that Tarion doesn't cover conversions right now, even when they buy a 'new' unit. (Loft conversions being a prime example) There is simply NO Tarion warranty protection.
If the Act can't be amended, the developers should be obligated to obtain insurance coverage for condo conversions covering major claims relating to construction deficiencies.
Create New Property Tax Assessment Classes for Residential Condominium Units
The committee argues that it's unfair to assess 200 condo units in a single building the same way you'd assess 200 single family homes spread out over several blocks. Both house and condo assessments are based on Current Value Assessment - a rough approximation of resale value. But it takes a fraction of the time and cost to deliver municipal services to Toronto Condo owners. Using garbage collection or snow removal as examples, the condo building uses only a fraction of the municipal resources compared to houses.
Disclosure by Developers on Key Financial Matters and Honest First Year Budgets
Many Toronto Condo Buyers have been misled about the true cost of condo living by developers who hide or artificially depress first year expenses. Someone who's bought a new Toronto condo will often see large increases in common expenses (typically a minimum of 25%) in the second year.
The Developer/Seller sidesteps the facts by absorbing costs such as extra security or elevator and mechanical maintenance contracts, or by deferring payment of mortgages on guest suites until after the first year. They may also include fine print in the purchase agreement that causes the corporation to assume leases or liabilities for things like heating and A/C equipment in the units. (See Buying Your Toronto Condo for the Best Price)
These practices can be manipulative and unfair, and should be clearly prohibited or restricted to protect purchasers from those declarants (developers) who use them.
How Can You Protect Yourself when Buying a Toronto Condo?
One way to avoid the problems associated with underfunded reserve accounts, or artificially low maintenance fees, is to simply buy a unit that's a year or two old. The board of directors will have to deal with these issues immediately once they take over. Make your offer conditional upon approving the Status Certificate. This document describes the financial health and obligations of the condo corporation. Your lawyer will review the Status Certificate, and you'll have the option of getting out of the deal if there's anything you don't like. If you'd like to view the current list of Downtown Toronto Condos or East End Condos for sale, you can use this link.