Owners, Developers And Property Managers

Written by Shlomo Sharon | 05 July 2014

New Condo Guide

When a developer makes the decision to go to market with a new condominium project, he/she needs to prepare a disclosure package containing legal and financial information pertaining to the development. When the purchaser signs the Agreement of Purchase and Sale, the developer must provide the purchaser with the disclosure statement including the first year budget which is often prepared by a management company. While some developers have their own management firms, most will engage a third party who is independent of the developer. It is sometimes confused by owners that the management company is influenced by the developer, which is not the case.

When the City has determined that the development is ready for occupancy, the developer will advise the purchaser of the interim closing. The standards for interim occupancy by the City may cause an inconvenience to the purchase due to on going construction, or improper completion of the unit itself. This is a cause for frustration among owners who bring the deficiencies to the attention of management. The management company is not in a position to resolve any of these issues, as they are only serving in an administrative capacity as a go-between with the owners and the developer.

 

In order for the developer to be able to register the development as a condominium corporation, the City must approve that the development has met all the requirements. The City conducts the inspection during the construction period to ensure that the work meets the plans that were submitted and approved by the City’s building department. Once the City has provided the developer with the condominium registration, within 10 days the declarant (developer) appoints the first board of directors which is referred to as the declarant board. They also sign various contracts among them being the contract with the management company. Once the developer has closed the sale of the majority of the units (50 per cent, plus one unit), he is required to call a Turnover Meeting of the owners. The purpose of this meeting is to hand over the affairs of the condominium to the owners who now elect their own board of directors to carry the responsibility for the condominium corporation.

 

In actuality, it is normally the property management company that coordinates and administers the calling of the meeting, simply because the owners deem the property management to be an extension of the developer. Once the new board is elected, it assumes the responsibility of directing the management company to carry on the day to day operation of the condominium.

 

The management company serves the owners, not the developer (despite the fact that they were appointed by the developer). The first major task of the board is to retain a person with certification by the Professional Engineering Act or the Architect Act to conduct an audit of the common elements, to be done between the sixth and 10^th month after the registration of the condo. The auditor must inspect the major components of the building and property like foundation, parking garage, walls, ventilation, windows, elevators, roof, mechanical systems, fire protection system, as well as landscaping to the extent that it is described as a common element.

It is also a requirement to conduct a survey of the owners to check for evidence of damages to the unit caused by defects in the common elements, and defects in common elements that may cause damages to the units.

Purchasers of new condo units should attend the “Living in a Condominium” seminar conducted by ACMO. This seminar may help clarify the various duties of the parties involved in the daily life of a condo corporation. Also helpful is a seminar titled “How to Service Condominium Residents. Finally, the developer should be held to a higher standard of construction, which forces him to be liable through Tarion (not as an arbitrator) to the owners.

Shlomo Sharon is CEO of Taft Management Inc. and a member of CCI since 2002. Taft Management Inc. is an ACMO 2000 Certified Property Management Company and has been providing property management services since 1996. Visit the website www.taft-forward.com for further information or email him at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .