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Auditor General’s Annual Report Takes Issue with Ontario’s Condo Sector

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The province’s annual report card from the Auditor General was released today, which included 13 stand-alone value-for-money audits, including an audit of Condominium Oversight in Ontario

Auditor General Bonnie Lysyk’s sweeping annual report covers a wide range of areas, such as the oversight of retirement homes and condominiums, and co-ordination of Indigenous affairs, as well as the delivery of virtual health care, which has increased in use significantly since the onset of the COVID-19 pandemic.

According to the report, Lysyk found many condominium purchasers may not fully understand the financial implications, such as maintenance fees and reserve funds needed for repairs, of buying this type of home.

The audit also found that condo owners had difficulty accessing condo corporation information and records, and complaints were closed too soon.

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“The existing model for the condo sector does not provide effective consumer protection and does not address the risks that exist for condo owners and buyers,” the auditor warned in her multi-volume 1,444-page report.

“For example, reforms not yet in force at the time of our audit included changes to help ensure that condo buyers receive accurate financial information about the cost of purchasing and maintaining their home,” she said.

“This has resulted in some condo developers understating condo fees so as to stay competitive with other developers to attract potential buyers.”

Lysyk also found problems with the Condominium Authority of Ontario, noting it “lacks the ability to inspect or investigate potential abuses or misconduct by condo boards, or investigate non-compliance and enforce compliance with the relevant legislation and regulations.”

Another agency, the Condominium Management Regulatory Authority “does not effectively address complaints, inspect condo managers and management companies proactively, or identify unlicensed individuals and companies providing management services,” the report says.

“Overall, we concluded that the mandates given to the Condominium Authority of Ontario (Condo Authority) and the Condominium Authority Tribunal (Tribunal) are limited and do not sufficiently protect condo owners against common issues that they may encounter in their daily condo living,” reads the report.

“Many of the relevant 2015 amendments to the Condominium Act, 1998, that would provide more consumer protection giving condo owners and boards a stronger ability to manage their ownership interests and/or responsibilities effectively, are not proclaimed and therefore are not in force.”

The audit also found the majority of condo boards surveyed did not have adequate reserve funds set aside to cover future repairs and replacements, while purchasers are not provided enough information on how condominium fees are set and managed.

Other significant findings included that initial developer-set condo fees are typically understated — the audit found that 47 condo boards, representing approximately 73% of the 63 boards that responded to the relevant question in the auditor’s annual survey, experienced significant increases in condo fees, ranging from 10% to over 30%, in the first two years after the condo’s registration.

What’s more, the audit revealed that hundreds of unlicensed individuals and companies provide condo management services. According to the report, 316 individuals and 156 companies that did not hold licences were listed in the Condo Authority’s public registry as providing condo management services and were associated with a total of 713 condo boards with over 44,000 units, as of February 2020.

Lysyk’s report was tabled in the Legislative Assembly Monday morning.

You can read the full Value‑for‑Money Audit Condominium Oversight in Ontario here.

Toronto Storeys reached out to the Building Industry and Land Development Association (BILD) for comment but had not heard back at the time of publication. 

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