Property Management

April 12, 2019 Published by Toronto and Area Chapter - By Murray Johnson

Consumer Protection or Consumer Cost?

From the Spring 2019 issue of the CCI Toronto Condovoice Magazine.

Looking back over the period from November 2017 and into this new year and trying to articulate what has transpired is overwhelming. In the last 14 months I have had to review, learn and understand over 17 different pieces of legislation, regulation and code just to be able to do my day-to-day job.

I had to learn a new code of ethics that applies specifically to me and what I do for a living. I had to consider how staff performing against the Condominium Management Services Act code of ethics affects the livelihood of the many employees, managers, accounting and support staff we have counting on us. We must be very careful, but then most have always been very careful in how we provide our services.

As managers and directors, we go about learning and trying to understand the multitude of new rules and regulations and we're getting pretty good at that. Managers are learning to adapt to the new regulatory requirements and directors are taking their required training (for the most part). It seems like the mechanics of condominium governance, contrary to some predictions, did not come tumbling down, imploding into itself. We're still here and for the most part we're chugging along and getting things done. Sounds pretty good… or does it?

Contrary to the code of conduct that says we shall not represent ourselves as a professional in a field we are not qualified for, some managers are still offering legal and other non-management professional advice. Directors are taking the courses but they're not all applying the content they learned. The bridge between the mechanics of governance, doing the dayto- day tasks, and the ethical and moral soft skills required to be squeaky clean are getting lost in the noise of condo living and managing. It's very hard to make that split-second decision and consider the new regulations and ethics when you're in the middle of a flood.

No doubt that the vast majority of directors and managers are exactly that, "squeaky clean" and above reproach… until someone steps forward with wild accusations and innuendo and then the ability to defend oneself seems to get lost in the lack of accurate record keeping. Sadly, this new level of so-called consumer protection is far from cost free. Seems everyone; directors, managers, management firms and even owners and residents are taking a stance based on risk mitigation. Are we shifting from customer service to self-protection, and if we are, what is the cost?

When multiple managers have been stripped of their licenses and are unable to practise in this province, I fear that the industry has not taken full ownership of the new license standards and code of ethics. Every manager should be able to recite the conditions attached to their level of license and every director should be able to demonstrate that they are in compliance with ethical procurement, governance and the many regulations affecting condominiums.

Managers are simply not going to say "no problem, we can do that, no extra cost" any more – we can't. Between increased insurance premiums, manager paid license fees, continuing education fees, firm license fees for each manager, and higher salaries driven by increased demand for experienced managers, the cost of doing business has drastically increased while boards continue to look for low to zero percent increases. Even agreeing to place a transitional licensee at the site means that a firm must put a higher level of record keeping and supervision in place… it's simply not a sustainable business plan, something's gotta give!

Smaller "mom and pop" management companies are starting to leave the industry as license fees and insurance premiums increase. Rural condominiums are starting to lose the low-cost service providers who managed much of their business. These are but a few of the casualties of the new consumer protection levels we are now seeing in this province. More and more condominiums will find themselves cut off from the condo network as a result of opting to save money by self managing and exposing themselves to the risks associated with "condominium isolation".

The rising costs of the new level of "consumer protection" will predictably cause some condominiums to self-manage in an attempt to save some money in the short term. Sadly, we've seen some of this before; "condominium isolation" means that many of these corporations are not capable of recognizing that long-term costs have wiped out the short-term savings. They will have lost the back-end networking stability that a professional management company can offer.

Boards will have to learn that they have reached the practical limit of their management in this new age. Salaries of good managers are jumping substantially (long overdue) and the risks everyone is exposed to offer additional layers of cost. Sharing legal opinions from one condo to another will need to stop, legal review of decisions will increase, free project management at any level will soon be a thing of the past, there is simply too much risk and liability.

The need for organizations such as The Canadian Condominium Institute (CCI) is greater today than it has ever been because of this increased complexity. Self managed condominiums need to network and be compliant and without participating in programs presented by CCI, boards will be left to come to their own often incorrect conclusions and suffer in "condominium isolation". Condominiums will always be better managed when linked into the professional world of condominium management and the increased awareness that takes them out of "condominium isolation".

It's a new world filled with overwhelming change and with so much change comes great opportunity. When we look to fix a problem let's agree to also prevent it from happening again. Let's agree that you get what you pay for and that good solid and transparent procurement is essential and must be included in the next round of regulatory change. Let's agree to work together, respectfully and with the greater good as a key component of every decision.