Governance

January 24, 2025 Published by Golden Horseshoe Chapter - By Dave Williams

A Chat with Ali Arlani, Chief Executive Officer and Registrar of the Condominium Management Regulatory Authority of Ontario (CMRAO)

From the Volume 22, Winter 2025 issue of the CCI GHC Condo News Magazine

What follows is our third interview involving participating and supporting organizations in the condo industry in Ontario. The following responses to our questions come from the Condominium Management Regulatory Authority of Ontario (CMRAO).

It is worth noting that the CMRAO and CAO have developed some excellent educational tools and training programs. These programs are of assistance to condo Board members, Property Managers and condo owners/residents. 

DW. If you were to write a “brief next 5 year” vision statement for the condo industry and the CMRAO involvement in it, what would it look like?

AA. This question is very timely considering that our Board of Directors is just wrapping up its strategic planning exercise. Although the new plan will set out the vision for the organization for the next 3 years, it also considers a 10-year horizon.

One thing that stands out is the importance of well-informed condominium managers. Managers need a strong foundation to begin with, but they also need to keep up with trends in the industry. This translates into better service provision, and in turn, higher levels of trust from condo boards and condo owners/residents. The public has to be confident that the assets of condominium communities are being well managed and protected.

DW. The industry has many challenges currently. These challenges include a shortage of property managers, possibly skill sets of property managers (given more complex issues to deal with), need for better industry communications generally, need for condo board directors to have better all-round experience, underfunded Reserve Funds and in some cases rapidly increasing fees.

The current industry players, ACMO, CCI, CMRAO and CAO will play an important role in making improvements in the next five years. How do you see marshalling these various groups to organize and co-operate with respect to accomplishing the needed improvements?

AA. Continuous collaboration amongst industry players is critical. We all have unique roles to play, but it is in everyone’s best interest that we work together and support each other. We have developed strong relationships with other regulatory organizations like the Condo Authority of Ontario (CAO), the Home Construction Regulatory Authority, Tarion, the Real Estate Council of Ontario, as well as other key industry partners, and we need to continue to build on this.

You mentioned the shortage of condo managers, and this is something we are keenly aware of. The sector, and the organizations that regulate it, need to help enable the supply of competent condominium managers to meet the demand for them.

From its inception, the CMRAO has benefited from being a digital-first organization. The data we collect through licensing, complaints and compliance activities, as well as through our partnership with the CAO, has given us great insights into the condominium management landscape across the province.

DW. Do you think the average condo corporation understands the need to fund the reserve appropriately (from inception) to meet the challenges inherent in building (asset) deterioration over time. Also, are you comfortable that the average condo manager can “coach” their boards in terms of good reserve management?

AA. This is such an important aspect of the long-term health of any condominium corporation, which is why earlier this year we published a three-part series on reserve funds and reserve fund studies.

The CMRAO needs to provide managers with the right resources so that they can more easily understand the core principles and legal requirements of reserve fund management, including:

• what a reserve fund can be used for
• when to conduct an updated reserve fund study
• who can and should conduct the study
• what kind of investments are permitted

Managers also need to understand their own limitations. Engineers, financial experts, auditors and lawyers all play key roles in supporting the board’s management of reserve funds. When managers are given the right resources, they can in fact “coach” condo boards on the importance of these requirements and help influence positive outcomes for condo owners.

DW. A blend of reasonable assessments and supportive funding of the reserve could be a solution to modern condo financial management. It could be said that residents should be a part of deciding about this process and not something done by the board in isolation. What would be the CMRAO position on this. Also, allowing a slight move upwards in terms of return rates of monies invested in the reserve fund could help. Any comments on this as well?

AA. Communication and collaboration are key. At the end of the day, owners are the ones who feel the impact of how the reserve fund is managed, and managers can support the board in keeping owners engaged.

The reserve fund study can only provide an estimate for future needs and even well-run condos sometimes run into challenges. When the condo community must finance unexpected costs, management might for example advise the board to hold a “town hall” with owners to discuss options.

Although it is up to condo boards to make decisions, keeping owners informed can go a long way in terms of building trust and keeping people calm in challenging situations.

DW. Five-year plans are quite common for well-managed corporations. Good “rolling” five-year plans are updated annually, dropping the current year and adding a year at the end. One of the major benefits is continuity of governance in terms of achieving future goals.

A good five-year plan would be different in its objectives from  the “reserve study.” It would force boards and condo managers to look more closely at future spends on asset replacement annually, to adjust on the fly and be in position to work more closely with “reserve study suppliers” in preparation for the next review.

What is the CMRAO position with respect to ensuring that Condo Corporations plan appropriately? Should five-year plans be mandatory? Should property managers lead their condo boards in annual planning exercises?

AA. Managers have different obligations to condominium corporations in this area. At a minimum they need to keep their boards informed in a timely way of any information about the condition of the property that they have a contractual obligation to manage, maintain or repair. If a management provider is aware of issues with the property, they need to make sure this is properly communicated to the board and the reserve fund study provider to make sure that this is included in future plans.

DW. People arriving at retirement often purchase a condo to downsize, economize and eliminate maintenance tasks. Appropriate “reserve funding” can often, over time, put their monthly costs “out of reach.” This phenomenon is probably more evident after the recent round of inflation. Do you see a fix for this?

AA. Condo living can come with lots of benefits, but owners must remember that these conveniences are not free. Whether you own a freehold property or condominium unit, it makes no difference: owners have to budget for the future repair and maintenance of the property. Condominium corporations are unique in that owners need to work together to ensure that their reserve fund is appropriately financed. Condominium managers can help in this area by encouraging their boards to follow the legal requirements: conduct reserve fund studies on time, create a plan, engage the right professionals.

I do not think appropriate “reserve funding” puts monthly costs out of reach. In fact, the opposite—failing to appropriately fund the reserve fund—is what leads to trouble. You can pay for it now or you can pay for it later, but neglecting the condition of the property is not in the owners’ best interest. Delaying necessary repair and maintenance can lead to higher costs in the long run, devalue the property, and simply put, it can be dangerous. Anyone who purchases a condo should pay attention to the property they are considering, the physical building condition, and the corporation’s finances, including the health of the reserve fund.

Providing information about condo living, in plain language, to condo buyers may also help them to understand and be better prepared for future financial obligations.

DW. In my experience, condo boards can be notoriously lacking in “the art” of communicating with their residents. How do you see mandating better communication practices?

AA. Effective and consistent communication, particularly in settings like condo buildings, is critical for well-managed condo communities. Interpersonal Relationships and Communications is one of the core competencies identified in the CMRAO’s Competency Profile for Condominium Managers 2019, and constitutes part of the training required for managers.

DW. The cost of “Property Management” fees towards the overall costs of any condominium’s monthly expenses is fairly insignificant. If say a 50% increase in these costs could provide a higher skill level in the sector, that might offer more objectivity and informed input to board operations. Would that not be attractive to most condo corporations?

AA. Increasing the skill level and knowledge within the management profession should be attractive to condominium corporations.

The consultations the CMRAO has held with industry leaders tell us that there is a high demand for managers with a General Licence. That said, there are about 4.5 condos per General Licensee in the province. This disparity combined with high demand are leading to higher wages for condo managers, and management providers have had to adjust. But simply increasing salaries does not translate to better service. In order to hold a General Licence, a person needs to meet certain experience and education requirements. In addition to that, General Licensees need to keep their knowledge current through ongoing continuing education requirements. This is a marked change from before mandatory licensing came into effect.

DW. Further to the above question. Competition amongst PM companies is keen. My guess is that they are often afraid to increase prices for fear of losing an account. That said, CMRAO introduced a document outlining a number of skill areas that should be considered in hiring future Property Managers. I think there were approximately 79 skill areas outlined.

So, the question is this. Is there a role for CMRAO to play in helping Condo Boards to understand that raising rates (of PMs) could be a benefit to being advised by better trained and educated future managers?

AA. The CMRAO has an important role to play in educating the public about our mandate and what that means for the condominium management sector. This includes condo boards as important stakeholders. Condominium management is a challenging profession. Managers are expected to have a solid understanding of the legal framework that condos operate under, as well as knowledge of financial practices and building operations. But more than that, managers also need to have ‘soft skills’ to work and engage with so many different people within condo communities: owners/residents, board members, lawyers, auditors, engineers, and all the different vendors that service condominiums.

Last year, the CMRAO introduced a new mandatory Continuing Professional Education (CPE) program for General Licensees, and this has been very successful. General Licensees are required to accumulate 10 CPE credits each year to maintain their licence. It is a major investment in both time and effort to get and maintain a licence as a condominium manager.

We thank Mr. Ali Arlani for his frank responses to our questions. Mr. Arlani is the Chief Executive Officer and Registrar of the Condominium Management Regulatory Authority of Ontario. Mr. Arlani holds a Doctorate Degree in Building Engineering, a Bachelor of Commerce in Economic Management, and is a graduate of Queens University’s Public Executive Program.

This is the final in our series of interviews. Once again, we thank the CAO, ACMO and CMRAO for their support and participation.

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Dave Williams is a retired corporate executive and graduate of York University. We would love to hear any comments, and they
can be addressed to williamsdavem7@gmail.com.