FIRING
YOUR PROPERTY MANAGER - BEST FIRST STEP FOR A NEWLY REGISTERED CONDO
Charles Hanes
January 7, 2008
I’ve been writing about the distasteful disparity in quality developers amidst this
present swath of “also-rans” in this city for a long time now. Fortunately,
thanks to the thousands of emails that I receive from buyers all over the world, some of
you are apparently getting the message.
If you are buying directly from any sellers agent (either presale or resale) you are at a
decided disadvantage! Having represented well over a hundred condo buyers each year for
the past five to seven years now apparently my point is being listened to.
Tragically, my somewhat impressive (for a single Realtor) volume of clients represents
only a “rimple on a dimple on a sand fleas behind” compared to the flood of
novice condo investors who still flood to sales sites with and/or without their own
Realtor (not all Realtors know anything about condos). When you realize that this rather
staggering volume of clients does not even make a blip on the radar screen of overall
Toronto condo sales, you can see why my frustration levels frequently leave me wanting to
either just walk away from this stupid business or go back a join the other side! Oh well,
I’m too old to do that and I find the work distasteful.
So, if I can’t make any positive impact on the overall buyer market out there,
I’m going to give you all one very valuable tip here in this article. First, make the
promise to yourself to attend the board meetings, specially the first meeting (“hand
over meeting”) where the developer literally hands ownership of the building over to
the owners. Up to this point the/she/they (collectively “the developer”) have
been the Board of Directors of the condo that has just formed. At this meeting, they
resign the Board and the new owners form their own board (a group of volunteer owners
willing to put in time and their personal resources to make the condo what it is supposed
to be and/or all it can be) and management and operations, for the first time since
everyone moved in (“occupancy”) come into control of the owners. Up until this
point owners have been in suspended animation, not really owners as they had not title but
allegedly somewhere above renters (although I haven’t really be able to differentiate
where this line is drawn).
So before this meeting you really should look at the election package that is sent around
to all owners just ahead of this meeting. This package will carry to biographies of
anyone/everyone interested in service on the Board of Directors for the condo. If you have
something to offer it is quite smart for you to sit on the board yourself but if time
and/or situation does not permit, at least be sure to attend all of the meeting and make
sure all these board meeting are monthly and open to everyone who wants to attend.
I’ve got tons of documented proof to support the following statement: “No matter
what the price point, developers are absolutely committed to meeting ONLY the MINIMAL
STANDARD of construction quality”. We’ve got settled disputes where the
developer’s litigator insists on “minimal standard” even when it comes to
settling legal deficiency disputes. The best that you can expect is “MINIMUM
STANDARD” unless the documents specifically say otherwise.
You will not find this in any of the glitzy sales and marketing materials that they spend
tons of money on to get you to buy the condo from them. Now, all these “minimum
standards” come in two forms, visible sub-standard workmanship and mechanical
substandard workmanship.
Now remember, the property management company has been brought in by the developer thus
the property manager’s loyalty will rest with the developer who gives them the
contract (and who want to job on their future buildings as well) thus their loyalty is
undivided.
This works the same with the security guard company. Oh, you don’t realize this term?
Well, when you were buying it was called the “Executive Concierge Service” (that
would stand the building apart) but the developer never had any intention of fulfilling
that representation (promise). During the construction period they need security guard
companies to watch the site and try to minimize theft of construction |
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materials. When the
building occupies the developers never hire a concierge company (most are going broke
because they can’t find work in this town) but simply leaves the security guard
company in place.
It is said that many developers receive kick backs from property management companies for
these contracts but that’s fodder for another article. The point is that you never
get your concierge and you get to live with a security guard in your lobby (no training as
a concierge or people skills or subtle understanding of the expectations of a concierge
job). Oh well, condos are the science of compromise all right!
The same applies with the superintendent usually as well. Now, I don’t have anything
against any of these supposed roll fillers but my 30 years of experience has shown me the
best first step for a newly formed condo board is to replace all three roll fillers
immediately at the turn over meeting (or at least give them notice at that meeting as
their contracts usually have a 60 day notice clause).
I am continually bombarded with complaints by developers unable to find “a good
property management company”. I know of a few decent ones but they are few and far
between. I know a couple of terrible property management companies and right up at the top
of my list of nightmare property management companies is indisputably Brookfield
Residential Services Ltd.
I have had first hand experience with Brookfield and they have proven themselves
absolutely untrustworthy and incompetent. They worked with the board of a condo that I
resided in and in the first year of operations the condos budgets literally doubled under
their management or should I call a spade a spade “mismanagement”.
We finally had a new board elected the second year and they fired Brookfield (we were not
the only condo board getting rid of them) but significantly, when we told Brookfield that
we were auditing the budgets, they immediately and mysteriously found a $12,000
discrepancy (to the board’s favour) in their books! Imagine that someone so
conscientious that they would do their own audit before handing things back over to us and
fortunately finding the $12,000 overpay to them before we did which might have led us to
form the conclusion that they were taking money from us that was not authorized.
This is all why it is so important that your condo corporation get it right the first time
out of the box! Brookfield and the “shill board” (board manipulated by the
developer at the turn over meeting). It took two more years to work things out at that
condo so the owners suffered for three years under highly questionable management tactics
at the hands of Brookfield and the corrupt board before getting costs under total control.
Maintenance fell by 50%.
The shill board and the developer’s loyal property manager (“Brookfield”)
allowed the mechanical audit (a very important aspect of a condo turnover) to be deferred
almost a full year. It should have been undertaken no later than six but preferably three
months into registration to allow sufficient time to remedy deficiencies found in the
audit. Of course, Brookfield and the corrupt developer manipulated things together that
insured that the Mechanical audit wound up after the full year under which time the
developer is held accountable. They simply refused to settle the deficiencies requests
submitted by the new board and passed the blame onto the old board.
All of this could have been avoided had the owners taken control of their and their
condo’s lives by doing it right the first time! The refreshing things is that doing
it right the first time is easy! You replace absolutely every contract (property manager,
security, maintenance) immediately upon bringing on the original board of directors.
It is also critically important to realize that if you don’t terminate all those
contracts, immediately they become permanent and things like the security guards become
very difficult and costly to terminate after the fact. You absolutely need your property
management company, security company and superintendent accountable and loyal to the
owners without equivocation!
I absolutely guarantee you that if you swear by this one simple rule (fire them all) your
condo and life experience will benefit immeasurably. If you don’t, then your condo is
destined to flail around in the disappointing mediocrity that consumes a decided majority
of condos in Toronto.
The quality of your condo experience really is tied directly to what you are prepared to
do to make it a better place. Your condo is a reflection of you!
I’m Charles Hanes |
