Wasted Condo Money

Also click here for Horror Stories About Special Assessments. Other relevant sections are the letters in Condo Fraud, Kickbacks and Conflict of Interest and, in the main part of this website, Misuse of Funds, Kickbacks and Fraud.

Basically, problems of monies being ill spent stem from the qualifications and ethics of boards and managements as well as from issues of conflicts of interest. Qualified boards generally communicate well with their owners, are transparent, and accountable. As a result, condo funds are properly spent and the issues described in the letters below occur less often.

Letter: How do we prevent the board from running very large surpluses year in and year out even though we have a very good reserve fund (about $900K)? I ask this question because we have a budget of a little over a million with a surplus of 350K+ and this seems unfair to us owners because the board is piling up money at our expense and keeps our fees increasing by about 6% yearly even though this is a “no frill” condo. Each year, sure enough, the board and manager use this money to add all kinds of fancy things we don’t need such as a lavish party twice a year, catered and with a DJ, add new furniture in the lobby so much so that there is barely space to move, lots of new cameras inside and out, it’s like the CIA, new outfits for the staff that makes them look like a French movie, lavish drapes in the manager’s office, and the list is endless. We complain but nothing doing because the condo lawyer stands by the board and manager. Our money is like their private bank account. Thank you so much.

—September 2013, North of Toronto

Letter: [This letter is a condensed version of two letters from the same owner. It contains board, management, and possibly fraud issues. But, above all, moneys are being wasted.] Hello I need help with 2 issues. I live in a condo townhouse at [stacked townhouses]. I bought a unit on the 1st floor... 4.5 years ago and I renovated at the same time pf purchase. My management requested a notice of entry to inspect for renovation and I had complied. The Manager came in checked my unit, took pictures and I was told I made the place in to a beautiful place to live.... now managers have changed [but same management company] the new manager was kicked out from our neighbouring condo corp for harassing owners... since last May the management keep sending me notices to inspect my unit for recent renovations-- 3 notices in the past month. I went to the offfice and told manager I have not done recent renovations and my neighbours are my proof. I was told I do not have a choice: I have to let her in or I would be in trouble. I complied, we set up a time which is suitable with me, I waited the full day and no one showed up. This week I receive a letter again, same notice, to inspect unit for recent renovations I went to the office, asked the secretary to check my file for the inspection done 4 years ago. I am told there is nothing there. The whole inspection of my unit is missing from my files!!! Do I have to let the manager in to inspect my unit so they can stir up problems for me?

Our condo corp is huge... yet it is so poorly maintained .We have light posts outside rotted which have fallen down for months and no one bothers to fix; if a child is to touch the fallen post in the winter or on a rainy day for sure it will be electrocuted--a disaster is waiting to happen! Our swimming pool has a black rim around it, out whole property is falling apart. The necesary repairs are not being done. Yet last year our underground parking garage was totally repaired: a substantial amount of our reserve funds were used up. We were told the city had given orders to have it repaired but it turns out there was no work orders and conveniently the contract was given to a company where our board member works. When I phoned to complain of the area not being sweeped and leafs not raked I was told " We dont have a landcaper" yet our financial stmts show payments made to one... Our financial stmts show a lot being done for huge $$$ yet in reality there is not much done. When we question these amounts we are somewhat zipped up ....

I pay a fee of $710 for my town house. The same president has been on board for the past 8 years, the rest of the board members are his pets. What he says is what gets done or the manager lose his or her position. 85 % owners are immigrants and are afraid to speak up because of the harasment... This board is corrupted yet the president is extremely smart! We also have a suspicion during the AGM the proxies are also tempered with. Our proxies go to the office and the office is the board. All hate the members of the board yet they keep coming back year after year.

— January 2013, Toronto

Letter: I am hoping that you can help us. We have lived in this condo for 10 years and it went well, good board, good manager until about 2 years ago when we got a new president and a new manager. Up to that point, we had and a very good reserve fund and the fees were reasonable, the place was well maintained and there was a good community spirit. Then this new president was instrumental in getting a new management company and manager and things started going downhill. We think that he bullies the board with the help of the lawyer and manager. Immediately, new expenditures started appearing, all kinds of new things were replaced even if the old ones were not so old and still well functioning, and had not been listed on the reserve fund study for a long time from now. Some of these moneys went against the reserve fund and others from the surplus that the previous president used to maintain our fees at a competitive rate. But the worse part is that the huge repairs and replacements were done by contractors without the usual bidding process and the figures in the budget show lump sums of $280,000 the first year and this past year $543,000 against the reserve, plus another set of figures in the range of $45,000-$126,000 in the regular budget under plumbing, contracts, heating, pool and we just don’t understand what applies to what. Besides, looking at all they did, which was already too much, these totals add up to over $lM just in two years and this does not fit....the first year, our fees went up by 18% (usually it was 1%) and then by 25% this year. They need more money to catch up with the reserve fund, they write, but they have looted it. Two of the many contractors used are related by family to the management company and one of them is not even qualified to do the work in any of the areas that we have seen.... if we ask questions about this, the manager gets very angry and after that the entire staff stops being nice to us, whether it is security, housekeeping or whatever. Finally, three owners that asked questions have received a letter from the condo lawyer telling them to stop their harassment and had to pay for it and are now terrorized. These fee hikes are never put in the status certificates and I have seen only one of these and the previous owner next to me had raised some questions and they refused to give him a certificate and he had to sell at a lower price because the buyer wanted a certificate and is now very upset that they didn’t know about the second hike in fees. Please can you advise us? We want to move out.

— January 2013, south of Toronto

Letter: We have this situation whereby the board has been spending a lot of money in the past 3 years renovating or upgrading all of the common elements ....Most of these did not need to be done right away and all of these came way over price according to several owners here that are in the know professionally. There has been nothing that we could have done because the board never let us know until the deed was done of how much all of this cost and they did only because someone asked at the AGM and we were lucky that on that particular day the corporation solicitor that always chairs the meetings did not object, which he generally does, such as trying to pass by-laws without any discussion being allowed last year. ...

I want to add here that our board surrounds itself with managers, solicitor, CCI advisors, and all these contractors. They never consider what our opinion is and even if we make it heard, they just shrug it off. This president in particular just seems to enjoy spending money. So the inevitable happened, our reserve fund fell below its allowed mark because in 3 years the board has spent $500,000 in upgrades and I understand that most of this was not only overpriced but also would not have passed the definition of what can go against a reserve fund. As a result, we have just been struck with a huge fee increase in order to refloat the reserve fund. For instance, my fees will jump monthly from $550 to $750. That’s $200 a month more or $2,400 a year or a 30% increase. ...

— January 2013, Toronto

Letter: We have a manager that lets the staff do nothing and instead of making them work, they hire new staff that we have to pay for in addition to everything else so our fees are going up. The board is as good as nothing and although they keep increasing our fees, they also keep upgrading the place and there is no end to the list of things that they are doing, I suspect because it makes them feel good to spend money rather than figuring out ways of savings, such as with helping owners and staff save on utilities....They waste tens of thousands of dollars, our dollars, just in this area alone. I am an engineer and I know all of that but they would not listen to anything. I could go on the board but it would be a fight and I am afraid that once on the board, I would become part of a little clique that has its own agenda and forgets about its responsibility to us owners. I have to mention also that it is the manager that runs the place or I should say her management company because a lot of the useless expenditures we have benefit one of their vice presidents and family.

— January 2013, North of Toronto

Letter: [This is the end part of a letter about abuse of legal letters.] The directors disregard the budget and... we have had 3 special assessments in the past 6 years, for instance, because they have spent too much and paid the manager and solicitors too much...

— January 2013, Brampton, ON

Letter: We used to have a board that was accountable, kept us informed and that made sure that we got good services for our money. That board treated our staff with respect but made sure that they worked. Now we have a board that sees itself in a partnership with the management and the staff rather than with us owners. They stand by the manager rather than by us and they don't seem to dare to displease her and tell her to make the staff work. It is obvious to all of us owners that our staff is not working as they should and no one in charge is telling them anything. So what are they doing instead of making them work? They hire more staff! And of course the manager is happy because this makes her life easier and besides the companies that supply us with staff are friends and the board seems to think that this is normal. So what is happening is that our fees are going up to support a lazy staff that is increasing in size rather than in quality.

— January 2012, Ottawa

Answer: This situation seems to be very common, if one can judge by the number of letters received on this topic. It is too often easier for some boards to simply agree with the manager on just about everything. Yet, it is a board's duty to supervise. When the staff realizes that no one supervises them, unless they truly love their job, they are going to work as little as possible. Once this pattern sets in, it is difficult to rectify. Condos are big business: Can you imagine a private business that would hire people not to work? As another reader said, "this happens only in condos." You also refer to a conflict of interest that is also too common.

Letter: Since our former Board President left we have seen a lot of changes in the appearance of our building and how management works and in the lack of communication from the Board. What worries me the most is that some contractors suddenly appeared here nearly on a daily basis as soon as the former President left and some of the work that used to be done by our own superintendent and housekeeper are now being done by contractors. We’re getting less value from our staff, and money is probably pouring out and more of this is going to happen because the manager seems to like to spend money and the Board has communicated that the building is aging, a good excuse for having contractors here so often. Another part of the problem is that the former President used to elicit our help in the maintenance of our building and used to explain what we should do to prevent various deteriorations from occurring, from the garage floors to plumbing. We just finished repaving the parking areas and this was expensive and some of this is preventable, but no one is informing residents about this. I don’t think that we are told the truth and the not-so-bright manager is misleading the dependent and inexperienced Board. I tried talking to one Board member but that person said that there is nothing that [he/she] can do because the [titles deleted] make all the decisions. What can owners do because I am not the only one complaining?

— October 2009, Toronto

Answer: Frankly, this is happening because there is no accountability in the Condo Act. There is no one you can complain to who is in charge and will come in to rectify the situation. As an owner, you can requisition a meeting and have this situation brought out in the open—but this board and manager may come up with a rafter of intimidating “facts” that will be impossible to disprove. As well, please make sure that you are well documented before you proceed with a requisitioned meeting. Your condo is failing in utilizing its staff to their full ability. Staff should learn some basic, useful skills that keep contractors away longer. What you describe is a very expensive proposition, especially in the long term. Expect fees to go up. Added January 2012: Please refer to the new section on Misuse of Funds, Kickbacks and Fraud. As well, you may want to read letters in Condo Fraud, Kickbacks and Conflict of Interest.

Letter: Our fees are going up by about 3% each year and I am not complaining but there is a lot of wasted money and it is our money after all. For instance we have a full-time manager, full-time superintendent and full-time cleaner for a total of $190,000 or 19% of our budget. I know that we don’t need a full-time manager because all the other buildings our size share their manager with at least another building somewhere else. Plus the super and the cleaner spend half of their time socializing and smoking and lounging about. Either they should work for their money or our board should use them only half time. We could save $75,000. The manager is hare-brained and the board totally rely on her. What to do?

— August 2009, Toronto

Answer: Have you written to the board about this? Second, check out the possibility of having a requisitioned meeting to bring this issue out in the open. (Click here for Requisitioned Meetings) This is also important because, in July 2010, the HST (Harmonized Sales Tax) will kick in Ontario and will be added to the fees charged by companies that contract out supers, janitors and managers, as well as labor costs for plumbing, for instance. This will mean a good-size raise in fees for such services.

Owner's Reply: I wrote my board all right, and they copied the manager so that now none of these people are even polite toward us. They’re so totally lacking in any sense of ethics and they are so ignorant. They don’t have to do anything because they’re not accountable to anyone. Someone has tried before me to requisition a meeting and they made it so difficult that it didn’t take place. Please anyone DO something for us, we’re more poorly protected than car buyers.

Letter: The problem with condominiums is that owners don’t want to learn anything and as a result end up exploited by all kinds of charlatans who call themselves [names deleted] and as was our case, one day serious repairs are carried out at the cost of $500,000 and a new board is elected and finds out that these repairs weren’t necessary. In the meantime our fees go up by 25% and suddenly everyone is up in arms. But it’s too late and the deed is done. Owners have to understand that things can go very badly in a condo very quickly if no one is accountable because owners are not vigilant.

— August 2009, British Columbia