condominium governance       

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          New research investigates condo governance       

                
          Wednesday, October 26, 2016       
        
                    By Michelle Ervin
      
      

New research into condominium governance found that board members, property managers and unit owners have a number of familiar topics on their minds. Lack of community, lack of director education and poor communication were among seven themes identified by Dr. Randy Lippert, professor of criminology and sociology at the University of Windsor, in a recent study.

For the study, Dr. Lippert and his research team of graduate students interviewed roughly 150 board members, property managers and unit owners in condominium dense New York City and Toronto. The individuals represented condominiums ranging in price — more than and less than $600,000 in Toronto — and in size, from fewer than 50 units, to 50 to 150 units, to greater than 150 units.

Funded by the Social Sciences and Humanities Research Council of Canada, the independent research was designed partially to highlight the issues for unit owners and service providers in hopes of improving condominium governance. Going into the study, Dr. Lippert predicted that he would find disputes and dysfunction, based on information available about the U.S. experience with these types of arrangements.

“We expected a lot of conflict, a lot of litigation, and in some places we found that, but in others, we didn’t at all,” he said. “Some condos are run extremely well; if you speak with owners, you find that they’re happy with their property management company, they are not too freaked out about how fast their condo fees are rising, so it was really a mix in that respect.”

The research ran almost in parallel with the Ontario government’s review of the Condominium Act, which explains why they picked up on similar themes. Dr. Lippert said he’s optimistic that some of the legislative changes that were recently passed but that are not yet in force will address certain issues. However, he added, it really depends on the details of the regulations.

One of those changes is to introduce and make mandatory basic education for new directors. Both unit owners and board members reported to the researchers that they were troubled by the fact that directors frequently deferred to property managers on decisions due to lack of knowledge.

Another of those changes is a forthcoming requirement to follow specific procedures for certain procurement contracts. The details of the requirement are to come in the regulations, but it could answer concerns the research identified about conflicts of interest on the part of board members.

Unit owners also commented on the difficulty in combatting breaches of the Condominium Act when they’re up against board members who can call on the corporation’s lawyer as a resource. Dr. Lippert noted that the Condominium Authority, which would provide a cheaper, faster alternative to taking disputes to court via a tribunal, may address this.

But, he said, unit owners questioned whether they alone ought to bear its cost. (It’s expected that the Condominium Authority will be self-financing once established, with a monthly fee of roughly $1 per unit owner supplementing service fees.)

Those with experience locked in conflict with their board considered that the benefits of a Condominium Authority might outweigh its cost — assuming the Condominium Authority is brought to life. Those with institutional knowledge dating back to the 1970s recalled that a ‘Condo Office’ was promised by a previous provincial government.

“They never did anything with it,” Dr. Lippert explained, “so there is the suspicion that it’s just window dressing and won’t really do anything.”

However, the research also found that satisfying the craving of unit owners for communication from their board could be another way to head off conflict. An easy step for boards to take would be to host fireside chats or other gatherings outside of the mandatory AGM, offered Dr. Lippert.

“Actually have more open meetings, which I get can be uncomfortable sometimes for condo directors and property managers,” he said. “But at the same time, sometimes people just want their beef to be heard and that can go a long way in terms of defusing problems and litigation later.”

A common fault line in condominium communities exists between investor owners who do not reside in their units and the owner occupiers who do, according to the research. In particular, these two groups appeared to be at odds over reserve fund spending, and whether to prioritize aesthetic projects or saving for critical replacements.

The research found that unit owners worried about the lingering influence of yet another player in the condominium community, the developer. Owners pointed to examples of developers trying to dodge warranty obligations and install developer-friendly members on the post-turnover board.

All of which is to say condominium governance — and property management — is complicated, as Dr. Lippert observed. He characterized the research as a small, but in-depth contribution to an area that demands further inquiry as millions of Canadians and counting live in condominiums.

“It’s really kind of stunning how much they [board members and property managers] have to know and do,” he said. “Everything from hoarding, tobacco smoke drifting through corridors, fire hazards, mentally ill owners wandering the halls, crime, conflicts of interest on the board in terms of arranging contracts … and just a huge list of ongoing things that they have to deal with in a fair way and consistent with the legislation.”

Dr. Lippert plans to report further on the findings of his work in forthcoming academic papers. He is also finishing a book manuscript tentatively entitled Condo Conquest, which will be reviewed for publication by University of Toronto Press. Anyone interested in obtaining a copy of the final report can contact him at lippert@uwindsor.ca. He is also still interested in reaching more property managers for confidential interviews.

Michelle Ervin is the editor of CondoBusiness.

Source: https://www.reminetwork.com/articles/new-research-investigates-condominium-governance/