Self-Managed Condominium Corporations Can Pose Risks
Generally speaking, an owner or one of the board members takes on this role for a stipend. This is permitted by the Condo Act but a by-law has to be passed regarding any remunerations. The condos I know of who self-manage, have done so in order to save the costs of hiring a property manager which can often cost anywhere from $20 to $60.00 per door, per month and is paid out of the owners monthly condo fees.
As a condo owner/investor and condo corporation board member myself, I think the option of self-management can give rise to a whole bunch of problems. For starters, if the manager is an owner and/or board member, they could be in a conflict of interest. Secondly, the oversight of money could be more challenging. Thirdly, the Condominium Act governs the rights and obligations of owners and board members. Without formal training, would the self-managed corporation always know what they are obligated to do or enforce? A quick search on the internet will reveal hundreds of thousands of posts about condo management gone wrong and many relate to governance issues. The odds of problems may be greater with self-managed corporations.
It can be hard to find owners who have knowledge of building maintenance, budgeting, insurance and legal issues and who can also devote enough time to the condominium’s day-to-day business. In addition, a self-managed corporation would really need to have a strong system of checks and balances.
I know in one case in our area, a condo sold in a self-managed corporation and there were no books or financial records and, there was no status certificate available to the buyer. In another case, condo fees were very low but the lack of required maintenance over the years, all run by one person, meant that the property had generally fallen into disrepair and would require a special assessment to bring things in line.
A well-managed and healthy condo corporation can offer you the peace of mind and lifestyle you are looking for. To make sure it can meet these expectations, it is VERY important to get a status certificate which will among other things, outline the governance structure, the financial status of the corporation and any pending legal issues or assessments. If it turns out a condo is self-managed, it is critical that you obtain informed legal advice before proceeding.
If you are thinking about buying a condominium in Southern Georgian Bay, send me an email so we can chat.