A recent Globe and Mail article shed light on an ongoing crisis for British Columbia condominium communities: a shortage of qualified property managers. This shortage isn’t limited to the West, however. Ontario’s condo communities are facing similar shortfalls, with the potential for serious financial implications.
Why? The province is home to more than 11,700 condominium corporations, most of which engage professional management, while others are self-managed. However, there are currently only about 1,200 general property management licensees for thousands of existing corporations. And with more condos rising fast, the challenge of finding and competing to retain qualified property managers will only intensify in the years ahead.
This could spell trouble for Ontario condo boards that fail to take steps to manage the financial risks of having inadequate property management—or, worse, none at all.
Factors contributing to the property manager shortage
Under the Condominium Management Services Act, 2015 (CMSA), individuals and businesses providing condominium management services in the province of Ontario must be licensed by the Condominium Management Regulatory Authority of Ontario (CMRAO). As a recently introduced condition of license renewal, property managers must complete a continuing professional education program delivered by the CMRAO. This new requirement takes effect on July 1, 2023.
While condominium boards are typically volunteer in nature, they’re essentially helping to run a business with the many related compliance and reporting responsibilities. Alongside these boards, qualified property managers handle day-to-day communications and operations; manage security and enforce community by-laws; maintain the property in good condition; and manage necessary upgrades, renovations, and contractors, all of which help to maintain property values. Critically, they also help to ensure that financial matters are kept in order.
Attrition, retirement, COVID-19, the relatively recent requirement that property managers be licensed—along with the dramatic rise in building construction over the last decade—have all contributed to the current shortage and related challenges for condo boards.
Playing a crucial role
Yet, without qualified property management, issues may go unchecked and condo management fees can skyrocket due to poor maintenance and cost escalation. There’s also a greater risk that a property’s finances won’t be adequately managed and reserve funds maintained for future capital expenditures or crisis situations. When it comes to condo audits, poorly managed books can result in a plethora of avoidable compliance issues, while negatively impacting the condo corporation’s financial standing.
It’s important to note that condo property managers typically fulfill a wide range of financial responsibilities, including:
- Creating annual budgets for board approval
- Providing and maintaining comprehensive management, financial and accounting reports and budget updates
- Reviewing monthly costs and expenditures based on approved guidelines and the annual budget
- Managing routine banking and monthly reconciliation
- Managing outstanding payments and conflict resolution
- Coordinating Reserve Fund Studies and required updates, while identifying recommendations for reserve fund investments for condo board information and approval
- Helping to ensure that reporting requirements, as outlined by the Condominium Act, 1998, are fully satisfied
- Working with the condominium property’s audit/accounting firm to develop an effective financial management strategy
Certainly, the role of property manager can seem overwhelming when considering the day-to-day responsibilities, combined with the reporting and financial needs of the board and community. This is why it’s important that property owners and condominium corporations don’t underestimate the value of retaining a specialized condominium management firm—one with the expertise to meet the full scope of the community’s operational requirements.
Setting the stage for success
Implementing effective systems, policies and leveraging productivity-focused technology platforms can help ensure that condo communities enter into efficient service agreements with their property management firms (e.g., the right level of service for the community’s needs). Enlisting the services of a qualified management team can even help deliver operational savings that could well exceed the fees paid for their services.
Additionally, by working in concert with the corporation’s audit/accounting firm, this combined team of professionals can help mitigate financial risks, reduce the risk of special assessments caused by underfunded reserves and any legal challenges that could otherwise arise. This approach will help bring peace of mind to the condo board members who volunteer their time to ensure a secure and quality living environment for themselves and those the fellow residents they serve.
Jan Kundakci, Partner