Court Appointed Condominium Administration: The very “VERY” last option.
AVOID AT ALL COSTS
- It is going to cost – big time – basically necessary due to years of neglect
- Many fellow owners will lose their Unit because;
- Monthly common elements fees will dramatically increase
- Special assessments
- Unit value dropping; easily the value could be cut in half and in some situation almost 80% drop of pre Administration value.
- Renewing a mortgage or obtaining a new mortgage practically impossible
- Investor ownership will rise sharply as resident Owners move or lose their Unit
Appointments of Court Appointed Condominium Administrators
In extreme situations of poorly managed Condominium Corporations, a Board of Directors or a group of Owners can request the provincial government to appoint a Court Appointed Administrator to act with the same authority as a Board of Directors.
I have never been a Court Appointed Condominium Administrator.
I have very limited experience regarding Court Appointed Administration but I am sharing what I learned as;
- a Candidate Court Appointed Administrator for a group of Owners (Applicant) vs. the Board of Directors (Respondent) candidate, and
- having minimal access to an active (in fifth year) administration which I believe is a huge black mark in the making for the entire industry including our provincial government.
Those that are looking for additional Court Appointed Administration information should review Holland Marshall’s “Condomadness” site – address can be found under Great Links.
The Courts gives the Appointed Administrator the authority of a Board of Directors in order to manage the Corporation, BUT technically authority is so much more than a Board because;
- The lone Administrator has 100% authority; hence, additional Directors’ oversight is nonexistent (basically a Court approved “Dictator” )
- Owners cannot remove an Administrator as in the case of the Condo Act procedures to remove Director(s).
- If the appointment is challenged at any time, the Administrator has full access to the Corporation’s funds which will be used to protect their Court appointment regardless of the amount of legal costs of the Administrator/Corporation legal representative.
With this kind of dictatorial authority you would think an Administrator would require specific qualifications and the Courts would provide specific guidelines. NOT SO.
- There are no prerequisites or qualification for an Administrator
- No Court approved specific guidelines or job description
- Extremely limited and inconsistent oversight, (our Courts knowledge of condominiums are extremely weak and relies heavily on the legal representative of the Administrator)
- There are no central records of Corporations of current and past Administration
- Different Judges are involved in individual cases of Administration; therefore lack of consistency.
- No follow up; hence no lessons learned
- No weaning out unsatisfactory or questionable ethical Administrators
To make matters worse, from my understanding, it is the Corporation’s lawyer who may recommend Court Appointed Administration to the Board and in addition may recommend a candidate for the Administrator.
You have to question who really has the authority.
Who would be the lawyer’s most likely candidate as an Administrator? My guess would be those individuals that;
- refer the lawyer’s services to their clients, such as an owner of a management company, and
- individuals that unlikely would ever consider terminating the lawyer.
A Board has the authority to select their Corporation legal representative but under administration process it appears the Corporation’s lawyer chooses the Board (the Administrator) – the entire process is flawed, backwards and pretty darn scary.
In the case of the ongoing four plus years of Administration which I have some knowledge, the legal fees (I have no breakdown) is averaging approx. $80,000.00 annually. I have no idea how this can be justified, it is simply incomprehensible especially when you consider legal costs for the collection of fees are that of the Owner.
In some situation (this was the only time I was involved in the process of a candidate selection) two possible candidates were recommended to the Court: 1) the Board and their lawyer candidate and 2) a group of Owners candidate (I was the group of Owners candidate).
As a novice to the process I was shocked; it was not at all what I was expecting.
Each candidate was legally represented and the lawyers act as one would expect in a litigation situation. The Board’s lawyer went for the jugular while the Owner’s lawyer (the group of Owner’s representative) just took in on the chin and squirmed. This is the process in the selection of the individual who I consider the last life line for the Corporation and its Owners.
Outcome – At best it was a knock out in the first round but to be perfectly blunt I felt I never even got into the ring.
Without sounding too bitter; in my extremely bias opinion, the Judge choose an Administrator for exact opposite reasons why I believe the Judge should not of chosen the Board’s candidate.
My summary and argument of the Endorsement
- Proximity – absolutely a closer proximity is convenient but only for the Administrator. At no time would the Corporation turnaround efforts be affected because of distance. There is a management company and if the management company does not have the ability to take care of any kinds of emergencies or make the necessary arrangements, then the management company is not qualified and must be changed.
- Local Trades Connection – one of the main concern (from what I observed) of those Owners that attended the various public sessions (I went to three) for the Condo Act Review was the coziness of the vendors and condominium managers; currently the courts is recommending that this is a requirement to be an Administrator. I would have thought one of the Administrator duties is to assure a conflict free relationship between the manager and other service/product provider.
- Company’s Resources – The Board of Directors typically does not have resources and nor should they be required (unless self managed); all Directors are volunteers. In my opinion an Administrator should be extremely knowledgeable condominium (experienced/educated) conflicts free Director who must demand the necessary resources from the condominium management or seek out others that have what it takes. (It should be noted that the Judge did not deal with the issue of what the Administrator can charge for additional resources to the Corporation etc. even though it should be covered in a management contract.)
This Corporation has now two management companies, both owners are ACMO Members; one overseeing the other, both with obligation to the Corporation’s law firm (an ACMO Associate Member) and all have the same ACMO Associate Members connections. (ACMO Associate Members are required to pay an annual fee and are companies or individuals who provide professional services, products and trades to Corporations)
In January of this year the Administrator, through the Administrator lawyer, requested an extension to the appointment to May 2018, which I believe was granted.
Perception of Coziness
In my opinion the perception of coziness within the industry is well deserved and according to the Endorsement, a prerequisite for a Court Appointed Condominium Administrator.
Bottom line – Before considering Court Appointed Administration please make sure you have done everything possible prior to making this difficult decision to seek out a Court Appointed Administrator – there is no turning back.
As mentioned earlier, my knowledge is limited and since there is a lack of public information regarding Corporations that have gone through Court Appointed Administration, I assume that there are success stories – if you know of a success or you have additional horror stories please share – Thanks.