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The Best Argument for Licensing

The condominium industry, perhaps as a result of the depth and breadth of the assets making up a condominium, and the people that are living and investing in condominiums in Ontario, has arrived at a new place in its history and has brought condominium property management to a new beginning – licensing.

Based on our history in the industry, we have had, collectively, decades of experience of exceptional, not so exceptional and ugly property management services. It happens in every industry and profession, so this industry is not unique. However, we recognize that the superstar managers we know are brought down by and forced to compete with the ones who are not committed to professionalism.

Property managers, the professional ones, are invaluable and are key players to the industry. Why? Because communities must trust property managers to deliver the services, including handling thousands/millions of dollars, with integrity and honesty and intelligence. This, in my opinion, clearly places a fiduciary obligation on the property managers in addition to their contractual obligations. Am I upping the game for property managers by saying that? No. When you manage assets or value, at law you are a deemed fiduciary. Fortunately, in reality there are many property management companies that perform to the caliber of fiduciary performance because they care about what they do and reputation means something. Unfortunately, there are those that do not.

About 7 years ago, our law firm was engaged to bring litigation against a property management company because the property management company decided to take $50,000 from our condominium corporation clients. The monies in question were gas rebate monies received by the manager on behalf of our clients (in trust). The manager, knowing that these monies were rebate monies to be held in trust, unilaterally and without any authority redirected the rebate monies to the bank account of the property manager. The manager alleged that the Corporation owed money. This turned out not to be true and it appears that it was being used to force our clients to enter into a contract renewal. Our client successfully won an arbitration to prove its ownership of the money, had a court order put in place, conducted debtor examination, found out that the assets of the company had been transferred to a successor company without notices to creditors in breach of the Bulk Sales Act. To date, the management company and its successor, under the guidance of the president (by the way both companies have the same president) has not followed through in paying the judgement even though a breach of fiduciary duty was found!

Enter licensing.

Licensing, if it is done well and enforced rigorously, will help Boards decipher who should be trusted with the care of the Corporation’s assets and duties. And fortunately, there will be consequences for not playing by the rules. Unit owners, directors and investors need to think about the qualifications, skill, education and experience managing extremely valuable assets and Boards need to make sure that they get it right. This is where licensing starts to level the playing field by creating minimal criteria, which, if you cannot meet, means that you cannot practice. Doctors, lawyers, engineers and accountants need licences, which recognize a minimum standardized level of qualification. I much prefer to go to a doctor that is licensed than one who is not - should management be different?

Under Section 34(1) of the Condominium Management Services Act, 2015 (“CMSA”), “No person shall provide condominium management services unless licensed as a condominium management provider or as a condominium manager.” There are two types of licences; 1) a limited licence and; 2) general licence. While the initial requirements for a limited licence are straightforward, in order to achieve a general licence, experience and education are essential. Licensing however is not automatic. In order to be licensed, the Registrar must be of the opinion that the manager must reasonably be expected to be financially responsible and the manager will perform with integrity and honesty, to be of good character, which includes not lying on the application.

There are also transitional timeframes within which managers must apply for a licence, specifically one hundred and fifty days after the CMSA is proclaimed, managers and management companies must apply for a licence if they wish to continue managing. Individuals who have provided management services within the 5 months preceding Proclamation may apply for a limited licence, if the individual has less than 2 years’ work experience. Where the individual has two or more years of work experience but is not a Registered Condominium Manager or does not have the 4 ACMO courses; or a general licence with two or more years of experience and an RCM and/or 4 ACMO Courses; a transitional general licence may be applied for. The ACMO courses are related to Physical Building, Law, Human Resources, and Finance. After retaining a transitional form licence, the manager would have a further 3 years to satisfy the educational requirements of associate with obtaining an unqualified general licence. (This might work well when an older manager may want to work a few more years without going through the stress of examination).

I look at what our client has gone through to try and collect this money, the games that have been played, the failure to pay and I think, together with managers I know, that licensing will be the way to separate the wheat from the chaff.

By Patricia E. Elia - March 2017
B. Comm., LL.B., ATC

Ext:  802
Email:  patricia@elia.org 
Toll-Free:  1-866-446-0811

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All of the information contained in this article is of a general nature for informational purposes only, and is not intended to represent the definitive opinion of the firm of Elia Associates on any particular matter. Although every effort is made to ensure that the information contained in this newsletter is accurate and up-to-date, the reader should not act upon it without obtaining appropriate professional advice and assistance.


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