UPDATE – We have received inquiries from condo directors asking about how best to evaluate and select new management providers for their condo corporations. Eagle Audit is ideally qualified to advise condo boards on selection of new management. We can help qualify your needs, develop a short-list of candidate providers, and also interview candidates for your new on-site property manager. Fill out our contact form and we will send you our worksheet for selection of new management. As a starting point, we normally recommend that the short-list be comprised of management providers that are certified under the ACMO-2000 program, which offers a higher level of confidence based on reputable practice standards.
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The Globe and Mail newspaper recently published a news article on an alleged wide-scale condo fraud at 38 Elm Street, an upscale condo tower in downtown Toronto.
The news story hints at a disturbing scope of alleged losses, which allegedly include purchase of personal-use items that have no purpose for operation of a condo tower. Here are some of the more interesting quotes from the Globe news story:
• “Late last year, Minto Plaza filed a $900,000 lawsuit against its new property-management company, ICC Property Management Ltd., and the new on-site manager, Massimo Musso, alleging Mr. Musso had spent more than $100,000 of the condo’s money on personal items.”
• “Among the allegedly improper expenses are thousands of dollars spent on underwear, cologne and men’s clothing at Moores Clothing for Men, houseware at a Bed Bath & Beyond store in Oakville where Mr. Musso lived, and items such as an iPhone arm band and a Valentine’s Day card.”
• “The lawsuit also alleges that condo residents’ money went to buy six Nespresso coffee machines even though there were only two coffee machines in the building, and another $9,000 went to pay legal expenses for a small-claims court case against Mr. Musso that was unrelated to his work at the condo.”
• “In 2009, the condo board, known by its legal name of Metropolitan Toronto Condominium Corporation No. 933, sued its property-management company, Brookfield Residential Services Ltd., and the on-site manager, Christine Maitland, after the board paid a contractor nearly $150,000 for hundreds of low-flow toilets that were never delivered.”
The background documents found in public court records for both legal actions involving 38 Elm Street are available for perusal. We invite you to download the October 2009 statement of claim by MTCC 933 against Brookfield Residential Services Ltd., Christine Maitland and Helen Kennerney, and the December 2015 statement of claim by MTCC 933 against ICC Property Management Ltd. and Massimo Musso.
The unfortunate fact is that this sad situation for owners at 38 Elm Street is not an isolated occurrence in the condo world. Condominium management is a deeply troubled business. Although some providers try to do right and uphold high professional standards, condo management fraud appears to be a persistent risk for owners in many condominium corporations, large and small.
Condo industry special interests have tried for years to deflect public attention from the financial disasters that have befallen condo owners due to wide-scale fraud in a portion of the market. But thanks to news stories such as the April 9th article in the Globe and Mail, the full spectre of these concerns cannot be dismissed or ignored.
Thankfully, the Ontario government has noted these festering problems and took action. Wide-ranging reforms to the Condominium Act were formally adopted by the Ontario Legislative Assembly in December 2015. And an entirely new legislative and regulatory regime has been imposed upon the condominium management industry with adoption of the new Condominium Management Services Act, also in December 2015. When both new Administrative Authorities defined under the two Acts are fully launched (projected some time in mid- to late 2017) we expect that accountability and deterrence for rogue activities, including similar improper conduct committed by rogue condominium boards and individual directors, should finally be strengthened.
Are you a condo director with concerns about the performance of the property manager in your building? Are maintenance fees in your condo corporation increasing to unacceptable levels? Is your condo tower managed by a big-name management company that appears not to deliver on its performance promises? Is your condo complex managed by a smaller provider that seems to struggle with basic management responsibilities? Contact Eagle Audit for a no-obligation discussion about what might be happening, and steps you can take to protect yourself and your fellow owners from the risks of condo fraud and condo management negligence.
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There is a big problem with Condos and their property management companies in Toronto. Most of property mngmt are thinking only about profit, but not about reputation and those people that live in condos under their management.