Toronto condo owners slapped with big special fees

234 Albion Rd., Toronto. In Ontario, condo boards are not required to hold a referendum or even a public meeting on special assessments.Zillow

Condo owners at two Toronto buildings have been hit by demands for huge sums of money above their regular fees, something industry insiders say may become a wider problem even among newer buildings.

In 2022, owners of condos at Guildwood Terrace (MTCC 1013 at 3233 Eglinton Ave. East) received notice that they would need to pony up extra cash above their regular monthly fees to pay for a $12.5-million “building envelope” project that would include replacing all the windows in the complex’s two towers. The cost per resident ranged between about $25,000 and close to $50,000 depending on the size of the apartment. For some long-time residents of the building, which opened in 1992, the numbers come as a shock.

“My mum’s been here for 15 years, she’s a 98-year-old woman,” said Sandra Ryan, whose mother owns a two-bedroom unit in the building. “My dad’s just passed away and she’s on a widow’s pension; it’s really tough.” Perhaps most galling to Ms. Ryan, the project is slated to take three years. “She’s not even going to see these windows. We just gotta suck it up and pay the balance … but no, it isn’t fair.”

Management at Guildwood declined to comment on the record, but notes the board made several payment options available to residents: lump-sum one-time payments, annual payments or monthly payments. Another long-time resident, Rob Burridge, said the condo board messaged for years that the project was coming and he compliments them on their handling of the first special assessment the building levied in his 25 years living there.

“It’s unfortunate it wasn’t caught with previous boards. I took it that it’s not uncommon; these things do happen,” he said. “Has it affected me? Sure: disposable income is a little bit less, that’s maybe one less trip a year. I’m paying $7,800 a year [in special assessment fees], for some people that’s a down-payment on a car.”

Experts in condo management say the need for special assessments can be caused by everything from genuine disasters or age-related mechanical upgrades to a history of underfunding the government-mandated reserve funds condo buildings are required to maintain.

Up until recently, special assessments were usually seen in older buildings that either had unexpectedly large repair needs or dramatically underfunded reserves. But that pattern is changing, say some in the industry.

“With the new builds, we’ve been seeing a lot,” said Natalia Polis, an associate with Lash Condo Law. “Increasingly with new-builds the developer doesn’t allocate the correct or appropriate amount to adequately fund the reserve fund, so within a few years a reserve fund study shows they’re way under-funded.”

Coupled with an increase in common expenses – everything from management fees to insurance premiums have seen rapid inflation in recent years – many owners are feeling the pinch.

“We created condos from Day 1 to create more housing in less space, but nobody thought about condo costs,” Audrey Loeb, condo law expert and partner with Shibley Righton LLP. “I think we have among the best legislative framework for long-term repairs [in Ontario], but the problem is, we have people who can’t afford to pay for it. And boards who get ousted when they try to do the right thing.”

Whatever the reason, to say special assessments in any circumstance are unpopular would be an understatement.

“There is almost always backlash from owners, and a significant amount of work by both the board and their manager to undertake the whole process,” said Julian McNabb, vice-president with Melbourne Property Management in Toronto. “It is very stressful, emotional and extremely time consuming. … For some, it can be seen as a failure as a board to act and govern the affairs of the condominium as they should have.”

That’s how Ai Ngo feels about her building, Twin Towers (MTCC 655) at 234 Albion Rd., Toronto, which was completed in 1984. After a special assessment that amounts to about $10,000 for each owner, she joined with other frustrated residents and twice tried to force a board change in 2022 through special meetings that would recall elected and appointed board members and replace them.

According to Ms. Ngo, about seven years ago a different board completed a large-scale project to fix the building’s balconies: residents had been gradually paying off a bank loan taken to fund this work through a monthly fee increase agreed at the time. But when a new board came in, Ms. Ngo said it was announced they would do a special assessment to retire a $1.9-million outstanding debt.

“We decided to pay gradually, suddenly in 2022 we have to pay in full … without our consent, with no meeting,” she said. In Ontario, boards are not required to hold a referendum or even a public meeting on special assessments (unlike, for example British Columbia and some U.S. jurisdictions).

The combination of the levy and what she says were process barriers that disqualified dozens of the proxy votes she had collected to recall the board have left Ms. Ngo feeling powerless in her own home, and unsure if the voices of residents will ever be fairly heard. “They will have some reason to say it’s not enough. … They do whatever they want,” she said.

The building’s condo manager Leza M. Blair, with Maple Ridge Community Management (owned by U.S.-based property management giant Associa) declined a Globe request for comment.

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