The Auditor General of Ontario (AGO) examines government programs, agencies, certain public-sector organizations receiving government grants and Crown-controlled corporations to see if their administrators have spent money with due regard for economy and efficiency and have satisfactory procedures for measuring and reporting on effectiveness.
Here is a brief summary of their findings:
- The initial developer-set condo maintenance fees (for pre-construction condos) were typically understated
- Those responding to their survey, “experienced significant increases in condo fees, ranging from 10% to over 30% in the first 2 years after the condo’s registration”
- The majority of condo boards surveyed were required to increase reserve fund contributions by an average of 50%.
- The Ministry of Government and Consumer Services would like to implement a set of standard terms and forms for key documents relating to the purchase of new condo units, such as the agreement for purchase and sale, declaration and disclosure statement. The AGO found there has been little to no progress on this initiative.
- Require developers to place money in trust to be available to condo corporation if the developer understates common area expenses, or that developers have to pay a penalty if they were found to understate condo expenses by a set percentage compared with their budget statements. The AGO found there has been little to no progress on this initiative.
- Extend reserve fund studies of condo buildings to include the cost of repairs and replacements looking forward 45 to 60 years, instead of 30 years. The AGO found there has been little to no progress on this initiative.
- Looking into removing the option of developers basing reserve fund contributions on 10% of operating expenses and replacing this option with a requirement to have the contributions be supported by a third-party reserve fund study. The AGO there has been little to no progress on this initiative.
The AGO has made some very interesting observations. Many of these recommendations that have had little to no progress would greatly help the transparency for consumers buying pre-construction condos. It’s something the industry desperately needs.