There is just over a month to go until the amendments to the Condominium Act, 1998, come into force (unless the implementation is delayed again). The industry is abuzz about the amount of work the amendments are going to create with all of the returns, notices of change, certificates, disclosure obligations, etc. So you might be asking “Why would anyone want to create more work for themselves and amalgamate now?”
Many condominiums, especially the older ones, are likely considering amending all of their documents to remove outdated, unenforceable provisions and add some of the new pro-technology options, like electronic voting for owners meetings. The process to amend all of the documents is actually pretty similar to the process used for amalgamation: hire a lawyer to prepare documents, send notice to the owners, hold a meeting to present the new documents, vote on them or collect written consent, and register the documents if approved by the owners. Don’t get me wrong, there is definitely more work involved in an amalgamation than amending documents, but the process is very similar.
Another reason is the cost to amalgamate versus the cost to complete amendments to all of the documents. In my experience, the legal costs for amalgamation may be only slightly higher than amending all of the documents, especially where there are several condominiums to share the costs. That said, there are other costs to consider like surveyor’s fees to prepare a new description for the condominium and reserve fund study fees (if it has to be completed ahead of schedule). Some management companies charge extra fees for amalgamations as well because of the extra work involved.
The other trend that I have noticed is that some management companies are giving notice to end their contracts with their smaller condominiums. The management companies are assessing their contracts and determining if they can make a profit with all the extra work they need to do. For smaller condominiums that really leaves three options: find a manager who will work with smaller condominiums (which is getting harder unless you want to pay higher than average per door rates), self-manage (which seems like a full-time job with all of the changes coming), or amalgamate with their neighbouring condominiums (if there are any).
Amalgamation isn’t easy, quick or cheap, but it can be beneficial. Given that many condominiums will be under increased pressure to pinch pennies anywhere they can, I think the number of amalgamations is going to increase over the next few years. Before you incur the costs to start the process you should discuss it with the owners at your next owners’ meeting or put it in the next newsletter. No sense in incurring thousands of dollars in costs if you can’t get close to the 90% consent that you’ll need. For more information, see our previous post on amalgamation.