Condo owner says board's lack of transparency regarding needed repairs cost him $25K

Calgary condo owner Richard Lemaire says he never would have sold his Beltline property and taken a $30,000 hit in this market had he known he would also have to fork over $25,000 for repairs in a special assessment.

Richard Lemaire says key information was not provided during sale of his suite

Richard Lemaire says an unexpected $25,000 special assessment prompted him to speak out and warn other condo owners to ask more questions, get more involved with their board. (Colleen Underwood)

Instead of a two-bedroom, two-bathroom, move-up property, Richard Lemaire plans to do some couch surfing at friends' homes for the foreseeable future, after an unexpected $25,000 special assessment ate away a good chunk of his down payment.

Lemaire says it's far from the image he had in mind when he decided to sell his 880-square-foot, two-bedroom condo in the Beltline last summer.

"So am I moving up or am I trying to rebuild?

"I had, you know, a nice trustworthy car, a new condo, and was going to buy something different … that was the plan, and the reality is completely the opposite," said Lemaire.

That plan changed a week after the sale of his condo in an older building went through. 

Lemaire and everyone else in the 52-unit building were sent a $1.1-million special assessment. His portion is $25,000, and legally he's on the hook for it.

He has to pay any special assessments that crop up between the time of the sale and the date of possession, which is Feb. 3, 2020.

But that's not the real problem, says Lemaire.

Rather, he says the issue is that the property manager, Her Management, and the condo board didn't provide accurate information when Lemaire sold his place — information that he says would have drastically changed his financial situation.

He says the property manager, on behalf of the condo board, didn't supply any building or site reports — which he had requested — that would have indicated the extent of the problems with the complex's brick exterior, parkade, railings and windows.

The building is 49 years old.

"I would have looked at them and said, 'Oh, there's a special assessment coming' and pulled my place off the market because I'm not going to sell it when I'm going to have to pay $25,000.

"I would just hunker down, pay the $25,000 and stay here for a few years."

Instead, he says, after requesting documents to share with the prospective buyer, the property manager sent a letter saying, "There are no structural deficiencies in the condominium complex."

Lemaire says this whole experience has left him frustrated and fed up with condo life.

"I refuse to buy another condo because I think that there's too much risk associated with it. You pay your condo fees and you don't always know what the condo board is up to and you don't know what kind of advice they're getting from the property management company. "

Documents in question

Lemaire paid the property manager hundreds of dollars to provide, if they existed, a long list of documents about his two-bedroom, one-bathroom condo, and the building, Executive Estates, on Oct. 1, 2019. 

One of the requests included:

"A copy of any other building or site report such as a building assessment report, building envelope report, geotechnical report, technical audit, performance audit." 

By law, the board has 10 days to supply the list of documents that are set out in the purchase agreement. 

An arrow points to cracks in the exterior brick wall of the Executive Estates building detected by engineering firm, EXP. (Submitted by Richard Lemaire)

Lemaire says he received the documents on Oct. 15 after some prodding by both himself and his real estate agent. The property manager said some minutes were missing and she would reach out to the board for those minutes.

He says he never received any building, site or engineering reports, which his real estate agent told him isn't unusual because if one hasn't been done, then it wouldn't exist.

Then on Oct. 17, Lemaire ordered a disclosure statement, as per routine in a sale, because he had received an offer.

The property manager, Nathalie Skyrie, as agent for the condominium corporation, sent the letter that same day, stating that the complex had no structural deficiencies and there was no special assessment for this property. 

The deal then went through and the new buyer was set to take possession in February.

But Lemaire says about a week after the sale was completed, he received a letter from Her Management, again on behalf of the condo board, requesting a $1.1-million special assessment. 

The letter says the assessment is to cover the cost of urgent repairs to the building recommended by EXP Engineering. It says the notice follows careful review and numerous meetings with different providers.

There are a lot of condos in the city and there are a lot more going up and I think that people need to be aware.- Richard Lemaire

Lemaire is legally responsible to pay for any assessments that arise before the new owner takes possession. His portion comes to $25,000 and he must pay it immediately, because he's moving out, so he says he put it on his credit line and will pay it off once he receives funds from the sale.

Others unit owners in the building, who aren't moving, have about a year to come up with their portion.

"I'm definitely jaded.… The point of sharing this story is not because I want people to know that poor guy is …financially screwed up because of this. It's that there are a lot of condos in the city and there are a lot more going up and I think that people need to be aware. They need to be on top of what's happening with their property management company and they need to push more with their condo board," said Lemaire.

The kicker, says Lemaire, is the engineering report by EXP was dated Sept. 12, 2019 — two weeks before he put in a request for documents and a month before he received any.

And he's since learned the board and property manager had access to previous building reports, including an estimate for a rebuilding envelope and parkade repairs, prepared by another engineering company, dated May 21, 2019.

That and three others done in 2018 were not shared with Lemaire before he sold his property.

Image of a rooftop railing with spalled concrete on the top. This was one of many issues pointed out during an assessment of the Beltline property done in August 2019. (Submitted by Richard Lemaire)

Board and manager respond

Lemaire says in the weeks after receiving the special assessment, and attending a town hall meeting, he repeatedly asked the property manager why the building and engineering reports weren't shared with him when he specifically asked for them.

Skyrie responded to Lemaire by email saying:

"The board was emailed the draft BECA (Building Envelope Condition Assessment) from EXP in September and met with the engineer on October 17th to get explanations and clarifications on the repercussions that this BECA would have on the building and the owners. Numerous discussions ensued to determine the amount of the special assessment needed and set a date for the town hall meeting. The board approved the release of the report on November 12th.

"As the previous reports were being updated by EXP,  there was no requirement to release obsolete reports. In addition, as all the estimates or quotes mentioned in your email below were just that, proposals, there was no obligations to release these documents. In addition, none of the current board members were on the board when these repairs were discussed, and as such, the current board of directors was struggling to understand the size and financial impact the issues raised would have."

During a Nov. 14 town hall, which Lemaire recorded on audio, Skyrie tells the owners that her advice to the board is not to put out more information than it is absolutely required to, because information may not be correct, or owners may try to sell their places knowing an assessment is coming.

CBC News asked for a comment from the board but had not heard back before publication time.

Skyrie told CBC News she is not able to speak on behalf of the board. 

Need for transparency

Lemaire has sought legal advice but was told it would be hard to prove his losses because he would have had to pay the special assessment if he didn't move, and Lemaire can't say he would have received more money for his condo in the future had he waited.

The lawyer also told Lemaire that suing the condominium board would be expensive and he should weigh those potential costs against his unexpected $25,000 bill.

Shelly MacMillan, with the Condo Owners Council of Alberta, is a strong advocate for the province to introduce mandatory education for members of condo boards, so they know the ins and the outs of the Condo Property Act and Regulations. 

She reviewed Lemaire's documents and says a reserve fund study in 2016 hinted at the deteriorating components of the 1971 building that should have raised red flags for Lemaire.

Water issues in the parkade's ceiling are pointed out in an engineering report authored by EXP. (Submitted by Richard Lemaire)

She also says there appears to be a lack of transparency and communication between the board and the owners — because of the lack of information available in the meeting minutes.

She says it's not clear why one management company was hired when another was actually voted on by the majority of board members.

And it's not known why one engineering firm was chosen over another.

Further, MacMillan says the board's disclosure statement didn't contain any notations for upcoming projects, which could have led buyers and sellers to believe that everything was fine, and that could open up the corporation to legal actions.

"Although this is not a new occurrence in condos in Alberta, this should serve as a caution for condo owners to watch their investment closely, take an interest in their condo documents and always attend their AGMs so that they could ask questions of the board and stay on top of how the board plans to maintain the property and enhance their investment. This will potentially avoid the surprise of a special assessment or at the very least cushion the blow," said MacMillan in an email to CBC News.

Lemaire says he realizes he needs to take responsibility for not taking a more active role with the condo board, or pressing harder for information.

"I park in the parkade and I noticed water leaking but water had been coming into that parkade since I bought this place five years ago, so it didn't alert me to anything." 

Plus he says there were indications in the 2016 reserve fund study that a $2,500 special assessment may be coming — not $25,000.

He now plans to save some money by staying with friends and selling his car, and then buy a place away from the city core.

But he says it won't be a condo.

"I'll plan the maintenance of my home. I'll not rely on others to make decisions. And so, yeah, I won't do it. I'm not going to take on that risk."