Written by: Katy Campbell, Executive Director, CCI North Alberta
As members of CCI are well aware, the condominium world is often complex and full of nuance, making condominium documents an intimidating read for the layperson. Understandably, consumers looking to purchase a condominium are looking for help and guidance from experts in navigating the complexities of condominium documents provided during the sales process.
Condominium Document Review Companies have stepped in to address this need. These companies offer purchasers an analysis of the condominium corporation’s records, promising to give buyers an informed snapshot of the financial and operational health of the condo they intend to buy.
Given the technical nature of these records and the rising complexity of condominium ownership, it’s no surprise that document review services have become common. To be clear, there are some very good Condominium Document Review Company practices and this service can be effective at informing purchasers.
While the intention of these services may be to provide clarity and reduce risk for purchasers, feedback from our members suggests that there are some concerning practices entering into and affecting the role of these companies in the buying process. This has led to challenges for purchasers, sellers, Boards and Condominium Managers.
What Are the Issues Being Reported?
After being approached by concerned members, our Government Advocacy Committee initiated a feedback process among local condominium managers and legal professionals. The responses were swift, detailed, and at times alarming.
Here are some of the key issues that have been raised:
1. Overstepping Demands to Condo Managers and Volunteer Board Members
Many managers reported aggressive and repeated contact from document review companies, demanding representations or documents beyond what is required under Section 44 of the Condominium Property Act. We have also been told that at times these requests/demands are also being made to volunteer Board members directly. These requests have included:
- Guarantees that no special levies will occur
- Access to contracts, invoices, and scopes of work
- Confirmation of outcomes of future board decisions
- Requests to alter previously approved Board meeting minutes
Members note that these requests are not only inappropriate but also create liability risks if they respond inaccurately or are pressured into giving opinions or guarantees.
2. Lack of Standards and Accountability
There is no current licensing, certification, or training requirement for those providing these reviews. Yet, their reports carry significant weight in real estate transactions, influencing whether or not a buyer proceeds with a purchase.
This raises concerns about misinterpretation or incomplete reviews, particularly around reserve fund balances, ongoing projects, or long-term maintenance liabilities.
There can also be very broad limitations of liability within the contracts for the document review firms, limiting accountability for errors or mistakes.
3. Misleading Buyers
Some document reviewers are reported to market their services as sufficient for mortgage company approval, potentially confusing buyers about what their lawyer or financial institution will still require at the time of sale. There have been reports of:
- Buyers having to reorder updated documents for lenders after reviews became outdated
- Reviewers incorrectly assessing a condo’s financial health, leading to lost sales
- In one case reported to us, a buyer proceeded with a condo purchase based on a positive review, only to face a crippling special assessment soon after possession, something that should have been clearly flagged as a likelihood based on the available engineering report but was overlooked by the reviewer.
4. Burden on Condo Managers and Boards
The time and energy required to respond to these companies, often without compensation, has become a growing administrative burden. Some managers note that reviewers profit from their analyses while leaning heavily on condo managers to “fill in the blanks” or provide additional unrequired commentary.
Is It Time for Regulation?
Some of our members are calling for provincial oversight, licensing, and educational standards for these companies, similar to the regulatory changes applied to condo management in recent years.
Others have suggested:
- Restricting direct contact between document reviewers and condo managers
- Educating realtors and buyers about the limitations of third-party reviews
- Promoting the use of qualified professionals for legal interpretation
- Clear guidelines and tip sheets from Service Alberta about what these companies can and cannot provide
One recurring theme is that reviewers must be held responsible for the accuracy and consequences of their reports, especially when they are used as a condition of sale.
Your Feedback is Needed
Our Chapter’s Government Advocacy Committee believes this issue warrants deeper exploration and discussion.
We would like to hear what the good Condominium Document Review Companies are doing, identify the troubling behavior, and see if we can work towards solutions, the creation of a Best Practice model or otherwise dialogue to help inform the industry.
We are calling on CCI North Alberta Chapter members to share your:
- Experiences with condominium document review services
- Opinions on what, if any, regulation or oversight is needed
- Ideas for how the system could be improved to better protect purchasers and corporations alike
Join us via Zoom for this important discussion
FREE
Members only engagement session
Friday Sept 19th at 12 pm
Questions?
Contact us at info@ccinorthalberta.com or 780-453-9004