Immigration Policy Canada – some thoughts

One of the difficulties with formulating immigration policy is that there are numerous interests which approach the topic from different perspectives. Economists tend to focus on the economic impact on those countries which are the source of migrants and those which receive them. Various dimensions are considered. For example, one country may lose productive members of its labour force while the other may gain, and there will be effects such as the costs and benefits of integrating newcomers into the economy. Other economic topics include the size and impact of remittances sent back to the migrants’ home country. These are now estimated at $400 bn annually worldwide. Compared to further changes to free trade and capital movements, a recent study estimates that world economic welfare would increase markedly with freer movements of labour (Michael Clemens in the Journal of Economic Perspectives, Summer 2011, pp83-106). Such estimates are noted to be hard to calculate because of the possible negative effects on the societies which receive the migrants. This is where it becomes difficult to compare and measure economic with non-economic interests which are part of the conversation on immigration policy.

Non-economic interests are concerned with issues like the humanitarian aspects of allowing greater movement of persons from poor to wealthier countries, with integrating them into their new societies and with promoting policies of multiculturalism. It is often difficult to reconcile these diverse viewpoints in part because they use different metrics when making their cases.

Here I offer some thoughts on this topic. None is original but some are at times ignored in the discussion. The argument here is that the immigration policy of a country like Canada was formed at a time when different conditions prevailed than those experienced today. While the policy has been amended over the years and shaped by evolving circumstances, these changes do not meet many of the conditions prevailing today. Further amendments are needed and the current conditions and debates in the developed countries reflect these requirements.

1. The world population in 2011 is 7bn and growing. In 1950, it was about 2.5bn or the present demographic size of China and India combined. This almost threefold increase has resulted from a combination of birth and death rates influenced by factors such access to food, water and medicine. Canada’s population has more than doubled from 14 million in 1950 and 34 million in 2011.

2. In the past Thomas Malthus (1766-1834) projected that such growth in world population would lead to starvation as it would not be matched by the increase in food production. He was both right and wrong. World population increased but so did the ability to produce food. However poverty and food production are not evenly spread throughout the world so that famine and malnutrition in parts of the world are accompanied by problems of obesity elsewhere. One result is the increasing pressure for people to move from poor to richer countries, and a greater focus on migration.

3. Migrants are attracted to richer from poorer countries – to Western Europe, North America, Australia, New Zealand and South Africa from Asia, Africa, Latin America and Eastern Europe. The pressure now is greater because of the larger world population, increasing wealth disparities between countries, greater knowledge of the disparities, and lower costs of travel. While people cannot flow as cheaply as messages over the internet, they can more easily travel between countries than in the past.

4. The world is divided geographically and politically into different countries. State borders are the result of a range of historical factors. At the end of WW2 there were about 50 member countries of the UN. Today there are almost 200. The same geographical area, namely the world, is now divided into more countries with more borders than existed 60 years ago. According to the doctrine of state sovereignty, states can control what crosses their borders, thus the operation of customs, finance and immigration authorities to control the crossborder movement of goods, services, money and people in about 200 countries.

5. While a country has the right to operate border controls, its ability to do so is now weaker. The immigration and refugee systems of countries such as Canada were established at a time when the world population was much smaller, there were fewer people trying to move from poor to richer parts of the world, and the ease (cost) of travel was much higher relative to the incomes of those seeking a better life in more prosperous parts of the world. The factors affecting the administration of immigration policy are different today than 50 years ago. (Note: around 1910 there were a large number of immigrants coming to Canada and these represented over 5% of the smaller total population than immigrants do today when the percentage is closer to 0.5%).

6. Other changes include the introduction of multiculturalism policies in Canada and other countries; the importance of ethnic groups in individual political ridings and the lobbying of ethnic diasporas; the displacement of peoples due to domestic and international conflicts leading to growth in the number of refugees and their need for resettlement abroad; development of entrepreneurs who often act in a criminal fashion to transport persons illegally from one country to another; the growth within developed countries of an immigration/refugee support industry made up of immigration lawyers, consultants and organizations, often financed in part by governments, to assist the settlement of migrants into their new countries. These interest groups take part in the conversation on immigration and refugee policy. At the same time it is customs and immigration officers manning the border who have to cope with the daily crossborder flow. How big is it?

7. A total of about 30.5 million people entered Canada legally in 2010, 30 million as tourists, 280,000 as permanent residents and the remainder as temporary foreign workers, short term visitors and foreign students. That works out at about 80,000 persons per day (over 3000 per hour) who have to be screened for entry. Unlike some other countries Canada does not record those leaving the country so that it is not known how many persons remain illegally and how many permanent residents depart the country. The 280,000 figure is a gross not a net figure. Estimates of those illegally in Canada are as high as 500,000 persons. For the US the comparable figure is 11-12 million. Other estimates can be found for member countries of the EU.

8. The administration of the 280,000 permanent resident accepted applicants (almost 700 per day) requires substantial human resources to screen applicants abroad as well as in Canada. Screening is undertaken by permanent CIC staff aided by those hired locally abroad. Worldwide in 2010 there were eighty visa offices employing a mix of 320 Canadian based officers (268 from CIC and 52 from the Canadian Border Services Agency) and 1263 locally engaged staff, some with limited powers to screen applicants and others case analysts and clerical staff (information provided by CIC).

9. Since demand exceeds supply for Canada and other countries there are incentives for applicants to buy (bribe) their way into the country and such cases exist. Also foreigners arrive at the border by boat and plane and claim asylum on arrival. Although boat people receive more publicity, they are a fraction of the total such arrivals. The administration of immigration/refugee policy includes procedures use to process these arrivals. The Canadian Auditor General has documented the problems associated with administration and court procedures which allow several stages of appeals. Consider the issues involved in collecting and evaluating data from foreign countries.

10. The 280,000 accepted for permanent residency in 2010 and ultimately eligible for citizenship are categorized into the following groups:
Economic – business, skilled workers, live-in caregivers – 187,000 (67%)
Family – 60,000 (21%)
Refugees and others – 33,000 (12%)
The economic category is sub-divided between principal applicants and family dependents. The applicants in each category and subcategory (principal and dependent) are screened for particular characteristics requiring the officials to evaluate the information collected abroad by the applicant and reliably translated where necessary. Business applicants also have to deposit a certain sum of money. Refugees often do not have the papers required for easy evaluation. Those picked out in refugee camps are vetted by Canadian and international officials, but those arriving uninvited by boat or plane at the border usually have no papers. Overall the application and screening process is time consuming, expensive for both the applicant and receiving country and subject to fraud and abuse. Little wonder there are phony consultants offering their services both abroad and in Canada, a point made prominently on the CIC website which posts “Don’t get cheated by a crooked immigration consultant.”

11. In the family category information has to be verified that these persons are actual relatives of previous immigrants. Indicative of the problems is the CBC news article (July 21, 2011) of the Somali who was welcoming to Canada the 100th person under the extended family member program,
http://www.cbc.ca/news/canada/manitoba/story/2011/07/21/mb-somali-refugee-family.html,

12. At any one time there are persons detained in Canada while their cases are evaluated by officials and the courts, often as a result of appeals against deportation. Many of these people are not detained in camps but allowed to mix in Canadian society with a requirement that they appear for a hearing at a certain time. Some do, but many do not, especially if they have a weak case. On July 21, 2011, the federal government through the CBSA asked Canadians to help in identifying 30 individuals accused of, or complicit in, war crimes or crimes against humanity and who are thought to be hiding in Canada. A number have already been identified and some deported. These examples illustrate some of the administrative problems faced by border officials.

13. Reform of Canada’s immigration/refugee policy requires a number of steps. Here I suggest what the first ones should be. Decide on the size of the total population for Canada over the next few decades with projections for its desired age structure and male-female composition. Note here that some developed countries have remained small and with a much smaller increase in population since 1950 than Canada – Switzerland, the Netherlands and the Scandinavian countries. Although the land area of these countries is much smaller than Canada, the new arrivals to Canada tend to reside in a few cities and many of the problems faced by smaller countries are replicated in urban centres in Canada.

14. The argument that Canada needs immigrants because of an ageing population ignores the fact that there are other ways to address this problem. Alternatives include outsourcing work abroad, hiring temporary foreign workers (Canada already does this for farm work and care –givers.) In some instances capital can be substituted for labour and wages can be raised to attract workers to particular jobs. Singapore and some Middle Eastern countries have managed population growth by the use of foreign workers.

15. Decisions will have to be made about the type of immigrants to bring to Canada. There is already a point system used to screen foreign workers and provincial nominee programs provide other vetting mechanisms. Note that persons accepted as provincial nominees are free to move anywhere else in Canada. Provincial nomination may be a useful way to determine local market needs but in fact allows subsequent entry to any part of Canada. The person accepted as an economic migrant comes with his or her family members. This then links in future years to migrants who are part of the extended family of the original migrant and to the problems outlined above in the CBC news story. Once accepted as a permanent resident, a person is on the track to citizenship.

There are of course many more issues to be resolved in reformulating, some of which will be addressed in a future posting. At the outset it is necessary to decide on the desired population size and characteristics.

Universities and the Internet

What are the implications of globalization for the organization and administration of governments, businesses and other organizations like the military, universities, religions and NGOs. Obviously this is an enormous topic. Here I suggest how universities may have to and are already responding to these pressures. They did not occur all at once but have evolved over time and lead to organizational experimentation.

Friedman’s three stages of globalization in The Earth is Flat are at the levels of the country, the organization and the individual. The world is now supposedly at the third level. In the postwar period, the discussion was about economic interdependence (Richard Cooper and others) between groups of states and regions – the USA, Europe, Latin America, Asia and Africa – with particular attention to the industrialized OECD countries and their relationship with the developing world. Examination then focused on trade and investment with emphasis on governments, multinational enterprises and aid organizations. More recently the declining costs of communication, travel and transportation have lead to an increasing crossborder flow of messages (the Internet, Facebook, LinkedIn,Twitter and the use of cellphones) and of persons with a focus on immigration (legal and illegal), refugees, tourists and the movement of students and temporary foreign workers.

The world it seems has morphed from an aquarium into fish soup with little likelihood of a reversal of the process. This is the case for trade, investment , the movement of persons, beliefs and ideas. Living in North America means that one is daily aware of events in Iraq, Afghanistan, China, Norway, the UK and North Africa (written in August 2011 when these countries and regions were in the headlines). Everyone knows immediately what is happening elsewhere in the world, discuss it with friends and adjust their beliefs and economic circumstances because of it. This was not the case in the past. Before the laying of underwater cables in the 1860’s a message took 10 days to go from the UK to the USA by boat and 10 days for a reply to reach the UK. After the cable was laid three words a minute could be sent. Today communication via the telephone or internet is immediate and cheap via wireless and satellites.

Knowledge in the West of China and Islam are two examples of how the third stage of globalization has changed our understanding of international relations and awareness of events anywhere in the world. How has this affected higher education?
Universities deliver teaching and research. They provide people with skills which will assist them in becoming active members of the labour force and with knowledge which will allow them to lead a fuller life, which means different things to different people. Research is undertaken to develop new products and processes and to further our understanding of both scientific and non-scientific aspects of the world.

Traditionally this has involved students qualifying for entry, attendance at lectures, seminars and laboratories and the taking of exams. At the graduate level, research and preparation of a thesis may be required. Typically this has taken place in a bricks and mortar setting with classrooms, laboratories, libraries and land in the case of agricultural sciences. The university has been a place where students go and interact with faculty and staff and worry over things like parking and accommodation. The model is one of the student or customer coming to the service provider. Now the service can come to the student.

That model began to change in the 1970s with the introduction of television and computers at first desktop and then laptop. While it had always been possible to take correspondence courses in some subjects and not physically attend a university, it was the introduction of television and computers which made attendance at a university location less necessary. Some courses were given on television with the tapes available for later student use. This required either attending the university or borrowing the tape similar to borrowing a book from the library. With computers and the internet, students no longer needed to attend a university location. They could and do stay at home and receive instruction online. Interaction with teachers can be done online as well and office hours eliminated. Passage through the halls of faculty offices is often now a lonely experience. Full time faculty demand office space but spend more time working at home. Teaching and conducting office hours online can and does occur.

While new universities were built in the 1960s to cope with the expanded enrollment, recently there has been much less construction of new campuses although existing campuses have seen new buildings constructed. I wonder how long this will continue as the model for universities changes from the student coming to the campus to receive instruction to the instruction being delivered to the student electronically. The latter is already happening with the expansion of distant education learning.

The economic attraction of distance learning is enormous to governments which fund institutions and will now no longer have to provide funding for the bricks and mortar, and to students who can live at home and receive their education while having a job if they so wish. Two of the main costs of education to the student are the income lost from not working and living away from home. For disciplines which require laboratory work and seminars distance education may not be possible, but for many others it will. A glance at advertisements at the back of the Economist indicates where distance learning is already being offered in some subjects.

Part of the benefit of an on campus experience are the personal, educational and athletic interaction with other students. Some will want this experience and many including myself have benefited from it, but it is a more expensive way to deliver higher education. Those who partake in continuing education at a later age will have difficulty in attending an institution and will take advantage of distant education.
In an age of government cutbacks, I would expect that there will be a variety of delivery mechanisms used from the total on campus experience to the total online experience and mixtures in between. They will have different cost structures and be priced differently to the students.

Technology has affected the organization of other industries such as newspapers, book publishing, music, movies, and television. Higher education will be affected. I would argue that it already has been and a look inside university buildings reveals this. The main floor of the library is filled with computer terminals and the material accessed is increasingly available online not just in the library but from any site with an internet connection. While lecture halls are filled, faculty offices are often underutilized. Secretarial services are reduced as faculty and staff do their own word processing. The challenge to universities will be to decide where in the range of delivery mechanisms they will operate.

Condo Living 3

The previous two postings gave some people the impression that condominium ownership is not great. That is a misleading conclusion and contradicted by the increasing percentage of households in Canada which are condos. The pros and cons of condo ownership and living need to be compared with the alternatives. These include ownership of a single family home and rental of a home or apartment. Time sharing and hotel living are other alternatives but I will not discuss these here.

When living in a high rise condominium unit (town and row house configurations would be somewhat different), typical favourable comments are that a person is living on one floor with no staircase, easy to lock up and leave the unit, good security, indoor parking, no gardening or snow clearing to do, freedom to decorate inside the unit as the owner pleases, and payment of a modest monthly condo fee (if that is the case).

Since condominium refers not to the physical layout of the unit but to the ownership arrangement, most of the above comments apply to rental of a similar unit. Two differences are that condo owners can decorate the inside of their units as they wish, and they own the unit and a share of the building. If persons wish to remain invested in the real estate market for whatever reason, then condo ownership provides this in contrast to renting, where the building owner invests in the real estate and takes responsibility for the insurance and the upkeep of the building and its units. With a condominium, the board of directors of the condo corporation acts as building owner on behalf of the individual unit owners. This works well with an attentive board of directors often assisted by a management company and in some cases a live-in superintendent who deals with day-to-day matters.

I would be interested in what others think are the benefits of condo ownership as opposed to renting similar space.

Condo Living 2

My thanks to those who commented on an earlier posting. Here I focus on a few issues about condo ownership and management. More detailed information is found at http://condoinformation.ca/
Many of the owners to whom I have spoken are unaware of the contractual obligations when they purchase a condo, and what they agree to when they are elected a board member. Board members act as caretakers for their own property and that of fellow condo owners, property which may account for a large share a person’s total assets.

As I see it, a main problem is that many of the contracts involve the provision of services where the supplier or seller has more information than the buyer and where it is difficult or costly for the buyer to acquire the necessary information. Condo purchasers only become aware of what they have purchased and their rights and responsibilities after they have parted with their money. Board members only become aware of their responsibilities and liability after they have agreed to serve on the board.

For example, services are provided by real estate agents, developers, lawyers for buyers, condo management firms, and condo board members. As is the case with all services, some providers are more knowledgeable than others, some are more forthright than others, and in almost all cases they know more than the buyers. In addition, most buyers do not do the necessary research or spend the time to learn the details of their purchases. Economists call these transaction costs which can be high where it is necessary to collect and evaluate information about a contract. Many buyers do not do a thorough job of searching for and evaluating the necessary information. We rely on so-called experts whose interest is completing the transaction, although they have some concern for maintaining a reputation for honesty and reliability.

A starting point is to become familiar with the available documentation, much of which is legally required for a transaction and for condo management by a board of directors. The wording of these documents is often opaque, at least to the layperson, and that sometimes (often?) includes those providing services to the buyer.

Documentation

There is a series of documents which describe what a person owns and the rules and procedures which affect their ownership and living conditions in their condo unit.

1. The Ontario Condominium Act stipulates in general how a condominium corporation in the province has to be organized and governed. There is no one responsible for overseeing compliance with this act like an ombudsman, unlike the case of rental properties.
2. The Condo Declaration is the constitution for each particular corporation with details subject to the provincial act. It is often drawn up by the developer of the condo building and outlines what each person owns and what are common areas and expenses. At the time a unit is sold, a Status Certificate is issued in conjunction with the Declaration outlining the financial and other conditions of the building at that time.
3. By-laws are drafted and passed by the condo board of directors dealing with matters such as the standard unit and insurance. They become additions to what is required by the Declaration.
4. Rules may also be passed by the board to determine the conditions for living in a condo. Rules exist to promote the safety, security or welfare of owners and their property as well as the corporation’s assets. Rules also exist for the purpose of preventing unreasonable interference with residents’ use and enjoyment of their units and common elements.
5. For information purposes a corporation may provide owners with helpful suggestions for living in their units and making use of common areas. This information has no legal standing, but may be used to welcome new owners to a building.
A buyer needs to have copies of these documents and to understand the implications of the wording of each document. This is not an easy task for the typical buyer but vital to their understanding of what is being purchased. The real estate agent and buyer’s lawyer should do this but may not. I am aware of a situation where a number of units were sold in a building when the declaration was not in conformity with the amended provincial legislation and there was no standard unit bylaw in existence. I suspect there are other such cases. Agents and lawyers are interested in completing sales and collecting commissions rather than spending their time explaining the meaning of legal documents. Buyers are often content to remain unfamiliar with their purchases.

Board membership

Many of us agree to serve on a condo board of directors with limited understanding of the commitment being made and the personal liability involved. Some of the liability may be covered by insurance paid for out of condo fees. Residual liability is the responsibility of the individual. On joining a board, a person should learn about their responsibilities and ask to see the documentation listed above, even though they may already be owners and think they are familiar with these materials.
As owner of a single family home, a person has responsibilities and obligations. Some of these may be the same for condo board members (non-owners may be board members), but some will differ as you are dealing with single ownership of a condo unit but joint ownership of a building. Information can be obtained from existing board members and from board members of other condo corporations. You are pretty much on your own in learning about the responsibilities for the unit whose board you are joining.

Some may view these caveats as a deterrent to condo ownership. This is not the case and not suggested by the data. In 2006, 913,000 households or 10% of total households in Canada were condominiums, up from 4% in 1981. For Vancouver the 2006 figure was over 30%. I expect the 2011 census will report more recent figures.

Condo Living

The change from living in a single family home to condo living is often seen as eliminating certain responsibilities leading to a less stressful life. This can but need not be the case. If you want less responsibilities, rent don’t own. People often talk about condos as though they are a special type of building. They are not; they are a form of ownership.

If you rent an apartment or house, you own the right to use the space on whatever terms are set out in the relevant provincial legislation and in the rental agreement. The landlord is normally responsible for the upkeep of the building. If you buy a condo, which may be physically identical to an apartment, you own property (your unit and a share of the building in which your unit is located) and are responsible for its upkeep. Understanding these terms is crucial to knowing what you have purchased. I did not, and what follows results from my learning experience. It should not be taken as professional advice but as a cautionary tale. The legal dimensions for condo ownership and operation are outlined below. Following are some of the issues to consider.

What are your condo fees?

This is a regular query. The direct answer of the dollar amount is easy to provide. The significance of the answer depends on knowing what expenses are met by the condo fees. My experience is that when buying a condo, neither the real estate agent nor your lawyer will necessarily have read all the required information which allows you to assess what items are paid for out of your monthly condo fees and how these costs may change over time. In turn, you may not know what questions to ask. The core of what is included in the condo fees is set out in the Declaration which may require some legal knowledge to understand.

Consider the following. A developer builds a condo building and establishes terms in the Declaration which permit a low monthly condo fee to be charged and thus a more competitive price for buying the unit. Over time this apparent advantage will be offset by the increased cost the unit owner must bear in paying directly for work that in other buildings was included in higher condo fees. For example, in some condos the windows are the responsibility of the unit owner, while in others the corporation assumes that responsibility and the cost is included in the monthly fees.

A portion of the monthly condo fees is set aside in a Reserve Fund to cover capital expenditures for which the corporation is responsible. Major repairs (roof, windows, elevator) will eventually have to be undertaken to the building of which you are a part owner. If sufficient funds have not been accumulated, these will be financed either by a special assessment on each unit to cover the costs or by levying a higher monthly payment or both. These payments reflect the fact that the original monthly assessment was set too low to cover future major repairs which under the Declaration are the responsibility of the corporation. If you are an original owner and have sold your unit, the higher costs may not affect you, although a potential buyer should be aware of what might happen and seek a lower price for the unit. If you are still an owner you will be hit with the required payments.

The Reserve Fund study addresses some of these issues and is discussed below. As a buyer you need to know what questions to ask at time of purchase and subsequently when approving condo fees adjustments.

What do condo fees pay for?

Monthly paid costs usually include some or all of the following:
Condo insurance for common areas
Management fees
Legal fees
Insurance (see details below)
Hydro, heat and water for common areas
Fire and elevator inspections
Waste disposal
Janitorial fees
Snow clearing
Landscaping
Maintenance such as painting and minor repairs
Payment to the reserve fund for capital expenditures

Most of these costs involve the delivery of services – law, accounting, management – which are difficult to assess because they are intangible and you do not know if you are purchasing quality, unlike the purchase of goods like an apple or chocolate bar. Hydro and water are payment for goods where payment is for the amounts used and for the delivery services. Each year a condo is inspected for fire equipment. If there is an elevator there is a monthly maintenance visit. Many condo boards have little means to check whether these tasks are undertaken properly. It is the responsibility of the condo directors to ensure that they are, thus the need for directors’ liability insurance, a cost to the condo corporation. Similar costs are involved in single family home ownership so this is not unique to condo living.

What is the reserve fund?

Payments to the Reserve Fund (part of the condo fees) are made for financing major capital related items. By law, every three years a reserve fund study is conducted by a firm that meets the regulatory requirements, usually an engineering or appraisal firm. The initial study is done with a site visit by the firm. Three years later the study is updated without a site visit. That rotation is repeated. The study reviews the state of the building with an estimate of capital expenditures by category expected over each of the next 30 years. The Directors are responsible for the study being undertaken.

The study is useful in alerting the Board to major future expenditures but the exact timing of these expenditures can vary. For example, a roof may last 20, 25 or 30 years. The study may put it in at 20 years but the funds may not be needed until some years later. If the Board does not replace the roof at the recommended time as outlined in the study, it has to explain to the unit owners the reason for the delay. Any new owner will be given a copy of the latest Reserve Fund study and will want to know why a recommended replacement has not taken place. The timing of items for replacement beyond 2 to 3 years is a rough estimate….30 years out is little more than a guess.

I have experienced situations when the site visit by engineers did not detect work which needed to be done and when work was contracted for which was not completed in terms of the original specifications. The board can attempt to correct these situations but it requires continuous scrutiny of the work being performed and the willingness to sue if necessary……..caveat emptor.

What are the legal requirements of condo operation?

There are legal, financial and social dimensions to condo living, all of which vary with the size, location and other characteristics of the condo. As a start, the operation of condos in Ontario is subject to the province’s 1998 Condominium Act (posted on the web), which came into force in 2001.

Each condo unit is part of a Condominium Corporation which has a Declaration setting out the rights and responsibilities of the owners of that particular corporation. For example, the corporation elects a board of directors with responsibility for managing the corporation and can be sued by the owners. The board can propose a list of rules or by-laws for the corporation which has to be approved by the owners. In addition to the by-laws, some of which are required by law and which tend to govern the more serious matters, the Board may approve rules which may prohibit animals, smoking and the rental of units: some proposed rules such as who may own units may not be permitted by other provincial laws. The Declaration for each condo corporation is unique but has to conform to the general requirements of the Provincial Condominium Act. Each Declaration is like the constitution for the particular condo and any rules and by-laws are governed by the Declaration.

The order of authority of the documents governing each condo corporation is 1. The Condominium Act, 2. The regulations pursuant to the Condominium Act, 3. The Declaration, 4. The By-Laws, and 5. The Rules.

Most of what follows has resulted from my learning experience (from a low level) from being a condo board member for several years.

What do you own?

You own a share of the building and are jointly responsible (with other owners) for its upkeep. The inside of each unit is each owner’s responsibility to maintain, insure the contents and be liable for third party claims for incidents inside the space.
There are several insurance issues. The condo corporation buys a policy for the physical aspects of the building, public liability for the common areas of the corporation and for directors’ liability. Individual owners are responsible for insuring the internal aspects of each unit. There has to be a decision re the boundary between the inside and outside walls of each unit. Often the condo corporation insurance covers the internal walls as they were at the time of construction and before any improvements were made (the description of this will be set out in the Declaration). There then has to be a record of the standard unit (a bylaw) at the time of registration as a condominium corporation to determine what was original and what constitutes improvements. As the latter is the responsibility of unit owners, the owner’s insurance has to be aware of what needs to be insured.

Each owner should make sure that their insurance policy covers everything which is not covered by the unit description in the standard unit bylaw. This will ensure that its policy meshes with that of the policy for the condo corporation. My impression is that an insurance company or agent will tell owners that they are covered but seldom read the condo declaration which determines what the corporation is responsible for and what the owners are responsible for.

Who manages the corporation?

The number of units per condo corporation varies from about three or four to several hundred. A small number of units will likely be managed by the owners who are also condo board members, usually unpaid for providing these services. As the number of units rise, a management company may be hired to keep the accounts and ensure that the required maintenance work is done and the required inspections are made – for fire and elevator for instance. A corporation with 10 to 30 units may hire a company whose monthly fees are paid for out of the condo fees (as would be the case for 100 units). Because there are scale economies a larger number of units will get more or cheaper services per dollar paid as it costs the management firm less per unit to manage a larger number. Low management fees per unit will result from a combination of lower costs per unit to the firm and less services offered in the case of a smaller number of units.

In larger operations, a live-in superintendent may be hired to provide onsite services such as handling small repairs , receiving parcels, meeting outside contractors when needed, and generally dealing with the many day-to day issues which arise constantly. Where there is no superintendent, these services are provided by a combination of board members and a management firm if used. There can be tensions when owners ask board members for work to be undertaken and procedures are required so that owners know whom to contact for particular requirements…….. the devil is in the details to ensure that owners get services and unpaid board members don’t feel like janitors.

Social Dimensions

Whether you live in a condo, a rental apartment or single home, you have neighbours. In any of these instances, you have little control who will be your neighbours , unless you live in a rural area. One major difference in a condo is that you share ownership with the other unit owners and so have to interact with them for certain business matters. All owners are equal in this sense although those who have owned for a longer time may feel differently.

What actions to take when buying a condo?

1. Try to meet an existing unit owner and former owner other than the person selling the unit to determine what it is like living in the building.
2. Ask to meet the president of the condo corporation and a representative of the management company, if there is one.
3. Ask to see a copy of the Condo Declaration, the by-laws, the Condo Rules and the Reserve Fund Study. Make sure your agent and lawyer is familiar with these documents and can explain them to you. They need to conform to the current provincial legislation.
4. Find out what the condo fees cover and how they may change over time. For example, most condo corporations are responsible for the outside shell of the building (windows, walls, roof), but in some cases the individual unit owner is responsible for the outside shell. Fees will be lower in the latter case but the owner then has to pay for external costs of the unit. Problems can arise if repairs are needed to an exterior wall covering more than one unit. One owner may want to do the repairs but not the others. The value of the building can be adversely affected if only part of the repairs is done.
5. Find out where your parking space is and what storage space you will have.

My thanks to Tim Turner for his informed comments on an earlier draft. I alone am responsible for the views expressed here.