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ACMO – Future Licensing Body?

By Alfonso Carcamo, December 11, 2012

Author of Condo Saga – Exposing the Frailties in the Canadian Condominium Industry

On April 3, 2012 senior representatives from ACMO and CCI headed to Queen’s Park to meet

with MPPs from both sides of the house. Amongst other things, they urged the politicians to

consider implementing a licensing system that is self-regulated. They suggested to the

politicians “...a self-regulated licencing program, which would consist of graduated

licencing eventually leading to the attainment of a full licence and RCM designation

within 5 years of receiving the entry level licence.” 1

Prior to that visit to Queen’s Park, several months earlier, on September 2011, ACMO-CCI

announced the results of a “condosurvey” they had circulated to all provincial candidates

(Liberal, Conservative and NDP) in all 107 ridings in Ontario. Amongst other things, they asked

the politicians if they “...would support the licencing of managers through a program

similar to the Association of Condominium Managers Registered Condominium Manager

(RCM) course.” 2

Whereas the survey was directed to individual candidates, the actual outcome was a response

from the party headquarters. Multiple conclusions could be drawn from this stance by the

politicians; however, CCI-ACMO interpreted this optimistically as being “a good thing”.

While ACMO-CCI announced this undertaking to have been successful given that the

responses had been overall supportive, in my view, the responses from the politicians were

quite non-committal and perhaps even ambiguous—in terms of supporting the licensing of

managers as proposed by ACMO-CCI.

If you read carefully between the lines of the responses from the politicians, in my humble

opinion they were saying that before committing to support such an important decision that

1 http://percel.com/admin/bbms/dispbbcomments.aspx?BBItemId=121

2 http://acmo.org/pdf/6A_INSERT.pdf

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clearly affects entire communities, they would have to engage all stakeholders (including unit

owners) as opposed to follow the lead of an association:

Source: http://acmo.org/pdf/6A_INSERT.pdf

By February of this year, while ACMO-CCI had not yet explicitly stated that they hoped to

become the licensing body, the thought had “crossed their mind”, so to speak:

Source: ACMO Holds a Special Meeting to Discuss the Condo Act,

Licensing Property Managers and Mediation & Arbitration - 2012-02-24 13:15:28

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As of December 5 2012, according to a press release, ACMO has avowed

unequivocally their desire to become the licensing body for the condominium

management profession in Ontario:

“ACMO has been building the strong foundations of self-regulation including education, ethics,

discipline and professionalism for the past 35 years, and is ready to become the licensing body

for condominium management professionals.”

Given the democratic nature of our society, ACMO has every right to bid for that role.

And we, the members of the public, by the same token, have every right to

communicate our views to the government in an effort to support—or oppose—the

prospect of ACMO becoming the licensing body for the condominium management

profession.

While my views in this regard were expressed quite concisely in a previous article3, I

wish to elaborate a bit more in depth placing ACMO in the public spotlight from an angle

it is seldom looked at.

Praise and Critique

There is no argument that ACMO is a legitimate stakeholder and a very important

element in the condominium establishment. There is no doubt in my mind that amongst

its ranks one finds many of the unsung heroes who have propelled the condominium

industry to the astronomical heights it has reached in barely forty-five years. Kudos to

that handful however small it might be.

There is also no argument that ACMO has made an earnest attempt to raise the caliber

of condominium managers through its educational programs and its introduction of

ethics codes. For this contribution ACMO deserves a standing ovation.

However, despite all these “feathers in their cap”, Queen’s Park cannot regard ACMO

as the association that represents the interests of unit owners because, bluntly, and with

all due respect, ACMO does not represent the interests of the condominium owners at

large.

It should be stressed that, ACMO, like the condominium lawyers who crafted the ACMO

ethics codes, and like the condominium lawyers on the board of CCI [Canadian

Condominium Institute] who so enthusiastically support ACMOs bid to become the

licensing body, all these individuals—ACMO condominium managers and corporation

lawyers alike—they live off of the hard-earned dollars of the individual condominium unit

owner.

3 See http://www.alfonsocarcamo.com/property_manager_licensing.pdf

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A few years ago a Mr. Andrew Wallace, a respected condominium management

consultant with a lengthy record of experience stated that:

“At no time should the [court-appointed] Administrator be a property management company. This is tantamount to putting the fox in charge of the chicken house.” 4

I would not go so far as saying that placing an association composed of condominium

managers as the licensing body of condominium managers is tantamount to putting the

fox in charge of the chicken house. However, for reasons that will become obvious as I

elaborate further in this article, I consider that the lawmakers would be failing the

condominium community if they were to award ACMO the licensing role they are so

avidly coveting—the public at large would bear the brunt of such a faux pas.

Evaluating RCMs and ACMO 2000-certified Companies

Although ACMO has been around for 35 years, there is inconclusive evidence that

condominium corporations ran by RCMs and ACMO 2000 certified companies are

structurally and financially better off than those corporations ran by property managers

who are not ACMO members.

Personally, I can contribute a personal anecdote that is very close to “home” using my

own “home” as an example—no pun intended, by the way:

MTCC 706 saw three property management companies come and go over a three year

period alone (2008-2010). Two of these companies were ACMO members—Channel

Property Management, an ACMO 2000 certified company, and Harris Property

Management, who had at least one RCM on board.

Channel Property Management needs no introduction in the industry, and they do not

merit any elaboration other than to say that they were “asked” to resign within twelve

weeks of their arrival, a resignation that was triggered primarily upon the disclosure of

the name of their VP Operations, Mr. Paul Endres, which caused uproar in the MTCC

706 community.

Mr. Endres, by the way, is a property manager with an RCM designation who was

instrumental in wowing ACMO auditors who were impressed with Channel Property

Management’s understanding of the philosophical intent behind the ACMO 2000

certification.5

Harris Property Management, on the other hand, followed a similar fate shortly after the

2010 AGM when a majority of the directors, unhappy with their management

4 The Appointment of Administrators by Andrew W. Wallace, Condo Voice, Winter 2007

5 See http://www.acmo.org/cmmag/N_Fall10.pdf

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performance, colluded to hand them a pink slip giving them 24-hour notice to vacate the

premises. Although Harris Property Management subsequently sued the corporation,

the judge dismissed the case with each side having to bear its own costs.

And while their replacement (a non-ACMO member property management company)

has not done particularly a spectacular job managing the corporation, I must say that

their performance is still at par or perhaps slightly better than Harris Property

Management.

YCC 42 – Nightmare on Dixon Street

Like my anecdote in MTCC 706, there are others: YCC 42 is a corporation that set the

record as the longest corporation managed by a court-appointed administrator (2006-

2012). There is plenty of evidence in CANLII 6 to suggest that members of the

community were never happy with the performance of the property manager (Mr. Joe

Vero) and/or the court-appointed administrator (Mr. Andrew Atrens).

It is interesting to note that when the unit owners perceived unethical conduct on the

part of the property manager and/or the administrator, the owners did not flock to ACMO

waving red flags—despite both Mr. Vero and Mr. Atrens being RCMs subject to ACMO’s

“stringent” ethics codes. Instead, the unit owners flocked to the court waving red flags

which in some instances paid off:

a) The unit owners successfully defeated a multi-million dollar loan which the

administrator was attempting to pass through without a borrowing bylaw duly

approved by the unit owners themselves.

b) Upon the Administrator requesting indemnity for his actions, the unit owners

successfully convinced the court that the Administrator was not entitled for

indemnification beyond the normal indemnification accorded to a director. And he

could not be indemnified if it could be proven that there was negligence in his

actions.

I stress once again, despite ACMO providing an ethics mechanism to enhance

consumer protection, the community bypassed ACMO and instead followed the costly

avenue of battling in the court.

A final commentary on Atrens/Vero: Something that has been reported by members of

the YCC 42 community is a precedent set by Mr. Vero and Mr. Atrens which I call the

PMC/Administrator Flip-Flop Phenomena:

6 CANLII – Canadian Legal Information Institute, an online facility that publishes decisions from the courts.

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From 2006 to March of this year, YCC 42 (Dixon Road) was being managed by Vero Property Management under the supervision of Andrew Atrens, the court-appointed administrator. YCC 506, (40 Panorama Court) on the other hand, was and is still being managed by Atrens Property Management under the supervision of Joe Vero, the court-appointed administrator. In other words, Atrens/Vero looked after YCC 42 and Vero/Atrens look after YCC 506. Flip-flopped roles. While this “alliance” is possibly not questionable given the impressive qualifications of Mr. Vero (he was once Ethics Committee Chairman and served as president of ACMO) in my humble opinion some might say that it might set a bad precedent in the industry. Here is why: In the next decades to come, as the explosive growth in the condominium industry continues and as condominium buildings age, we are liable to see an increase in court administrator appointments. Future property management companies moving into administrator roles, not having the experience and the level of ethics of their more seasoned counterparts, may begin to join hands with each other in order to form these “PMC/Administrator Flip-Flopping” alliances. Some of them—not all of them—may begin to “scratch each other’s back” so to speak, turning a blind eye to inflated invoices in the properties they mutually manage. Conflicts of interest might develop. Purely as an aside comment, it is interesting that the very reputable corporations in which I have been employed have an ironclad code of conduct for their employees and business partners as it relates to conflict of interest: “Business practices are discouraged if they even give the appearance of conflict of interest. In other words, actual conflict of interest does not have to be visibly present for a business practice to be reprehensible. It is the fact of appearance of conflict of interest that suffices for the company to raise an eyebrow.” – Canadian Fortune 500 Company File that one away as this thorny topic is liable to come up in future condominium legislative debates: Should property managers appointed as court-appointed administrators be allowed to join hands with each other in order to form these “flip-flop alliances” where potentially they might scratch each other’s back, albeit tacitly and quietly behind the scenes when no one is watching?

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Proxy Use Meddling

The use of proxies has been such a controversial topic in condoland that unit owners have at times sought the help of the court in an attempt to curb their use. In 2011 unit owners of YCC 42 requested that the court impose that those resident owners and those living within a reasonable distance of the premises vote in person rather than via proxy. Judge D.M. Brown reviewed the applicable legislation and concluded as follows:

These words of Judge D.M. Brown make it clear that no unit owner can be influenced to vote in person rather than by proxy, despite the often-questionable validity of a proxy. Despite the above, in 1998 a rather bold property manager—Ron Outram, founding member of ACMO—running my condominium corporation (MTCC 706) arguably exceeded his contractual agreement by writing a letter to every unit owner recommending that they retract proxies given and that instead, they show up to the meeting and vote in person:

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Mr. Ron Otram is one of the founding members of ACMO. His firm, Provincial Property

Management, was one of the first ten firms to attain ACMO 2000 certified status.

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ACMO Ethics Codes – A Critique It is common knowledge that in the present condominium climate, rogue boards of directors often gang up with property managers and/or corporation solicitors in order to bully and victimize the masses. The simple fact that ACMO will turn away a complaint from a unit owner who has not gone through his board of directors reveals that ACMO is catering to those in power as opposed to the vulnerable masses who are “getting the short end of the stick” so to speak. ACMO is not the place to file a complaint if your board of directors is abusing their mandate for this simple reason:

Another Glaring Omission There is an additional detail that has been overlooked by the lawyers who crafted the ACMO guidelines for complaints and discipline—the owners living in a corporation managed by a court-appointed administrator. There have been several condominium corporations in which the board of directors is dissolved and the court-appointed administrator wears the hat of board of directors

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himself. Some examples of such corporations are MTCC 710, YCC 42 and YCC 82, amongst a dozen others. What avenue of recourse do the home owners have if the court-appointed administrator is behaving unethically? Certainly not ACMO if we re-read the first point of ACMOs complaints and discipline procedure above. So therefore, the only alternative unit owners have is to reach into their pockets, retain legal counsel and flock to the court to raise their complaints. Although one-for-one these court-appointed administrators are affiliated with the “prestigious” ACMO and/or CCI, and they are in actual fact instruments of the court, there is documented evidence that some of these gentlemen at times abuse their position:

a. At YCC 42 Mr. Andrew Atrens, the court-appointed administrator attempted to force a multi-million dollar loan on the community without passing a borrowing by-law approved by the unit owners.

Thankfully, the unit owners complained to the court and the Judge7 concluded:

b. A frequent complaint from unit owners is that despite their being entitled to financial information from the corporation, financial records are often denied by the board or the property manager.

In the case of YCC 82, counsel for the Administrator (Fengate Property Management, one of the first ten companies to attain ACMO 2000 certified status) provided a rather arrogant response to unit owners requesting financial information: 8

7 YCC 42 v. Abid Hashmi and All Unit Owners of YCC 42, Court File 06-CL-6587, May 29, 2007

8 Bridge Bahadoor v. YCC 82, Court File No: 04-CV-264294CM2

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c. At YCC 82 the court-appointed administrator (Fengate Property Management) attempted to force a special assessment on the community before the unit owners had even voted on additional borrowing. In the words of the court: 9

9 Bridge Bahadoor v. YCC 82, Court File No: 04-CV-264294CM2. Fengate Property Management, by the way, is one

of the first ten companies to attain ACMO 2000 certification.

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ACMO Ethics Codes – Point No. 9

ACMOs Code of Professional Ethics, Relations with Others (POINT NO. 9) carries this

stipulation:

A CONDOMINIUM MANAGER shall not make, authorize or otherwise encourage any defamatory, disparaging or unfounded comments concerning the practices of another CONDOMINIUM MANAGER, a client, or any of the personnel of his/her employer or another condominium management company.10

At a glance, there is nothing wrong with POINT NO. 9, and in fact, it seems a very

honorable thing to do, to require that the members of a profession respect and protect

the image of their fellow members.

Personally, I would have found nothing wrong with POINT NO. 9 until I had a chance to

rub elbows with fraudster extraordinaire, Mr. Manzoor Khan, and I was able to see how

skillfully Mr. Khan was profiting from the innocence—or perhaps naïveté—of ACMOs

legal talent.

It was only when I saw the aftermath left behind by Mr. Manzoor Khan that I was able to

see the liability of POINT NO. 9:

Point No. 9 fosters a climate in which condominium managers are encouraged to

remain silent rather than cry foul when they witness unethical, unprofessional or even

unlawful activities by members of their profession—this is a major liability that is not in

the interest of public welfare.

In other words, by penalizing speaking out against their misbehaving fellow members,

ACMO is tacitly fomenting a climate in which bad cats like Mr. Manzoor Khan can pull

their “stunts”. In such a climate, Mr. Khan’s fellow members shyly turn a blind-eye for

fear of ACMOs reprisals should the bad cat hide his wrongdoing well and be absolved

of his misdeeds.

Hell, one could even go as far as saying that if ACMO had had the prudence to adopt

the suggestion I am about to make, ACMO would have caught Mr. Khan, revoked his

ACMO 2000 certification, and alerted the authorities:

If ACMO truly cares about the public at large, ACMO will add an additional clause

to their Ethics Codes making it mandatory for condominium managers to report

what they perceive to be unethical or unlawful activity by members of their

profession.

10

Code of Professional Ethics: Relations With Others

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ACMO should require, if necessary, that such suspicions be reported anonymously

without fear of reprisal by the manager being reported.11

Adopting such measures would go a long way toward protecting the condominium

community at large.

I wish to give some concrete evidence on what I mean when I stated earlier that Mr.

Khan profited from the innocence of ACMO’s legal talent:

As mentioned earlier, Mr. Khan spent several months managing MTCC 706 (Nov. 2008

to March 2009). At the time he was also managing MTCC 710 (236 Albion Road, one of

our sister buildings).

During Mr. Khan’s tenure, the Shared Facilities directors resolved to terminate the

Shared Facilities Property Manager (Orion Management), as per the letter below that

was sent to Orion by the Shared Facilities solicitor:

Upon a consensus having been reached by a majority of the directors of the Shared

Facilities, I called a meeting to formally approve the motion to terminate Orion

Management. Mr. Khan, being property manager for both MTCC 706 and MTCC 710,

agreed to attend this meeting as usual. However, upon the day of the meeting, he was

no-show. He simply stood me up.

11

Incidentally, the prestigious fortune 500 corporations for which I have been employed usually maintain an Ethics Hotline where employees can report suspicious matters anonymously.

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The following day, he sent this communication explaining the reason for his absence:

It seems that Mr. Khan was well indoctrinated to not do anything that may raise red

flags at ACMO. If he began to collaborate with boards of directors to terminate property

managers, he feared creating antagonists against his own person. Therefore, it was

preferable to maintain good public relations with his fellow Property Management

Companies so as not to draw any unnecessary attention upon him. Smart. Witty.

Cunning. Faithful observant of POINT NO. 9 of ACMO’s Ethics code. Fraudster!

ACMO Directors Code of Ethics

One final note: Mr. Khan was very good at creating bureaucracy that would amount to

tying the hands of directors. One tool he used in the many corporations he managed

was to push for directors to be bound to the Code of Ethics for Directors that ACMO

publishes.

I recall Mr. Khan commenting that “requisitionists wanting to replace you usually have

second thoughts once they see the terms and conditions to which they are bound as per

the ACMO Code of Ethics”.

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In other words, Mr. Khan’s motto was probably “shackle the boards with ACMO Codes

of Ethics and bureaucracy, while I have free reign to act as I wish in the shadows”.

Here is Mr. Khan’s special request to our board of directors upon arrival in our

condominium building in November 2008:

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CONCLUSION

As of this date, ACMO has submitted a proposal to become the licensing body for

condominium management professionals in the province of Ontario. While in their

proposal they stress their commitment to ethics and education, they fail to spell out what

disciplinary action they intend to take against their brethren guilty of infractions. As an

aside, in the provinces of Alberta and British Columbia, disciplinary measures range

from publicized letters of reprimand, fines from $1000 and up to $25,000, to extreme

measures where violators are given the option to receive a lifetime ban from the

industry. There is also a compensation fund to which Property Management Companies

must contribute, in the event that a wronged unit owner needs to be compensated for

unfair damages.

If ACMO succeeds in being appointed licensor for condominium management

professionals in the province of Ontario, my fear is that the status quo will remain what it

is today. ACMO will make a weak licensing body that will not satisfactorily address

infractions by their fellow Property Management Companies. Most disputes will land in

the legal arena and unit owners will continue getting the short end of the stick.

Of course such a state of affairs will greatly benefit condominium lawyers. I therefore

predict that condominium lawyers are presently crossing their fingers hoping that the

government complies with ACMOs request to make them the licensing body they so

covetously desire.

While at the surface ACMO appears to possess the talent, maturity, ethics, professionalism and the educational foundation to accomplish this mammoth task, a more objective and in-depth approach is needed to ascertain ACMOs fitness for the role. Here is some general advice that the government could follow in evaluating the performance of property management companies in general:

1. Conduct a poll in the field reviewing condominium corporations managed by ACMO 2000 certified companies or with RCMs.

a. Is there any evidence suggesting the corporation has improved structurally and financially since the present management company took over the corporation?

b. Solicit anonymous input from the unit owners having them rate the competence and ethics of this management company.

c. Consult the Condo Information Centre (Ann-Marie Ambert) for any complaints that might have been filed on this property management company.

d. Search the Canadian Legal Institute for information featuring this management company.

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e. Consult the other Condominium Owners Associations for input they might have on this company:

i. Condo Owners Association ii. Canadian Alliance for Condominium Owners Rights iii. Condo Owners Union iv. Ontario Condominium Owners Association

2. Conduct a poll in the field reviewing condominium corporations managed by

Property Management Companies that are non-ACMO members. (Repeat steps a-e above).

3. Compare the results of 1 and 2 above. Is there any evidence to substantiate the theory that ACMO member companies do a better job than their non-ACMO counterparts?

4. Conduct an internal poll within ACMO membership to ascertain that a majority of the ACMO membership supports ACMO’s desire to become the licensing body for condominium professionals in the province of Ontario. While ACMO seems to have suggested that such sentiment is homogenous within their membership, there seems to be evidence to suggest that this is not in fact the case. An anonymous internal survey should be conducted.

Final commentary

Two corporation lawyers who appear to be very closely associated with both ACMO and CCI are Mr. Brian Horlick and Mr. Mario Deo. The former was recently elected CCI president and is past Chairman of ACMOs Ethics Committee. The latter is a board member and Vice-President of CCI-Toronto and Co-Chair of Public Relations of CCI-Toronto, and is the editor of the Condovoice Magazine. He is also a member of the ACMO/CCI conference Committee. Both of these solicitors feature in my article “Toronto’s Troubled Condos – 238 Albion Road”. Copy attached. We have a proverb in Spanish that says: Dime con quién andas y te diré quién eres Although its literal translation would be “Tell me who you associate with and I will tell you who you are”, its idiomatic equivalent would be this English proverb: Birds of a feather flock together. Alfonso Carcamo Author of Condo Saga – Exposing the Frailties in the Canadian Condominium Industry