The Stucco Scam
I have extracted most of the following information from an email that I sent to the corporate lawyer, Kelly, regarding the balcony project. I have updated certain items as more information has become available. I have tried to be as factual as possible but if you find any errors please let me know and I will issue corrections.
The board has based their decision to move forward with this project on
1 - Technical summaries from either the engineers or Paul of PMC YORK.
2 – Legal opinion that the corporate lawyer provided regarding Condominium Act 1998 requirements
It is obvious from the decision made, that the board members have no understanding of the issues involved. They have relied on the Engineering Company’s recommendations which are flawed. In that, these recommendations contain a major bias to increase the scope of each project to ensure increased revenue flow for the engineers. They have also relied on information provided by Paul, who again has a major bias to his recommendations, in that he would receive a 3% commission on any projects over 100K. Again, in order to increase his revenue flow he would obviously recommend the maximum project for revenue generation.
Obviously the board reliance’s on these 2 sources of information is flawed and should have at a minimum, required an independent recommendation.
Regarding the second point, the board has relied on the lawyer’s opinion that section 97-1 is the relevant section for any work proposed.
First some clarification
1. A repair implies that something is broken and needs to be fixed or replaced
2. Maintenance implies that nothing is broken, but the issue in question should be “oiled to keep it running smoothly”
The work done on balconies is obviously of a maintenance type, as nothing is broken. This work typically would be done periodically and would require removal of any flaking paint and patching of any cracks etc. to prepare the surface for painting.
A quote was apparently obtained from Maresco Ltd. for painting of the balconies in the amount of $85K Repainting would be the current construction standard for this type of maintenance. Section97-1 clearly states that
1. “ Repair or Maintenance Obligations (section 97(1))
A condominium may carry out its repair or maintenance obligations without notice to or approval of the owners if it carries out the obligation using materials that are "as reasonably close in quality to the original as is appropriate in accordance with current construction standards".
Applying stucco may be somehow the standard down south but here in Canada the standard is to repaint when painting is required. To claim that stucco is standard when maintaining a painted area is ludicrous. Any engineer that would sign his name to such a statement must be considered suspect.
Any work beyond this point should be viewed under the guidance provided by Section 97.
In addition, a second quote was obtained in the amount of 135K to upgrade the work being done on the balconies. This consisted of upgrading the concrete paint to an elastomeric coating to be applied to the interior walls of the balcony and a stucco finish to be applied to the interior of the guard rail wall of the balcony. The upgrade to elastomeric coating may be a good investment, as it has a longer lifespan than concrete paint. The stucco finish is another story. This is just there to inflate the cost of this project even further.
The complete quote was for 275K. This apparently was to also coat the perimeter wall, the penthouse area, etc. What does this work have to do with the maintenance of the balconies? And even funnier, the engineers are being paid 18K for consulting. I guess they are there to watch the paint dry.
At this point we have gone light years beyond what would be required for the maintenance of the balcony area. As this added a substantial amount to the cost there is no question that the owners under section 97-4 should have had to approve this major enhancement.
In his contract, Paul has stated that he is fully familiar with the Act, and as such, would know that he is transgressing Section 97. He is hiding behind the lawyer’s legal opinion to push through all this additional cost to the corporation. Section 97-4 specifically warns against any such project manipulation and states that directors may be held personally responsible should such manipulation occur.
At no point were the homeowners informed of this project and the first knowledge of this project came at the AGM when the directors announced that 275K had been committed.
The email that I sent to the lawyer brought her up to date as to the current situation. The fact that the directors signed a contract without the homeowner’s approval places the validity of that contract in question. I asked the lawyer to review this situation with Paul, the directors and the contractors but to no avail. They are brazenly going forward without regard as to the legal ramifications.
The bigger question is why this work was even started. As we will see at the reserve fund meeting there are many issues that have to be addressed and they will require more spending. So why was 275K pissed away on a project that could be done much cheaper and later. It is time to hold those responsible to account.