Construction starts
The corporation needed work done and now it had the management, the
contractors and the funds to get it done.
Safeguards
There were two guidelines that the board and management had to keep the
spending in line. First, there was the Reserve Fund Study.
This was backed up by a caution from the engineering company who
prepared the Reserve Fund Study. The engineer urged the board to defer
as much of the other repair projects as possible as the roofing repairs
will be very costly.
The Reserve Fund Study estimated the following expenditures:
2006 $300,930
2007 $473,938
2008 $547,358
2009 $1,233,886
The second safeguard was the loan restrictions. Maxium told the board
and the owners that the loan allowed a maximum of $500,000 to be
withdrawn a year for three years.
As you will see, Manzoor Khan ignored both restrictions.
Planning
By the end of 2005, the board identified the following priorities:
Replacing the roof
Repair the balconies
Repair the garage ramp
Security
Replace the hallway carpets
Paint the hallways
Pricing
At the last board meeting of 2005, Manzoor told the board that they
could get a 15% discount on the price of tiles from his company.
In early 2006, the board heard a presentation from an interior designer
from Atkins Architects on remodeling the main-floor front lobbies. She
told the board that her company could get them a 50% discount on the
price of tiles. In response, Manzoor told the board he could get a 40%
discount.
A resolution was adopted to purchase the tiles from Atkins Architects.
Construction
began
Once By-law #9 was passed and the loan approved, the contractors
started working. The roof was being repaired, work started on the
balconies, hallway carpets were purchased, the wallpaper in the
hallways removed and the walls stuccoed and the main floor floors and
walls tiled.
The garage ramp was replaced. Manzoor ignored the board’s instructions
to have it repaired.
Manzoor told the board he could have a video camera installed in each
elevator cab for $600 each, for total of $1800. He didn’t tell them
that it would cost an additional $15,750 plus tax to install cabling
needed to run the cameras.
The swimming pool was leaking three to four inches of water a day so
the pool needed to be repaired.
More work was done. The backup electrical generator that was damaged by
flooding was replaced. The required building permits to replace the old
one was not issued because Manzoor did not apply for one.
Manzoor had two card readers installed on the doors leading to the
swimming pool.
Manzoor told the board that the materials used in the elevator cabs are
not fire rated and the corporation is facing a penalty for fire safety
violations so the cabs should be renovated. Channel had the cabs
re-furbished. The Reserve Fund Study showed the cabs being renovated in
2008.
The first
safeguard
One day the owners saw that their Enterphone system was replaced. That
was odd because it was only three years old and it had a twenty-year
life expectancy. The Reserve Fund Study showed that it didn’t need to
be replaced until 2019.
The main floor lobbies walls and floors were being renovated. New
ceramic tiles were installed. However instead of 12” by 12” floor tiles
that was agreed upon, Manzoor bought 12” by 24” floor tiles. The
Reserve Fund Study showed this work being done in 2009.
The lobby ceilings were also replaced. This was a surprise to the
board, as they did not authorize that work. Worse, once the ceiling
tiles were taken down, new pot lighting had to be installed as the old
ones, which were just fine if the old ceiling was not disturbed, did
not meet building code for renovations.
The board and owners were shocked to see that the mirrors and marble
walls that stood in front of the elevators on all the floors were torn
down and were replaced with ceramic tile on the main floor and painted
drywall on the higher floors.
The hallway floor tiles in front of the elevators on all the floors
were removed and replaced with hallway carpeting. The replacement
hallway carpets were a lower grade than the original carpeting.
Using lower quality replacement materials is a violation of the Act.
Workmanship
Many of the floor tiles in the lobbies started to crack and some of the
corner pieces were crudely cut. Not all of the tiles were level; that
was obvious to the naked eye.
The wall tiles were improperly installed. A metal decorative edge that
went around the room was not the same height on all the walls. When the
strips met at the corners, they did not line up in a straight line.
Some of the wall tiles fell to the floor. They were not properly glued.
In places, paint peeled off the drywall.
Subcontractors
Subcontractors were required to be authorized by the board. Manzoor
ignored that requirement.
The second
safeguard
Spending should have been kept in check by the maximum yearly withdraws
that Maxium told the owners were in place. Manzoor withdrew the whole
$1,500,000 in less than a year spending five times what the Reserve
Fund Study called for.
What can we
learn?
A condominium corporation needs competent and diligent directors who
take their responsibilities seriously. It is not sufficient to hire
management and contractors and let them do whatever they please. They
need to be closely monitored.
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