What is "Amalgamation"? It is a consolidation,
joining, union or marriage of two or more parties. For
condominiums, it means merging two or more similarly built and
managed condominium corporations so that it becomes one brand new
corporation with a newly registered number. It means having
one board and one set of monthly financial statements, one audit,
one declaration and one reserve fund, just to name a few.
The usefulness of amalgamation cannot be understated.
Why a condominium community is developed with more than one
condominium corporation differs from community to community.
In some cases, the condominium community was developed before
amendments to the Condominium Act allowed for phased
condominiums. In other cases, phasing was not pursued for
some other reason. No matter the cause, developing a
condominium community with more than one corporation requires the
registration of multiple separate condominium corporations and
plans, complex agreements supported by agreements, trusts and
easements between them. Often this required the imposition of
at least two layers of organizational authority, including the
condominium board (as required by statute), and a committee made up
of representatives of each condominium tied to the community.
In addition, often due to the requirements of their agreements,
every amendment to a declaration, by-law or rule requires every
condominium corporation to undertake the same steps and register
the same document multiple times. For such condominium
communities, the opportunity to amalgamate to reduce the
administration to one board that covers the whole combined
property, and to reduce or eliminate multiple registration
requirements offers potential savings of time, energy and
First and probably the most important requirement is the
willingness of the unit owners to move forward and to invest some
funds to review the legalities and costs involved of
amalgamation. If there is no cost savings to each unit owner
in the long term, then one cannot justify the time, energy and
costs in considering amalgamation.
Some may think that savings would come from snow clearing or
landscaping, water rates or maintenance costs. In
amalgamations, the amount you have to landscape or repair, for
example, does not change, however, savings may be found through
merging of contracts and other economies of scale. Most
savings, however, are found in duplications that exist, such as the
preparation of the annual audit, monthly financial statements, bank
charges, office expenses, annual general meetings, management fees,
reserve fund studies and insurance policies. By having one
reserve fund and completing one reserve fund study, money from the
entire community can be pooled to cover capital costs as they
arise, instead of in an unamalgamated condominium community where
the funds in one condominium's reserve fund should not be used
to make repairs within the boundaries of a different condominium
corporation, even if the common elements being repaired are used by
owners in both condominium corporations.
Just as important, there are some non-monetary efficiencies,
such as removing the need for holding dual board meetings and
preparing budgets and minutes. The amalgamated condominium
will only have to elect one board instead of finding enough
volunteers to sit on multiple boards of directors.
Costs associated with amalgamation include lawyers' costs
for the preparation of legal documents, registration of title
documents, attendances at board and owner meetings. In
addition, a new survey must be prepared for the new amalgamated
condominium, which will form part of the declaration. An auditor
may be consulted for any special reports, if required, and updated
reserve fund studies may need to be prepared. Condominium
management will need to prepare status certificates and assist the
boards with coordinating the push to amalgamation.
Amalgamation is not for everyone, but in many situations it is
the best option for a condominium community to consider.
Because over 90% of unit owners in each amalgamating condominium
must agree to the amalgamation, it is very important that unit
owners be involved throughout the process. The rewards for
the amalgamating corporations can be significant, but any
corporation seeking to undertake the amalgamation process must be
prepared to undergo a complex and somewhat lengthy process
requiring good communication and cooperation by all involved.
Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
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