It’s the story that made newspaper headlines back in September.
A man by the name of Manzoor Khan stole 20 million dollars from condo owners across the city. 20 Million Dollars. That’s a massive figure. It’s hard to wrap your head around such a large sum
This man was the president and owner of Channel Property Managed and managed 9 different condominiums in Toronto.
He opened up fake bank accounts in the each of the condo’s names.
He authorized fake bylaws and falsified papers that authorized him to borrow millions of dollars from a lending institution.
He did this all without anyone noticing. Not the board of directors, not the condo owners, and not even the employees really knew what was going on.
It was months before anyone caught on to his scam. It was only when the property management company began to default on payments, that the lender issued a notice to the condo board. And that’s when the scheme unraveled. But by then it was too late, Khan had vanished. Speculators claim that he had fled with the money to the Middle East.
Madame Toastmaster, Fellow Toastmasters, Welcomed Guests,
Now those condo owners are on the hook for 20 Million.
This could have happened to anyone. It could have been you.
What do you do when your condo board announces you owe a lender 20 Million? Some people have succumbed to depression. Some people have tried to sell only to realize their units have become unmarketable. The negative media attention and resulting stigma has destroyed their condo’s reputation and nobody wants to buy.
They’re losing money on their investment; their units are selling for significantly less than a year ago.
Some people worry that the maintenance fees will increase to the point they can no longer afford to pay, or worse, a special assessment will be issued against the condo owners and they’ll be forced to pay thousands of dollars up front.
The truth of the matter is, that no one really knows what the future holds for each of these condos. The owners have pooled together and filed a lawsuit against Khan and his property management company. The case has gone to the superior court, but it could be years before they see an outcome.
This cautionary tale is not meant to scare off condo owners or condo buyers. This is an unprecedented case.
Sometimes despite your best efforts, there isn’t anything you can do. There are bad people in this world. And whether it’s in real estate, banking, in the stock market, in business fraud exists.
But there is something you can do to reduce the risk: your due diligence.
Future condo buyers: make your condo offer conditional upon the your lawyer’s review of a current status certificate.
The status certificate is a disclosure document which describes the financial state of the condominium, including information about maintenance fees, the condo’s budget, the amount of money in the reserve fund, special assessments, lawsuits, the status of the building insurance, etc.
Be diligent. Sit down with your lawyer and go over the document line by line.
If there is anything in that document that indicates the condominium is unhealthy, your lawyer will let you know. And you can walk away from the deal, with your deposit back in full.
Current condo owners: join the condo board. You’ll learn more about condos than you ever thought possible. You’ll have influence over how your condo is run, and at the very least, you’ll know where your maintenance fees are going.
In the meantime, we need to wait and see how this lawsuit plays out. Will the court recover the $20 million? Will the lender have to take a loss? Will the condo owners have to pay? These questions still need to be answered.
I’m certain that when the court announces a verdict, we’ll be reading it in the newspaper the next day.
Disclaimer: The preceding commentary is the opinion of Hanna Stecewicz and does not represent the interests or opinions of Right at Home Realty Inc., Brokerage or the Toronto Real Estate Board. Therefore, Right at Home Realty will not be held responsible and/or liable for any of the opinions herein.