Canada: Condo Act Reform Reaches Stage Two

Last Updated: November 13 2013
Article by Jim Davidson

As most of our readers will know, the province is in the midst of an extensive review of Ontario's Condominium Act. The current Condominium Act, 1998 came into force in 2001. According to the stage two report (released on September 24, 2013), the province feels that there is "pressing need to overhaul the rules governing condo communities, provide better information to owners, and devise new tools for resolving disputes".

The province has hatched a three-stage process for review of the Condominium Act:

I. Under the first stage, which was completed in early 2013, various participants from Ontario's condominium sector offered their comments and suggestions for reform of the Act.

II. In stage two, the province set up five working groups and a twelve-member expert panel to review and consider the various comments received in stage one, all with a view to developing recommendations for reform and offering ideas for further consideration. The resulting "Stage Two Solutions Report" contains numerous suggestions and comments about Condominium Act reform, including 112 recommendations in the following categories:

1. Condo Office

2. Consumer Protection

3. Financial Management

4. Dispute Resolution

5. Governance

6. Condo Management

III. As far as concerns the "next steps", the stage-two report states as follows:

  • "We plan to launch the third and final stage of the review process in the fall of 2013:

    • A residents' panel will review the stage-two recommendations.
    • Government officials will draft an action plan for implementing the recommendations.
    • Condo residents and other stakeholders will have an opportunity to review the action plan."

The Stage-Two Recommendations

Here are some of the key recommendations from the stage-two review:

Condo Office

  • "A new umbrella organization, to be known as the Condo Office, should be set up with four main functions: education and awareness; dispute settlement; licensing condo managers; and maintaining a condo registry. The Condo Office would operate at arm's length from government, but with authority delegated by government. It would be funded by a combination of user fees and a modest levy (estimated at $1 to $3 a month) on each condo unit in the province."
  • The Condo Office would act as a resource (a source of information) for owners, directors and managers.
  • The Condo Office would be empowered to make "quick decisions" respecting records, charge-backs, proxies, requisitions, and owners' entitlement to vote.
  • For certain types of more complex disputes, the Condo Office would provide neutral evaluation, guidance or assistance with the dispute resolution process.
  • The Condo Office would also oversee a two-stage licensing program for condominium managers:

    • Stage 1: The establishment of basic criteria to be met by all condominium managers;
    • Stage 2: Overseeing requirements for mandatory course work, experience and testing for condominium managers.

Consumer Protection

  • The ministry should prepare and publish an easy-to-read Condominium Guide, containing essential facts about condominiums, which would be provided, by developers, to all condominium buyers.
  • There should be enhanced disclosure obligations for developers and changes to the method for determining the budgeted initial contribution to the reserve fund.
  • Developers should be prohibited from selling or leasing back to the condo corporation assets that would normally be deemed common elements.
  • Status certificates should be enhanced, so that they provide more extensive disclosure to purchasers.

Financial Management

  • There should be a statutory right to quiet enjoyment, with condominium corporations having the obligation to take reasonable steps to enforce it.
  • Every condominium corporation should prepare two annual budgets – one for annual operations and one for the reserve fund.
  • Owners should be notified when expenditures exceed budgeted amounts by a threshold (yet to be determined).
  • Auditors should be required to verify that the board has formally approved the corporation's investment plan.
  • The condo corporation should be required to check with its reserve fund analyst (about the need for an early update) when the reserve fund balance is less than 50% of the amount predicted in the corporation's Notice of Future Funding.
  • For preparation of reserve fund studies, "the year-over-year percentage change in total contributions to the reserve fund should be no greater than the assumed inflation rate used in the study, except for the first three years when total contributions may be greater than the assumed rate".
  • The reserve fund should be available to cover changes required by law and for certain green energy projects.
  • The voting requirements for approval of "substantial changes" should be lessened.
  • The provisions respecting "minor changes" that can be made by the board (without notice to owners) should be revised (including increasing the cost threshold for such changes).
  • There should be an amended definition of "maintenance" to eliminate owners' obligations to repair, after normal wear and tear, any common elements over which they have exclusive use, such as balconies."Corporations should be required to repair all common elements whether or not an owner has exclusive use."
  • "A 'standard unit' definition should be put in place that applies to all condo units in the province. The definition would cover a liveable unit with finished walls and ceiling, fixtures and cabinetry. The description needs to be adequately detailed to obtain a valuation for a unit." Corporations would still be able to amend their standard unit descriptions through a by-law.
  • An owner's responsibility for the deductible portion of any loss under the corporation's insurance policy should clearly apply to any damage (to any part of the property) caused by an act or omission of the owner or resident.
  • The Act should specifically regulate a corporation's right to claim, and to lien for, "charge-backs" (such as charge-backs for legal costs allegedly caused by an owner). The Act should also contain a definition of "charge-backs".
  • There should be a broadening of a condominium corporation's permitted investments.
  • "Whenever a corporation contemplates a service contract valued at, for example, over $50,000 a sealed-bid process should apply with standard safeguards."

Dispute Resolution

  • The Condo Office (see above) would play a key role in the resolution of many condominium disputes.
  • As noted above, many types of more minor disputes would be decided by the "Quick Decision Maker". And there would be only limited rights of appeal from decisions of the "Quick Decision Maker". "Primary funding for the Quick Decision Maker office would come from user fees and the modest levy on condo corporations proposed to fund the Condo Office."
  • For many other types of disputes, current mediation and arbitration procedures would be retained, but with added default procedures to ensure more rapid selection of mediators and arbitrators as well as quicker completion of the mediation and arbitration processes. "The working group also proposes that corporations be allowed to pay the entire costs of the initial mediation session up front so that the session can proceed, but that it could recover the owner's share later."
  • Disputes with tenants should be clarified to confirm the fact that condominium law applies to tenants and also to confirm the obligations of owners for the conduct of their tenants.
  • The successful party (whether the condominium corporation or the unit owner) should be entitled to recover full costs from the other party, but "this provision would not apply to proceedings involving the Quick Decision Maker and Dispute Resolution Office, where a successful party can only recover a small cost award by the decision-maker".
  • Other disputes (not covered by the above processes) would still be resolved by application to Court.
  • The new Dispute Resolution Office would also have special authority to quickly resolve disputes about impending liens (ie. when an owner receives notice of a lien).

Governance

  • Minimum periods for retention of records should be further detailed.
  • There should be enhanced/easier access to corporation records (for owners). And there should be significant fines ($1,000 to $5,000) for non-compliance by corporations.
  • The fees that can be charged by condominium corporations for providing records should be revised. (In some cases, a fee could be charged for retrieval and redaction of records.)
  • There should be set timeframes (10 days for current documents and 30 days for all other documents) for complying with document requests.
  • Corporations should be encouraged to keep electronic records.
  • There should be a standardized proxy form.
  • Quorum requirements for meetings of owners should be relaxed.
  • By-laws should be easier to pass.
  • The procedures to be followed for requisitioned meetings should be further detailed.
  • There should be new requirements for enhanced communication from corporations to owners including:

    • Certain status certificate information should be provided quarterly to all owners.
    • Owners should be given additional information about the reserve fund (such as deviance from the study).
    • Owners should receive advance notice of the AGM (prior to the actual notice), soliciting candidates for election.
  • There should be new mandatory training for first-time directors.
  • The Act should allow on-line tools, such as Skype, for participation in board meetings.
  • There should be a statutory code of ethics for condominium directors.

The resident-elected director position should be eliminated.

  • There should be a new "declaration of rights and responsibilities" for owners and directors.
  • Corporations should be barred from levying fines on owners or tenants.
  • Charge-backs should be allowed, but clearly defined.

Condominium Management

As noted above, one of the recommendations is that the new Condo Office oversee a two-stage licensing process for condo mangers. Some of the related recommendations are as follows:

  • The Licensing Office would also draw up a code of ethics for condo managers.
  • Fidelity bonding and errors and omissions should be mandatory for condo managers.
  • Certain contract terms should be mandatory for all condominium condo management agreements.
  • The Licensing office should establish mandatory continuing education for condo managers.
  • "To qualify as a condo manager (stage one) an individual must:

    • Be 18 or older;
    • Be a high school graduate or equivalent;
    • Not be an undischarged bankrupt;
    • Pay the required fee;
    • Meet minimum requirements for insurance;
    • Agree to a police check for a criminal record; and
    • Pass a test on the Condominium Act."
  • Stage two would involve mandatory training, minimum required experience, continuing education requirements, and then a final exam.
  • "Anyone with ten years' or more of verifiable experience as a condo manager should be exempt from the education requirements for stage-two licensing. They should still be required to meet the stage-one criteria, including passing the Condominium Act competency test, as well as completing the stage-two examination."

Click here to review the complete Stage Two Report on the Ministry of Consumer Services website. If you would like to provide feedback to the province, the Ministry's website tells you how you can do that. NOTE: The Ministry's website also says: "You can comment on the Stage Two Solutions Report until November 8, 2013." So, if you would like to comment, don't delay.

We're still a long way from the finished product (the actual amendments to the Condominium Act), but it certainly appears that amendments are coming within the next few years.

This article originally appeared in the Summer 2013 edition of the Condo Law Newsletter, published by the Ottawa law firm of Nelligan O'Brien Payne LLP. © 2013 Nelligan O'Brien Payne

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions