Canada: Change Is Coming: We Need To Start Preparing

Last Updated: April 25 2017
Article by Audrey M. Loeb, LSM, B.A., LL.B., LL.M

As we are all preparing for the changes coming with the new Condominium Act, I thought I would talk about my experiences with new legislation. It is the third iteration of the Condominium Act that I have "experienced" since I started my practice in the field of Condominium Law; and it is the most challenging and complicated set of materials ever produced.

We thought it might be useful to start engaging our readers with a brief summary of items with which we will all be dealing. These items are set out in the proposed regulations under the Condominium Act amendments, which the government has circulated for comment and consideration. What I am going to do is summarize these changes and how they will affect the job of property managers and the operation of condominium corporations.

As the government is seeking input on these regulations, we expect there will be some changes to them. We expect most of the policy decisions to remain, but some of the details may be modified. Managers and board members need to start getting ready as we expect these regulations to come into force in the fall of 2017.

1. Records

There will be different types of records, which must be retained for different periods of time and which have different procedures for access by owners. The following are some of the highlights.

Core Records: These records are listed in the regulations. Some examples of these documents are the Record of Owners and Mortgagees, Notices of Leases, Meeting Minutes, Current Budgets and Information Certificates. A corporation's by-laws will be able to specify additional core records beyond those listed in the regulations.  I doubt, however, that many corporations will add to the burden by increasing their number.

Records will have to be stored either in paper or electronic form and, if in paper, in a place not too far from the condominium.

These core records must be available to owners who request access to them (the "Requester") on an expedited basis and at reduced fees. The manner of delivery of copies of core records can be either electronic or in paper form as agreed between the Requester and the condominium corporation. The Requester may also ask only to review the records without requiring copies.

Non-Core Records: Non-core records are those documents, which are not defined or included in the by-laws as core records. They are to be available to a Requester who requests them through a somewhat complicated written process. The regulations will include a form for requests, which will have to be delivered to the address of service for the corporation. If the board is not willing to deliver the records, it must respond accordingly to the Requester, who can then deliver a further response challenging the corporation's position. It is not a simple process and may extend the time for receiving records quite considerably. Hopefully, most boards will be willing to provide records, and a delay in the delivery of records will not become the norm. The regulations set out specific timeframes for compliance with the request process steps, as well as penalties for non-compliance.

Retentions of Records: Different records are subject to different rules regarding access, as discussed above, and must be retained for different periods of time, being: 90 days, 7 years or forever. For example, proxies are to be retained for 90 days; but if a request to review proxies is made and the proxies are not delivered within the applicable timeframe, then the retention period for the proxies is extended beyond the 90 days to a fixed date set by the regulations. This approach is to prevent the situation where a corporation fails or refuses to respond to a record request and then states that it is no longer able to comply because the records in question have been destroyed. In order to comply with all these new obligations, it will be crucial for management and boards of directors to ensure that proper records are kept and that they comply with the request for access process.

The individual seeking access to the records will have to pay different fees and/or costs depending on the records requested. For example, photocopy charges will be limited to 20 cents/page, and the cost of labour for photocopying will be recoverable only if the corporation actually pays it out of pocket to a third party, such as the management company.

2. Information Certificates

In response to owners' complaints that they are not being kept informed of condominium matters, the government has created an obligation on condominium corporations to issue Information Certificates, which must be delivered to all owners as set out in the regulations. There are three such certificates: the  Periodic Information Certificate, the Updated Information Certificate and the New Owner Information Certificate. The New Owner Information Certificate  is intended to be the same as one of the other two, depending on when someone becomes an owner.

These certificates are designed to ensure that owners are advised of information of which the board might have knowledge (such as information that goes into Status Certificates) so that they are kept apprised of the business of the corporation and are not surprised by disclosures when they list their units for sale or are refinancing. New Owner Information Certificates must be sent to new owners within 15 days of their ownership information being provided to the corporation for inclusion in the Record of Owners and Mortgagees.

3. Board Elections and Candidates

The Condominium Act requires that a pre-notice of a meeting at which directors are to be elected be sent to all owners.  It asks those persons interested in running for positions on the board of directors to submit their names and the mandatory disclosure information. The regulations set out the particulars of what candidates must disclose so that owners can make an informed decision as to which representatives they wish to have on the board of directors. In addition to the mandated disclosure, a corporation's by-laws can require that additional information be disclosed.

One of the new disclosure obligations mandated by the regulations is whether the candidate is an owner and whether he or she is in arrears of common expenses for greater than 60 days.  Most of the by-laws that our office prepares for condominium corporations now require that board members be owners who live in the building or individuals who live with an owner in the building. By-laws prepared by developers and older by-laws do not typically include this provision. We suggest that the Ministry add to the disclosure requirements whether the candidate is an owner who lives in the building or lives with someone who is an owner-resident in the building. If the government does not include this requirement in the regulations, we recommend that condominiums add this provision when reviewing their by-laws. In our view, owners should know whether the people running for the board have an ownership interest in the building and/or whether they live there.

The regulations are not only lengthy, but also very complex. The Condominium Act  amendments contain 661 references to regulations. Not all of these references will actually result in regulations being prepared, but what we have seen so far is going to be a challenge for everyone in the industry. They will add significantly to the learning curve for everyone dealing with the Condominium Act and the regulations.

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.

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Authors
Audrey M. Loeb, LSM, B.A., LL.B., LL.M
 
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