A condominium corporation is more than a business; it is made up of our homes and collectively is our community. However, any discussion about the industry must start with the legislation that governs condominiums in Ontario – the Condominium Act, 1998 (the “Act”), which came into force on May 5, 2001, but was drafted in the late 1990s. Many may know that over the past two years the Ontario Government has embarked on a significant reform of the Act.
Since 2001, Ontario, and particularly the GTA, has experienced explosive growth in residential condominiums. Today there are about 9,000 residential condominium corporations with about 600,000 units housing more than 1.3 million people. These numbers are expected to continue to grow rapidly, and with this growth will come problems that are not adequately addressed by the Act.
The government had planned on introducing the legislation on May 2, 2014, but this turned out to be the day that the provincial election was called and the Legislature dissolved. We hope that legislation will be introduced early in the new year. In addition, the government will be introducing separate legislation for the licensing of condominium property managers.
By way of brief background leading up to the drafting of the legislation, the Canadian Condominium Institute (Toronto) and the Association of Condominium Managers of Ontario (ACMO) jointly worked hard over the years to reform the Act. In addition to meeting with Cabinet Ministers and staff of the appropriate Ministries, the two organizations prepared and submitted a 120 page brief with suggested changes to the Act.
In September 2012, the government began its comprehensive review of the Act. Instead of following the usual legislative reform process which can take upwards of five years (drafting legislation and then circulating it for comment and input), the government tried a new and innovative process designed by Public Policy Forum – an independent, not-for-profit think tank. The new concept was built on broad-based public consultation and engagement before any drafting was undertaken.
The process had three stages, all of which are now complete and the legislation essentially drafted. The review was grouped into five themes: consumer protection, dispute resolution, financial management, governance, and the qualifications (licensing) of condominium property managers.
Stage 1 began with a series of public information sessions in 5 major municipalities and was followed by the establishment of a Residents Panel consisting of 33 owners and 3 tenants. The Panel met over 4 consecutive Saturdays, with seminars in the morning by various industry experts (I had the honour of being one), and working groups in the afternoon to identify the major issues and problems. Concurrently, a Roundtable Stakeholders Committee was formed consisting of owner associations, professionals, representatives from the building sector, and others. This Committee met for five full-day sessions, and their work led to a Findings Report published in March of 2013.
Stage 2 consisted of five Working Groups comprised of industry experts and condo owners, each focusing on one of the five themes. These Working Groups reviewed the various problems and suggested possible solutions. Following this, a panel made up of 11 industry experts and an owners’ advocacy organization was created, called the “Experts Panel.” The Panel’s mandate was to review the reports from the Panel and Committees and particularly those of the Working Groups, and prepare a draft report called the Stage Two Solutions Report, containing detailed recommendations.
In Stage 3, the Stage Two Solutions Report draft was reviewed and validated by the original Residents Panel. It was then finalized by the Experts Panel and published in September 2013. All reports and working papers are posted on the government’s website and those of ACMO and CCI (Toronto). In the fall/winter of 2013/2014, technical working groups were established to fine-tune the recommendations. Finally the Bill was ready in May, which brings us to the current date.
Over my 23 years of working as a condo lawyer and participating in a wide number and variety of organizations and committees in the condominium industry, I have been involved with many, if not most, of the problems that have arisen with the Act. This experience allowed me a unique position to contribute to the reform, and I was fortunate enough to have participated in all the Committees and Panels. Over the years, we consistently heard that the biggest source of problems in condominium communities stems from a lack of knowledge of owners, residents, and directors about condos and what it means to live in one. This has lead to an erosion of trust between owners and Boards.
Some of the major questions faced in the reform process were how we could: 1) increase the level of knowledge of owners, residents, tenants, and directors; 2) introduce greater clarity and certainty in the Act concerning everyone’s rights and obligations; and 3) restore the trust between residents and Boards of Directors and the imbalance of power (particularly in disputes).
There was a clear consensus that all directors, especially new directors, need better training and support. The recommendation was that first-time directors must undertake a minimum of 3 hours of training that would be free and easily accessible, e.g. online., and with no exam. In addition, the government and condo corporations must do a better job educating purchasers, owners and residents.
Condo corporations are more than the physical space that the building occupies; they are in many ways a 4th level of government for the management of their affairs and assets, all on behalf of the unit owners. However, they are also communities of homeowners, and thus a balance must be reached between these often competing concepts. Unfortunately, many residents and directors do not understand this. Often residents are not aware that there is more to living in a condo than picking up their keys and paying monthly maintenance fees. With the great benefits of condo living necessarily come some restrictions and obligations.
The reform process has tried to address these and many more issues. Clarity and certainty in the legislation is the first step and then how we implement the recommendations comes next – both as to understanding rights and obligations and how to deal with the inevitable disputes that will arise – in the most cost effective and timely manner.
The centerpiece of the recommended solutions is the creation of a new, arm’s length organization to fulfill a variety of functions. It will be what the government calls a “delegated administrative authority” and for the purposes of this editorial, let’s call it Condo Ontario.
Condo Ontario will have three main functions: 1) education and information for everyone – purchasers, owners, residents and directors; 2) dispute resolution, which will be its biggest function; and 3) maintaining a database on corporations.
Education and dispute resolution go hand-in-hand. Think of condo disputes as similar to being in a big room. Our objectives are firstly, to reduce the number of people who enter the room (reduce number of disputes) by such measures as improved clarity and certainty in the legislation; and secondly, for those who end up in the dispute room, better ways to level the playing field between owners and Boards by making the process as cost effective and fast as possible. It is the latter that will be a pivotal role of Condo Ontario; faster and cheaper dispute resolution, without affecting the parties’ right to justice.
Condo Ontario will have some new creative tools to achieve these goals, including information and awareness, a Quick Decision Maker for certain limited issues, facilitation, a Dispute Resolution Officer for more complicated matters, and mediation and arbitration. Condo Ontario will also create a database about condominium corporations. It is envisioned that the database may include types and sizes of corporations, number of units, location, address for service, names of directors (as is presently done in Ontario for non-condo corporations), and possibly much more (e.g. audited financial statements, etc.).
However, the establishment of Condo Ontario comes with a cost. Given the present fiscal situation of the Province, the government indicated that Condo Ontario must be self funding; which is where the pushback from some of the public arose. In addition to user fees (for filing a dispute and for accessing the database, etc.), all corporations will be required to pay an annual fee between $1.00 – $3.00 per residential unit, per month (therefore, $12.00 – $36.00 per year, per unit). At this time it is expected that the fee will be closer to $1.00. None of the funds will go to the government; rather 100% will be used to run Condo Ontario. We found that the initial pushback dramatically reduced once owners understood the functions of Condo Ontario and the tremendous value it will provide to everyone across Ontario.
It is hoped that the two pieces of legislation will be introduced early in the new year and we can start improving the industry and building better communities. Everyone should contact their local MPP and push for the legislation, and quickly. In the meantime, there are a number of things that everyone can do to enhance their condo living and community.
Firstly, whether you are a resident, owner or director, read your declaration, by-laws, and rules. These documents govern how your corporation is operated and dictate such matters as the respective insurance, repair and maintenance obligations, the types of activities that are prohibited or restricted, and much more. Knowing your obligations is important regardless of whether you own or rent your condo. Know your rights, but equally understand your obligations. For directors, also understand your documents; work carefully with your manager and most importantly, communicate with your owners and residents.
Consider ways to get involved and make your community better. You do not have to become a director to help out. Often condo communities will have volunteer committees that are involved in planning social events and assisting the Board. Lastly, communicate to management and the directors when you see a problem that needs to be addressed. Together, and with the reformed Act, we can build better condominium communities and enhance our living experience, while protecting the value of our homes.