On May 27, 2015 the Ontario Government tabled Bill 106 called the “Protecting Condominium Owners Act, 2015.” The legislation consists of two statues: (a) An Act to Amend the Condominium Act, 1998; and (b) the Condominium Management Services Act, 2015 which essentially, is the licensing of condo property managers. It will also amend, amongst others, the Ontario New Home Warranties Plan Act – i.e. Tarion.
The government is not introducing a new Condominium Act. Rather, they are amending the present Act. But don’t let this fool you because the changes are very extensive. This article is to give a brief update of the legislative reform process and except for the licensing of managers, mention a couple of the reforms under the five themes.
CONSUMER PROTECTION. Consumer protection for both buyers of new condos and existing owners will be greatly enhanced. For new buyers, some of the key changes include:
- Developers to provide buyers with clear, easy-to-read guides to condominium living.
- More comprehensive rules to prevent buyers from being surprised by unexpected costs after purchasing their newly built condo.
- Standard disclosure statements and other documents, such as declarations.
- Amend the ONHWPA so that certain Tarion warranties will apply to conversions.
FINANCIAL MANAGEMENT. Transparent financial management is the foundation of a successful corporation and community. Here are some of the proposed changes:
- Alteration of Common Elements (Sec. 97) – increased cost threshold to the lesser of $30,000 or 3% of the annual operating budget.
- Notify owners within a specified time if it proposed an expense exceeding the budgeted amount by more than a set margin.
- Annual budget for both the operating and the reserve fund.
- Greater clarity as to who is responsible for which repair and maintenance and how the Declaration may modify this, including as to an owner’s responsibility for reimbursing the corporation.
- Establish how “adequacy” is to be determined. The purpose of Reserve Funds will be broadened to include major repair to units if the corporation has an obligation to repair said units. If the Reserve Fund drops below a threshold, then it will be mandatory to obtain an independent opinion on the Fund’s adequacy.
- Clarity on valid charge-backs to units and prohibition of fines.
THE CONDO AUTHORITY & DISPUTE RESOLUTION. It will be a “Delegated Administrative Authority” (DAA) and it will be a self-funded, not-for-profit corporation, essentially independent of government, similar to that of the travel industry. It will, amongst other things, provide:
- Online resources and self-help tools as well as case management and mediation to prevent easy-to-resolve disputes.
- A tribunal that is not like the Landlord/Tenant or Human Rights Tribunals. It will have the power to make binding decisions that would be enforceable as if they were a court order. The jurisdiction of the tribunal will be limited, but may include enforcement of declarations, by-laws and condo rules; procurement processes; access to the corporation’s records and procedures for requisitions.
- Education and awareness for condo owners about their rights, responsibilities and the basics of condo living and how it differs from other freehold ownership.
- Education for condo directors (mandatory education for first time condo directors).
- A registry/database of all condo corporations in Ontario.
- A guide for condo buyers, setting out unit owners’ roles and responsibilities.
After the initial set up by the government, it will have to be self-funding and will have two primary sources of funding: (a) a small fee to corporations – approximately $1.00 per unit per month, and (b) User fees.
GOVERNANCE. Governance is key for over 1.4 million people that live in condos in Ontario. It is the second part of consumer protection. More importantly, it is key to the best operation of your corporation. Through its increased clarity, it is hoped that the number of disputes will be reduced, especially between owners and their corporation. Here are just a few of the many changes:
- Clarity on what are corporate records, retention periods and examination of records.
- Mandatory procurement process for certain projects and contracts (e.g. sealed bids).
- Borrowing only permitted if authorized by a valid by-law (it can no longer can be in the budget).
- Standard Unit – minimum, threshold definition but can be amended by way of a by-law.
- Insurance deductible for damage to units, common elements and other units to be enshrined in the legislation and can only be amended by the declaration.
- Statutory entitlement to quiet enjoyment.
- Quorum requirements for AGM to be reduced on 3rd attempt.
- Proxy form to be mandated.
- Better procedure for Requisitioned meetings along with a mandated form and time frame for the Board to respond, including stating why rejected.
- Easier to pass rules.
- Minimum education of directors and duty to disclose certain information at time of election.
- Mandatory shared facilities agreements.
WHERE DO WE GO FROM HERE? On September 15, 2015, Bill 106 received Second Reading, after which it goes to the Standing Committee Hearings and all stakeholders are invited to attend and make suggestions and comments. Then it will go to the Legislature for Third Reading and then Royal Assent, hopefully by early 2016. It will not become law until it is proclaimed – which will be after the regulations are done. The government has indicated it hopes it will be by the end of 2016 or very early in 2017.
The next year and a half will be extremely busy yet very rewarding for everyone if all goes well. Thus, it will give our industry and communities a great condo legislation for many years to come.