Some of the most important changes proposed in Bill 106 (which is the proposed legislation aimed at amending ourCondominium Act) deal with the responsibilities and obligations related to changes, maintenance and repairs of units and of common elements. Indeed, if the proposed legislation passe, the responsibility to repair a unit after damage may no longer fall on the corporation (unless the declaration provides otherwise). This responsibility and the cost associated with it would be shifted back onto each owner. Moreover, the corporation’s ability to make changes to the common elements may also be affected by the proposed legislation.
Owners would be responsible to repair a unit after damage
In my view, reverting to owners the responsibility to repair a unit after damage is a welcomed change. It will greatly simplify many matters including issues surrounding insurance. Unfortunately, the proposed Act does not appear to make this change retroactive. This may prove to be a problem as many corporations had their declaration drafted under the current (or prior) legislation. For this reason, many of the existing declarations impose on corporations the obligation to repair a unit after damage. At the time of incorporation, this language simply reflected the legislation in place. By not making the proposed change retroactive, many existing corporations may still be responsible to continue to repair units after damage simply because their “old” declaration says so. Corporations may not be able to benefit from this proposed change to the legislation since amending a declaration is a very difficult and costly undertaking. It would have been preferable, in my view, to force all corporations into this new regime unless corporations chose to opt out of it after the passing of the new Act.
Corporations’ changes to common elements
Another potential disappointment, at least for me, has to do with how Bill 106 addresses the problem associated with corporations making changes to common elements. Indeed, there has been much frustration and much litigation over corporation’s extensive maintenance and repairs of common elements. The proposed legislation does not change the definition of a “substantial change” to common elements. Substantial changes continue to be mainly defined based on the cost of the proposed changes. This, in my view, does not sufficiently protect owners from changes unilaterally imposed by boards under the guise of required “maintenance or repairs”. There are many examples of disputes resulting from corporations making significant changes to the look and feel of common elements when changing decks, refurbishing elevators or working on landscape. In all of these cases, the corporation took the position that their changes were limited to required maintenance, not requiring consultation with owners. All that these corporations needed to do was to demonstrate that the additional cost of the proposed work did not exceed 10% of the annual budget.
But when does “required maintenance” amount to a significant change? The proposed legislation does not appear to have addressed this sufficiently.
When should corporations consult owners when working on common elements?
Below is a quick and basic summary of the level of consultation which would be required under Bill 106 by corporations considering work on common elements:
- Any “required repair or maintenance” using material which is reasonably close in quality (not look and feel) as the original as is appropriate in accordance with current construction standards would not require any form of consultation of the owners. This has not changed from the current Act;
- Any work required to ensure the safety or security of persons or to prevent imminent damage to property or assets would not require any consultation either. This too has not changed;
- Any work which is estimated to costs less than $30,000 or 3% of the annual budgeted common expenses would not require consultation, provided that owners, on an objective basis, would not regard the modification as causing a material reduction or elimination of their use or enjoyment of the element being work on. Bill 106 therefore proposes to raise significantly the financial threshold at which notice is required to be given to owners. It currently stands at $1,000 and 1% of the budget. More importantly, notice will have to be given to owners if the proposed work may be perceived as materially impacting the owners’ enjoyment of the common elements. This is a welcomed change, although it leaves room to some interpretation. Still, when notice is given to owners, it will be up to the owners to call an owner’s meeting. When/if such a meeting is called, the support of 50% + 1 of the owners would be sufficient for the changes to take place unless the proposed change constitutes a substantial change;
- Any changes to common elements costing more than 10% of the annual budget will continue to constitute a substantial change, requiring the approval of 2/3 of the owners. This remains unchanged from the current version of the Act. In my view, the concept of what constitute a substantial change should not have been limited to a budgetary consideration. The concept of “reasonable continued enjoyment” of the existing common elements should have been imported as a consideration in the determination of what constitutes a substantial change.
Where does Bill 106 stand?
As of October 6, Bill 106 has been debated for nearly 10 hours in second reading. The debate is scheduled to continue on October 7.