Ontario’s current Condominium Act, 1998, S.O. 1998, c. 19 (the “Condominium Act”) came into force in 2001. Since that time, the condominium market in Ontario has significantly expanded and evolved. Today, approximately one third of all new homes built in Canada’s major cities are condominiums and approximately1.9 million Canadian households live in condominiums. Acknowledging the growth and change in the condominium sector, in June 2012, the province announced that it would undertake a review of the Act.
That review consisted of an eighteen month collaborative public engagement process, and resulted in the Province’s enactment of the Protecting Condominium Owners Act, 2015, also known as Bill 106, which received royal assent on December 3, 2015. The Protecting Condominium Owners Act represents a significant overhaul of the legislative framework pertaining to condominiums, introducing major amendments to the Condominium Act, amending related legislation including the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31 (the “ONHWP Act”) and the Building Code Act, 1992, S.O. 1992, c. 23 (the “Building Code Act”), and enacting new legislation including the Condominium Management Services Act, 2015, S.O. 2015, c. 28, Sched. 2 (the “Condominium Management Services Act”). Many amendments to the Condominium Act came into force on November 1, 2017 and others more recently on January 1, 2018. Still other amendments are expected to come into force in the coming months.
Given the breadth of amendments enacted, this article will only consider some of the more significant changes. For simplicity sake, we will discuss four categories: (i) streamlining dispute resolution, (ii) enhancing consumer protection, (iii) improving governance and (iv) new obligations on condominium managers and directors.
Streamlining Dispute Resolution
The Condominium Authority of Ontario (“CAO”) is a newly established administrative authority pursuant to Bill 106. The COA is responsible for maintaining a condominium registry, administering condominium owner education and facilitating dispute resolution. Certain disputes, including those relating to the enforcement of declarations, by-laws and condominium rules, procurement processes, access to records, and requisitioning meetings of owners will be resolved through the newly-created Condominium Authority Tribunal (the “CAT”).The CAT may only adjudicate those types of disputes as are prescribed by legislation. The CAT is Ontario’s first online tribunal – the parties communicate with one another by sending messages through the online platform, a mediator joins the process at a certain stage to facilitate settlement discussions, and the Tribunal will typically make its decision based on written submissions.To fund the COA, in addition to user fees, assessed monthly fees will be payable by condominium unit owners. These fees will be collected by condominium corporations as part of monthly common expenses and remitted to the COA.
Enhancing Consumer Protections
Effective January 1, 2018, the ONHWP Act was amended so that most of the warranty protections available to buyers of new condominiums will also apply to certain condominium conversion projects.These amendments pertaining to condominium conversions will only apply to such conversion projects where the first arm’s length agreement of purchase and sale for a home in the project is signed on or after January 1, 2018.Of note, only conversions from non-residential to residential uses will qualify for warranty coverage. For example, the conversion of a residential rental building would not be eligible for coverage.
For those applicable conversion projects, they must be vetted by Tarion prior to breaking ground on the project or offering any units for sale. To ensure compliance with the new registration requirements, amendments have been made to related legislation, including the Condominium Act and the Building Code Act.
Other consumer protection measures which have not yet come into force include:
- requiring the Province to publish an easy-to-read condominium guide outlining essential facts about living in a condominium, and requiring developers to distribute these guides to all buyers of newly-built condos for review during the 10-day “cooling off period”;
- requiring disclosure by developers of circumstances that they know or ought to know may lead to an increase in common expenses immediately following the corporation’s first fiscal year;
- requiring additional information to be included in the status certificates mandated by s. 76 of the Condominium Act; and
- recognizing the right to quiet enjoyment by condominium owners by prohibiting the creation of unreasonable noise or other prescribed matters that are a nuisance, annoyance or disruption to an individual in the condominium.
Amendments to the Condominium Act now require condominium boards to issue to owners “periodic information certificates” twice annually and at such additional times as may be prescribed by by-law, as well as “information certificate updates” upon the occurrence of certain changes. These periodic information certificates contain prescribed information including, among other things, compliance with the condominium corporation’s insurance obligations, status of certain legal proceedings, a copy of the budget for the current fiscal year and any amendments made there to,matters pertaining to the reserve fund and certain required disclosure regarding the condominium corporation’s directors. These amendments also contemplate a class of certificate under clause 26.3 (b) called a “new owner information certificate ”that the corporation is required to deliver to new owners at the prescribed time.
Condominium boards are now required to provide a formal preliminary notice of a meeting of owners at least 20 days prior to sending out the meeting notices. Such preliminary notice, provided the meeting is to elect one or more directors, must provide a call out for anyone wishing to run for election as a director and an invitation to owners to submit materials they wish the board to include in the notice calling the meeting. At the meetings, votes can now be cast by a recorded vote indicated by telephonic or electronic means if the by-laws of the corporation so permit. Further, the amendments relax quorum requirements for mandatory meetings.
Finally, the amendments outline procedures to be followed when requesting a condominium corporation’s records and when responding to such a request. Failure to comply with these provisions, including a corporation’s unreasonable delay in responding to a request, can trigger penalties of up to $5,000.
Certain amendments intended to improve the governance of condominium corporations are not yet in force, including increased regulation of the procurement process and implementing standard-form meeting requisition applications for a meeting of owners.
New Obligations on Condominium Managers and Directors
Condominium managers are now required to be licensed, pursuant to the Condominium Management Services Act. To obtain the necessary license, managers are required to satisfy prescribed training and education requirements.As of the date of this article, the deadline to submit an application is March 30, 2018. Following this date, absent a further extension of the deadline, no person can provide condominium management services unless they are licensed or have submitted an application for same.
The amendments also impose new obligations on directors of condominium corporations. Directors elected or appointed after October 31, 2017 have six months to complete mandatory training, provided online by the CAO. Any director who fails to complete the required training within the prescribed time will immediately and automatically cease to be a director, unless an exemption otherwise exists. Directors also face enhanced disclosure obligations and must reveal, among other things, whether they, or a related person, are party to any legal action to which the condominium corporation is a party, whether they have a direct or indirect interest in a contract or transaction to which the condominium corporation is a party, if the person is not a unit owner, whether they have been convicted of an offence under the Condominium Act, and such other information as the by-laws of a condominium corporation may require.
Forthcoming Amendments to Look Out For
A number of the not yet enacted amendments are designed to strengthen the financial management of condominium boards and corporations. Among these amendments are: requiring preparation and distribution of annual budgets, imposing an obligation on condominium boards to notify owners of proposed expenses exceeding the budgeted amount, and significant additions to the reserve fund provisions. Regulations will define ‘adequate’ in the context of reserve fund studies, and boards will be required to obtain outside opinions regarding the adequacy of their reserve fund whenever it falls below the prescribed threshold. Further, where developers do not specify the portion of common expenses to be paid into the reserve fund in the first year’s budget, they will accountable for such amount to the corporation.