August 2015
Protecting Condominium Owners Act, 2015 is a 167 page document containing more than a thousand revisions to the current Condominium Act. These are the proposed amendments to the Condominium Act, 1998.
This legislation may take up to three years to become law. At that time it will affect condominium owners, new condominium owners, developers and vendors to the condo community.
From the perspective of a condominium owner, the proposed amendments strike a new balance between individual and corporation rights. In some ways this legislation will make condominium corporations easier to manage. It also places a large, and some would argue unnecessary, financial burden on condominium owners. It is hoped that concerns identified in this article, and others that are brought up as this Act moves toward legislation, are more effectively addressed.
Following are what appear to be the more significant proposed changes in the Act.
Creation of a Condominium Authority
The Condominium Authority will have three responsibilities:
- Dispute resolution
- Education of purchasers and owners of condominium suites
- Director education/training
A Condominium Authority Tribunal would be established for the resolution of disputes primarily between condominium corporations and owners or mortgagees. Any order of the tribunal would be final and binding. Questions of law can be appealed to a Divisional Court.
The Condominium Authority can set fees. It will have authority to assess condominium corporations and new owners to cover their fees and expenses. Preliminary information is that condo owners will initially pay $12 per year to fund this body which would likely raise in excess of $8 million per year. The amount can change at the discretion of the Condominium Authority. Given that the current Landlord and Tenant Board has a budget of $30 million – not funded by renters – a Condominium Authority with its broader mandate could be more expensive.
A corporation, owner, mortgagee or purchaser can apply to the Tribunal for resolution of particular disputes prescribed by the regulations. The tribunal can order one party to pay compensation for damages up to $25,000 as a result of noncompliance plus costs of the tribunal or proceeding. Financial penalties can also be assessed to a maximum of $5,000. When an order requires an owner to pay compensation or costs to a condo corporation, the amount can be added to the common expenses payable by that owner. When an order requires a condo corporation to pay compensation or costs to an owner, the amount can be deducted from common expenses payable for the owner’s suite.
Condominium corporations will be required to file annual financial returns with the Condominium Authority and to notify them of changes to its directors. They can also assess an annual filing fee.
While the general purpose of the Condominium Authority is well intended, the funding mechanism is questionable and a potentially costly financial burden on condo owners:
- Condominium Authority funding is through condo owners paying an annual fee per suite, annual condominium corporation fees and additional compliance costs. To the extent these fees subsidize the Tribunal, condo corporations would also be financially responsible for defending against more individual disputes regardless of their merit.
- Owners of single family homes do not pay additional fees for “continuing education” about home ownership. Neither owners of single family homes or renters pay fees to support dispute resolution. The Condominium Authority would place this unique burden on condominium owners implying they require, desire and are prepared to fund these programs
- Creating a dispute resolution process forcibly funded by all condo residents is troubling. The reality is that most condominium owners are happy with their lifestyle choice. Disputes are infrequent and most condominium owners are unlikely to avail themselves of the process. Renters or owners of single family homes are not required to fund a dispute resolution process for their chosen form of residency.
- The voluntary nature of condo boards ensures higher legal costs to interpret new legislation, represent condo corporations during Tribunal disputes and a myriad of other new tasks under this legislation. One condo lawyer “predicts opportunities for condominium lawyers,… and litigators” and ”opportunities to act as dispute adjudicators”. Within a system where condo owners represent themselves at the tribunal, condo managers and directors are unlikely to be representing the condo corporation and will likely rely on their legal counsel for this service.
Cumulative surcharges to condo owners appears to be a continuing trend that unnecessarily increases the cost of condo living. Despite lower costs to the city for providing essential services, condominium owners pay the same property tax rates as single family homes. These services include trash collection and infrastructure for receiving utilities. Condominium Authority fees are a continuation of this layering trend where hidden fees and costs to condo owners once considered nominal are now substantial.
Funding the Condominium Authority in this way is unlikely to be supported by condo owners. Such fees could result in the Condominium Authority being perceived as a financial burden providing little or no benefit to a majority of condo owners.
Condominium Management Services Act, 2015
This would require that persons who provide management services to condominium corporations be licensed as condominium management providers or condominium managers. Licensees found to have breached a code of ethics could be subject to a fine of up to $25,000.
This would eliminate the opportunity for condominium corporations to self-manage their affairs without employing a licensed Condominium Manager.
Condominium Management Providers, which would include property management companies, are held responsible for preventing abuses of Condominium Managers. Failure to do so could result in fines or imprisonment.
The Act would allow for imposition of penalties or required educational courses on Condominium Managers and Condominium Management Providers. There is also a provision for suspending or revoking a license or right to offer condominium management services.
It remains unclear how the Condominium Management Services Act improves on the current ACMO certification for condominium managers. Costs of licensing and educational courses would ultimately be paid through fees to condominium corporations. As management costs escalate, prudent condominium corporations are more likely to consider use of technology and part-time condominium management as a way to contain costs.
Condo Director Qualifications (Condominium Authority)
Qualifications and disqualifications for being the director of a condominium corporation are expanded to include disclosure obligations and required training.
Any requirement for director training on volunteer directors could have dire consequences on condo corporations already having difficulty filling the director role. Quality volunteer candidates are often unwilling to undergo mandatory education or training particularly when they possess desired expertise obtained through experience. This would lead to degradation in the quality of condominium corporation directors and less effective management.
New Quorum Rules and Expansion of Board Authority
New quorum rules are proposed for meetings.
A quorum for the transaction of business at a condominium corporation meeting would remain 25% of the suites in the corporation. The quorum drops to 15% if it is a third or subsequent attempt to obtain a quorum for that business.
For condominium corporations where owners are disinterested and do not show up for meetings, this change would aid in meetings such as an Annual General Meeting where votes for directors do not require a 50%+1 majority. Where a majority of 50%+1 or more is required for approval, this amended quorum requirement is unlikely to be beneficial.
The board will have greater authority to enact by-laws and rules without requiring a vote of condo owners.
Overall, Protecting Condominium Owners Act, 2015 appears to be a well-considered set of amendments to a currently effective Condominium Act. There is greater protection for new condo buyers and condo owners. As this legislation becomes law, it is hoped that legislators consider concerns identified here and improve on the currently proposed changes to better reflect the realities of condo living.
