With the current detached housing market crunch, it’s perhaps no surprise that according to data collected by City News there are currently over 3200 more condo projects either under review, being appealed or actively under construction. That’s an estimated 272,000 new units for the Toronto area. Life in downtown Toronto, Mississauga, or Hamilton will most likely mean living in a condominium for many urban residents. Condominium legislation is developing at a rapid pace to keep up with the increasingly complex and unique legal issues faced by condo dwellers.
In 2015, two major pieces of legislation were enacted, the Protecting Condominium Owners Act, and the Condominium Management Services Act. These laws will have a big impact on condominium related legal issues. Here’s some of the most important changes you should know about if you own or live in a condominium, or are thinking about it.
1) Most Legal Disputes Will Be Decided By The Condominium Authority
With the passage of Bill 106, Ontario heeded the call from stakeholders that the current system of pursuing condominium issues in the courts is far too expensive. The new specialized tribunal will have the power to hear and resolve most disputes between condominium owners, renters, mortgage holders, and condominium corporations.
The Tribunal’s authority will be limited to matters involving up to $25,000 of value, or any greater amount that may be prescribed by law. The intent of the government in creating the tribunal is to provide access to justice quickly and economically. The tribunal will be funded by assessments levied on all condominium corporations.
2) Enhanced Qualification Requirements For Board Members
Every condominium corporation is led by a Board of Directors, usually made up of owners who have been elected to the Board by a majority of the buildings unit owners. These are volunteer positions that come with major responsibilities involving managing the affairs of the condominium corporation. The Ontario government has taken steps to ensure the qualifications of these board members, and increase their disclosure obligations before being elected to the board. These steps are designed to provide increased protection for all unit owners.
Training: elected directors will now be required to undergo mandatory training within six months of being elected to the board, which will be valid for seven years before re-training is required. The properly designated training facilities and programs are currently being established.
Disclosure: any potential candidate who decides to run for election to the Board will be required to disclose more detailed personal information, including potential conflicts of interest. For example, do they have any type of beneficial or financial interest in the condo corporation or any of its contracts apart from their condo unit? Are there any lawsuits involving the candidate or certain members of their family with the condominium corporation? Have they have been convicted of any offence under the Condominium Act within the past 10 years and if so they must provide a description of the offence. Are their common element expenses in arrears? By requiring this information, unit owners will be more informed about the candidates when they cast their ballots.
3) Enhanced Disclosure Requirements For Condo Corporations
The new rules will likely require the Board of Directors to provide more information to unit owners. This includes things like making sure unit owners know where members of the board, officers and property managers can be served with legal documents, disclosure about legal proceedings or outstanding judgements and the impact they could have on the reserve fund, any insurance coverages or lack thereof, and disclosure about the number of units in the condo being rented out, to name a few. These disclosure requirements are slated to come into effect on July 1, 2017.
4) Changes To The Tarion New Homeowners Warranty Program
The Tarion Warranty Corporation will also be subject to some major changes. The changes come after much public complaint about the perceived conflict of interest of Tarion due to its dual role as new home warranty provider and home builder regulator. It has been recommended that new home warranties be provided by multiple insurance providers, which would spur competition and also be subject to regulation under the Insurance Act. The Ontario government has already announced that a new non-profit corporation will be chosen to offer home owner warranties instead of Tarion.
The government has indicated that they will be moving forward with increased oversight of builders to ensure the development of high quality homes and more easily accessible information about builders and vendors for consumers. Other steps they will be taking include
- a code of ethics for builders and vendors
- an independent dispute resolution process which would be less costly than litigation
- the use of neutral experts in any warranty defect disputes
- enhanced consumer education
- deposit protections
- consumer protection against complex corporate structures of developers
- and the need for issues unique to condominium developments to potentially be assessed separately for warranty purposes
These changes will be of great importance to condominium purchasers. In 2015, over 40% of the new homes enrolled in Tarion’s program were condominiums.
5) What Does This All Mean?
Condominium unit owners are a rapidly emerging and growing class of homeowners. These changes represent active legislative steps which are meant to protect the rights of community stakeholders involved with condominium ownership. We can expect the law in this area to develop at an increasingly rapid pace. The Condominium Authority will play a central role in developing condominium law and balancing the rights and obligations of unit owners with those of other market participants, such as condominium corporations, board members, developers, mortgage holders, and property managers.
For more information about the status of these upcoming changes check out the Government of Ontario’s website on the topic of Condominium Law Changes.
Are you dealing with a condominium legal dispute? Contact us to see if we can help.
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