Real Estate

First phase of reforms set to affect condo directors, owners

By AdvocateDaily.com Staff

Recent changes to condominium legislation represent a “brave new world” for the industry, with stakeholders hoping that new rules will significantly improve the community, enhance consumer protection and not stifle development, Toronto condominium lawyer Armand Conant writes in the spring issue of Condo Confidential.

As Conant, partner and head of the condominium law group at Shibley Righton LLP, explains, changes began in early December 2015 when Bill 106 received Royal Assent and was officially called the Protecting Condominium Owners Act, 215 (PCOA).

“The three main areas it covers are: (a) major reform to our current condo legislation – the Condominium Act, 1998 (the ‘Act’); (b) legislation for licensing of managers – the Condominium Management Services Act, 2015 (‘CMSA’); and (c) reforms to Tarion warranty coverage to cover conversions. The government has also recently announced a whole-scale re-structuring of Tarion itself,” writes Conant.

The PCOA, he says, does not become law until the draft regulations have been passed. The regulations are set to be phased in so that portions of the amendments to the Act can be proclaimed into law. The balance of the PCOA can then be phased in as the regulations are passed, which Conant says is hoped to be completed by early 2018.

“The task has turned out much more complicated than originally expected as they will be significantly lengthier than our present regulations,” writes Conant, who participated in consultations with the ministry about the regulations.

Phase I of the draft regulations for the reforms to the Act will impact directors, owners and corporations more immediately, says Conant, and will focus only on governance issues.

The draft regulations, he says, deal with four key areas. The first is communications from corporations to purchasers, including three different types of prescribed certificates/forms that will have to be sent out to owners, who will now have to give notice in writing setting out their name and identifying the unit, within 30 days of taking title.

Secondly, writes Conant, the PCOA amends the Act to require mandatory disclosure of certain information by directors and candidates running for the board as well as mandatory education/training of all directors after they are elected.

There are new rules related to meetings and voting, adds Conant.

“There will be new requirements for preliminary notices and notices of owners meeting. These hopefully will be in prescribed forms and are designed to give candidates and owners more information and advance notice of meetings, and include the information certificates and any director's disclosure statements,” he says.

The quorum threshold for certain meetings will also be lowered, he says, and there will be greater clarity about voting, a mandatory prescribed form of proxies, as well as mechanisms to reduce abuse.

Finally, there will be changes to the retention and access of a corporation’s records, which Conant says is an important issue, as the largest number of disputes arise in this area.

It is anticipated that this will be the first issue that the newly created Condominium Authority of Ontario's (CAO) dispute resolution mechanism and tribunal will deal with.

“The regulations will better define what are corporate records and stipulate minimum retention periods – from unlimited (for fundamental records), to the time when ballots and proxies can be destroyed. The industry is also being strongly encouraged to move from paper records to electronic, including electronic proxies,” he adds.

For access to records, says Conant, the regulations set out a new procedure and prescribed forms to deal with document requests, charging a fee, reply by the board and dispute resolution mechanisms.

Although these reforms are designed to reduce disputes, he says if they cannot be resolved then they will be dealt with in an expeditious and cost-effective manner through the CAO.

The CAO is a new self-run and self-financed non-government body that many hope will be certified as an "Administrative Authority" later this year, says Conant, allowing it to open its doors on a limited basis.

“The CAO will have three main functions: 1) public education and information about condos; 2) dispute resolution, which will be its biggest function; and 3) a database of information about every condominium corporation in Ontario,” he writes.

A large part of the CAO will deal with dispute resolution through a tribunal called the CAT.

“It is anticipated to include a very robust online dispute resolution tool (guided pathway to assist in education, facilitation and early resolution of the dispute), and if not resolved then adjudication. At the outset, it is planned that the CAT will deal with only s. 55 (records) disputes. This will allow the CAO to fine tune the CAT to make it as user-centric as possible,” says Conant.

The CAO will be funded primarily by a fee paid by owners, hoped to be in the range of one dollar per unit per month, he says.

“The CAO will invoice the corporation who will add it to their operating budget as a common expense. I strongly encourage all corporations to start budgeting for it now,” writes Conant.

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