Ontario is now in the final stage of its three-part Condo Act review, which puts the provincial government on target to introduce a reform bill at Queen’s Park early this spring. The provincial government accepted feedback on the more than 100 recommendations contained in the stage two solutions report between Sept. 24 and Nov. 8, receiving about 1,200 submissions. The next step is for committees to work on the wording of the legislation and map out how the proposed changes may be implemented.

By now, many stakeholders in the condominium industry are likely familiar with the major recommendations, the centrepiece being the creation of a Condo Office to provide information, education and dispute resolution services, as well as to oversee the qualification and regulation of condominium managers.

Armand Conant, partner and head of the condominium law group at Shibley Righton LLP, and Dean McCabe, vice-president of operations at Wilson Blanchard and former president of the Association of Condominium Managers of Ontario (ACMO), dug into some of the details at PM Expo in Toronto this past December.

Here is a snapshot of what they had to say about the five key areas for reform:

Condominium management

As McCabe put it, the proposed changes would mean that condo managers would need to be at least “18, not broke … and not a criminal.” Essentially, this means that managers must not be an undischarged bankrupt, and agree to a police check.

As well, condo managers would have to pass an exam on the Condo Act, possess a high school diploma or equivalent, and have insurance in order to qualify in stage one of the licensing process. Thereafter, condo managers would be required to abide by a code of ethics.

Stage two would then require condo managers to complete courses in condo law, financial management and reporting, physical building management, and condominium administration and human resources within five years attaining stage one status. ACMO sees the educational component of condo manager licensing as an endorsement of its Registered Condominium Manager program, which appears to have provided the framework for what is proposed.

McCabe said that ACMO is advocating that the licensing body not be housed within the Condo Office since it is intended to be funded by owners, and its major function would be the resolution of disputes, in which often condo managers are caught in between boards and owners. ACMO is also advocating that it be designated as the educational body, much like real estate agents were licensed by the Real Estate Council of Ontario, and until recently, took courses via the Ontario Real Estate Association.

Consumer protection

The Condominium Act, which falls within the purview of the Ministry of Consumer Services, is ultimately consumer protection legislation, Conant said.

“The courts now are starting to erode that and look at consumer protection in the context of commercial reality … so we had to beef up consumer protection,” he said.

The key theme to evolve out of this exercise was “smarter — not more — disclosure.” One aspect of that would be standardized declarations and clarification of what constitutes “material change.”

Developers would also be prohibited from selling or leasing assets back to condominium corporations that would properly be considered part of the common elements, with the exception of green technology. Further measures of protection might include a ban on the deferral of any reasonably foreseeable costs to the year two budget and a minimum contribution to the reserve fund by the developer.

Finally, Conant highlighted a proposal to divide utilities and mandate submetering for condominium corporations that share a building with commercial tenants.

Financial management

The stage two solutions report has proposed education, possibly in the form of an online course, as a way to address the common misunderstandings around a condominium corporation’s finances.

Further, the first-year reserve fund contribution would be revised, as 10 per cent is not adequate, McCabe said. The use of a formula based on construction costs and size of the building is likely the preferred option, he said. After the first three years, when contributions may be greater, year-over-year reserve fund contribution increases would be limited to the inflation rate assumed in the reserve fund study.

As well, reserve funds would be made available to boards, without owners’ permission, to implement legally mandated changes. This could include installing wheelchair ramps to meet accessibility requirements, and making green investments (assessed by a credible third party to ensure that the anticipated payback and savings will be realized).

Dispute resolution

The Condo Office, which would operate at arm’s length from the government with delegated administrative authority, evolved out of the dispute resolution working group. It is envisioned as a cheaper and faster way of resolving disputes, a sort of early intervention before disputes are elevated to mediation, arbitration or the courts.

As proposed, the Condo Office would have an information line that owners could call as a first step. It would also house a quick decision maker who could make binding decisions on minor issues such as the release of records and the validity of chargebacks, proxies and requisitions.

A Dispute Resolution Office (DRO) would deal with more complex areas, like enforcement. The DRO would involve mandatory one- or two-hour sessions with an early neutral evaluator who could advise on next steps if the dispute could not be resolved. This session could potentially be conducted online, which is what British Columbia is moving towards, Conant said.

Stage two of the report supports a $1-3 charge per unit per month for all condo owners to fund the Condo Office, but the expert panel recognized it might be seen as “another tax grab.” The key, Conant said, is that it should ultimately save condo owners money if it diverts disputes from reaching mediation and arbitration, which can cost thousands of dollars.

Governance

The stage two solutions report leaves it up to individual condominium corporations to decide whether to require directors to undergo criminal checks via bylaw.

“Many of my clients can’t get enough people to volunteer and everybody’s acclaimed in the election and you have a vacancy, so we can’t (create) too many obstacles,” Conant said.

Prior to the elections, candidates would be required to disclose whether they are suing the corporation, and first-time directors would be required to complete three hours of online education within six months of being elected.

Mandated forms would be brought in for records requests and meeting requisitions. Proxies, which would also move to mandated forms, would need to be submitted for validation 24 hours in advance of meeting. They would require owners to sign their names next to candidates’ names to vote, rather than marking their choices with an ‘x.’

Finally, quorum requirements would be relaxed slightly so that, if after calling two meeting and failing to meet the 25 per cent threshold, whoever showed up for a third meeting would be considered quorum.

ACMO and the Canadian Condominium Institute are continuing to accept feedback on the proposed changes to the Condominium Act, but at this late stage in the process, Conant recommended copying the Ministry of Consumer Services on any comments.

Michelle Ervin is the editor of CondoBusiness.