Condominium Act review and reform process

New legislation expected by spring 2014
Monday, April 22, 2013
By Armand Conant

The Government of Ontario is well into its process for whole scale reform of the Condominium Act, 1998, which it started last September. Additional good news is condominiums were mentioned in the Province’s Feb. 19 throne speech. So, unless the process is stopped by a new government (should Ontario have an election within the next 16 months), the three-stage review will continue and result in new legislation by spring 2014.

This type of review process is new to Ontario, and has involved extensive public engagement and consultation. In January, Stage 1 was completed, involving the filing of reports of the various sessions, panels and committees, and an official findings report prepared by a third party consultant, Public Policy Forum, which was retained by the government to spearhead and run the review process.

Stage 1 of the process began with a series of public information sessions in Toronto, Mississauga, Ottawa, London and Scarborough. Then a residents panel was established, comprising 36 residents and tenants selected from approximately 500 volunteers, followed by a stakeholders roundtable committee with 25 representatives from the condominium industry. The stakeholders roundtable committee included owners, owner associations, professionals and representatives from the building sector, among others. The roundtable met for four days last fall, and identified key challenges and possible solutions.

As well, public submissions were made to the government’s online portal, along with submissions and reports from various stakeholder groups.

Stage 2 of the process will soon begin with the establishment of an experts panel. This panel will have working groups of industry experts and owners who will undertake an in-depth examination of all suggestions and reports made to date, and especially the Stage 1 findings report. That is to be followed by a detailed action plan and recommendations in a preliminary report.

Stage 3 consists of the experts panel submitting the Stage 2 preliminary report back to stakeholder groups, excluding the residents panel and stakeholders roundtable, for review and comment. The experts panel will then review the comments and suggestions, and prepare a final report that will be submitted to the government for consideration and drafting of the legislation.

The three stage review process is a broad-based public consultation process. The discussion has been grouped into five key areas: consumer protection, dispute resolution, financial management, qualifications of condominium property managers and governance.

Here are some of the issues, options and potential solutions at play in each of these areas.

Consumer protection
All purchase and sale documents should be written in plain English, including summaries, explaining the key information buyers need in order to make informed buying decisions. Also, the full cost of buying and living in a condominium corporation should be transparent and all costs should be included in the first year, with any exceptions meeting stringent criteria, including being stated in disclosure statements.

Dispute resolution
All stakeholders and the government agree a better system for resolving disputes is needed. It should include better access to information and education, and the ability to obtain informed and impartial advice and reliable trusted mediation, if required. One issue still to be addressed is how such new tools and mechanisms will be funded.

Financial management
Reserve funds must be adequately funded through contributions based on appropriate, standardized reserve fund studies. There should be more flexibility on spending reserve funds and, thus, it should be clearly stated how these funds can be used. Owners should have the necessary tools and access to information, so as to be better informed on how their common expenses are calculated and used. This information should be in a form that is easily accessible and reliable, and it should be provided on a regular basis.

Property managers
Managers and management companies should have a higher standard of skills and training. This should include basic compulsory knowledge and may require regulation of the industry by government or organization acting on the government’s behalf. Who could do this and how it would be funded, along with whether there should be licensing of managers, is still being discussed.

It was agreed that directors, especially new directors, need better training and support. It is important corporations do a better job informing and educating owners and residents about all aspects of their community, including their rights and responsibilities, and the financial state of the corporation. Directors need to take additional steps to increase their responsiveness, transparency and accountability. Many stakeholders said there is often a breakdown in trust between owners and boards. To regain this trust, it was suggested that boards improve on their responsiveness, transparency and accountability to owners.

But how can this be done?

Suggestions included making the corporation’s records more readily available and ensuring information given to residents is more complete, accurate, accessible and up-to-date. It was also agreed that owners should be more engaged.

Additional issues
In addition to these five distinct areas or themes, the stakeholders, panels and discussion streams raised issues that were well beyond the scope of the Act. These issues included property tax (fairness of municipal taxation), building conversions, Tarion coverage, insurance rates, tenant rights and responsibilities, and “industry trends and power imbalances” in the condominium sector.

With the wide range of types and huge numbers of condominium corporations today, and their very significant needs, it is clear that no one-size-fits-all solution will work. But with the new and different legislative reform process, which is designed to reduce the traditional legislative reform process by almost two years, the industry should see much better legislation that reflects the reality of the condominium community and industry for both today and tomorrow.

Armand Conant is a partner and head of the condominium law group at Shibley Righton LLP. He is past president of the Canadian Condominium Institute, Toronto chapter, and chairman of the joint committee that prepared the legislative brief to the Ontario government regarding the Condominum Act, 1998.

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