condo law

Countdown on to roll out of condo law reforms

Industry prepares for new fees, rules as province provides update
Monday, July 31, 2017
By Michelle Ervin

The countdown to the roll out of changes to Ontario’s condo laws is on.

In just over a month, board directors and unit owners will be able to call or email the newly established Condominium Authority of Ontario (CAO) to ask questions. The non-profit corporation will on Sept. 1 receive its designation as the entity established to provide dispute resolution, education and information services as part of legislative reforms that are due to be phased in starting this fall.

“It’s anticipated the public will seek information from the CAO about common condo issues, including smoking, noise and pets,” Minister of Government and Consumer Services Tracy MacCharles said at a press conference last week. “In addition, it will likely be handling inquiries from condo board directors regarding issues with owners.”

With the volume of inquiries it will receive difficult to predict, the CAO is planning to add people to its start-up team as it prepares to launch a customer service centre.

“One of the concerns that we’ve identified and are addressing is we want to get off to a good start, and in order to do that, you have to be able to respond in a reasonable amount of time,” said Tom Wright, chair of the CAO, who was on hand at the press conference last week. “We’re not 100 per cent sure what the demand is as of yet, so we’re now looking at how can we staff without hiring permanent people necessarily in order to deal with that perhaps initial group of requests that we’re going to be receiving or information requests that we’re going to be receiving.”

The CAO will be looking for trained adjudicators with “experience in the condo community” for its tribunal, which will hear certain types of disputes if they remain unresolved after parties access online self-help tools and mediators. These dispute resolution services will become available through the CAO Nov. 1, as will director training, which will be mandatory for board members elected from that date onward. Director training will take the form of a free, online course, which breaks down three hours of material into seven to 10-minute modules.

The press conference provided an update on the status of legislative changes contained in the Protecting Condominium Owners Act, which was passed into law in late 2015 but has yet to take effect. The bill overhauled the Condominium Act and introduced the Condominium Management Services Act, which will regulate the condo management industry. Although the press conference provided some new details, it mostly reiterated information that has become available over the past several months as proposed regulations and fees have been released for public comment.

The CAO’s operations are expected to be funded partly through a monthly fee of roughly $1 per unit, which will be collected from unit owners and remitted by condo corporations annually. The prorated fees for the last four months of this year will come due Dec. 31.

The CAO is also proposing user fees for dispute resolution services that, if adopted, would max out at $200.

William Stratas, managing director of Eagle Audit Advantage Inc., said after the press conference that he thinks the proposed user fees are too low, citing the need to balance the deterrence of vexatious complaints with the recovery of the tribunal’s costs. But he added the true test of the tribunal will be the caliber of both the complaints that are filed and the tribunal’s decisions, which will be shaped by the members who sit on the tribunal.

“If the CAO tribunal is staffed with industry insiders, or persons who carry a prejudicial set of agendas, it’s going to be a disaster for condo owners,” said Stratas. “If they staff it fully eyes open, in a fair and objective way, with members willing to take the time to truly understand the underpinnings of this industry and the areas and sources of conflict, then there’s hope that good precedents will be established in the tribunal’s initial decisions that will serve as solid foundation for future decision-making.”

When its services become available Nov. 1, the tribunal will hear only disputes relating to records, but its scope could expand based on public input to include other types of disputes.

Also on Nov. 1, the Condominium Management Regulatory Authority of Ontario (CMRAO) will be designated as the entity established in new legislation governing the industry as licensing requirements roll out.

The non-profit corporation is expected to fund its operations through proposed annual licensing fees of $607 for condo managers (less for limited licensees) and a base rate of $799 for condo management companies, as well as $350 for every manager it employs.

Whether management companies will offer to cover the $607 licensing fee for its managers, in addition to the $350 they will have to pay per head, remains to be seen, Robert Weinberg, president of the Association of Condominium Managers of Ontario (ACMO), said after the press conference.

“For the largest companies, I believe it’s almost a quarter of a million dollars they would have to come up with a year for both the manager’s fee and their portion of the fee,” said Weinberg. “In this industry, which has about a 10 per cent profit margin, that’s $2.5 million worth of contracts just to profit to pay for that, so that might be difficult.”

Licensing fees are not the only new costs management companies will face as condo law reforms roll out. Condo corporations will be obligated to increase the frequency of their communication with owners through mandatory information certificates, which will add to administrative workloads.

With management companies likely to hire dedicated administrators to perform this new duty, Weinberg said some providers are considering charging a “disbursement fee” for information certificates to offset the associated expense.

More changes are on tap in 2018, with a code of ethics and discipline and appeals committees slated to be established by Feb. 1, at which point complaints about licensees will be subject to review by the registrar. Still to come are new disclosure requirements for developers and new reserve fund rules for condo corporations.

Condo lawyer Chris Jaglowitz, a partner at Gardiner Miller Arnold LLP, said after the press conference that right now his focus is on getting familiar with the changes as the regulations become available.

“There are new regulatory provisions for almost every new amendment to the Condo Act and we don’t yet know what they all mean and we don’t know how they will apply to every possible situation,” he said. “For simple situations, applying the new regulations should not be terribly difficult, but we often get situations that are unusual, or are partly from column A, and partly from column B, and so how will these new provisions apply in those unusual situations?”

This will take time for condo managers and boards to work through with their legal counsel, said Jaglowitz, adding that confusion over when different requirements take effect is likely to linger until the roll out of the legislative reforms is complete.

Michelle Ervin is the editor of CondoBusiness.

2 thoughts on “Countdown on to roll out of condo law reforms

  1. As the president/director of a self-managed condo board, I am appalled at this new bureaucracy which will essentially manage private business and direct its operations. Our board sends out monthly newsletters to owners, looks quickly to any owner concerns, and our board members attend most CCI seminars and conferences to keep up with latest legal and operational solutions. Now requiring directors to take, and presumably ‘pass’, directors’ courses will discourage many people from even volunteering to stand for elections to the board, making it even more difficult to attract volunteers.
    I am sure the various fees will rise exponentially over time, and boards using management companies will have to raise condo fees excessively just to pay the costs imposed on management firms.
    As usual, many will pay for trying to solve situations due to poor or no management in several large condo conglomerates.
    I can visualize a new version of the Toronto Housing Authority and its mayhem.

  2. I agree with William. As an independent condo manager, I can see myself being forced to look for a new job. I manage one 43 yr old building, whose main demographic is lower middle class incomes. Our owners are stretched thin as it is. The proposed COA yearly charges will add more strain to our already tight budget (building repairs and rising utility costs consume much of our limited budget as it is). No one wants to volunteer to be a Director and some don’t have internet access so the on-line course is limiting the volunteer pool. I forsee an increased budget for legal costs as applying the changes will require more legal direction. Our Board responds quickly to owners concerns and requests and maintains solid communication between itself and the owners. I’m not sure how these changes will affect our building but I do hope that everything goes well.

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