Condo Act Changes are Finally (Probably) Coming

Condo Act Changes are Finally (Probably) Coming

October 11, 2015
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Long-awaited changes to Ontario’s Condominium Act, which was first enacted in 1998, are finally on the horizon.  The Ontario Ministry of Government and Consumer Services reports [at http://news.ontario.ca/mgs/en/2015/05/reforming-ontarios-condominium-laws.html] that there are about 1.3 million condo-dwellers in the province, housed in about 700,000 units that are managed by about 10,000 condominium corporations.  Further, more than half of all new homes under construction are condos, which illustrates exactly how hot this sector of the economy is.

Finally, after receiving over 2,200 submissions from industry experts, condo owners, developers and managers, the provincial Ministry has heard the call for enhanced consumer protection, and for better rules around how condos are run and managed.   

The end result of this consultation process is a wholesale review of the existing industry- and ownership-governing legislation formally known as the Condominium Act, 1998.   Changes to it will be implemented in the new Protecting Condominium Owners Act, which (if passed) also amends the existing Ontario New Home Warranties Plan Act and enacts the Condominium Management Services Act.

The main thrust of all this legislative change is this:  The proposed Protecting Condominium Owners Act focuses on several key areas of reform, including:

Dispute resolution – Through a newly-established Condominium Authority – which will be a self-funded, independent not-for-profit corporation – any disputes between condo owners and boards with consumers will be more quickly and economically resolved, in exchange for a small fee of $1 per unit a month to be charged to the condo corporation.

Consumer protection for owners and buyers – One of biggest changes involves providing condo owners and potential buyers with enhanced and standardized information.    For example, developers will have to give new buyers an easy-to-ready guide at the point of sale, and there will be new comprehensive rules designed to foreclose unexpected costs imposed on buyers.  Changes to the Ontario New Home Warranty Plan Act will also include certain condo conversion projects for the first time.

Financial management – The rules relating to condo corporations’ finances will be beefed up in order to prevent financial mismanagement and fraud, and will give owners broader access to financial information.  Regulations on reserve funds will also be clarified.

Participation in condominium management – The changes will allow both owners and boards to participate and vote at meetings; certain rules around the manner of participation and the use of conference calls or other technology can be relaxed by the corporation without it having to pass a by-law authorizing the changes.  The corporation will also be required to regularly disseminate information to owners about certain topics such as insurance or legal proceedings. 

Licensing of condo managers – Brand-new legislation, in the form of the Condominium Management Services Act, will regulate condo managers and management firms through a newly-designated administrative authority that would oversee a compulsory licensing system.  Training and education requirements, as well as a new Code of Ethics, will be imposed on condo managers as well.

Taken together, these long-overdue enhancements are a welcome change, and in particular represent a significant overhaul and a focused improvement to the consumer-protection element of the condominium regime in Ontario.