Canadian Underwriter

Ontario proposes bill to reform condominium laws

May 29, 2015   by Canadian Underwriter

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The province of Ontario has introduced the Protecting Condominium Owners Act, which, if passed, would “strengthen financial management rules for condo corporations to help prevent fraud and mismanagement.”

The bill requires condo boards to issue information related to their insurance or any legal proceedings

Bill 106, which passed first reading on Wednesday, would require condo boards to issue “information to owners on a regular basis on topics such as the corporation’s insurance or any legal proceedings.”

It would also require condo directors to complete training requirements and forbid condo corporations from finalizing some contracts unless they have fulfilled certain procurement process requirements, the Ministry of Government and Consumer Services said in a press release. It would give owners “more information about their condo corporations’ financial matters and more control over important changes,” the ministry added.

“We’re proposing legislation that would greatly increase protections for condominium owners in Ontario, improve how condo corporations are run and ensure that condo boards are well governed,” said Liberal MPP (Sault Ste. Marie, Ont.), David Orazietti, in introducing the bill in the Ontario legislature. “The legislation, if passed, would allow for two new authorities to be created: a condo authority which would train and educate condo directors, provide owners with a single source of reliable information and help prevent common disputes; the second, a licensing authority, would ensure training and licensing for Ontario’s condo managers.”

The bill proposes the establishment of a Condominium Authority – an independent, self-funded, not-for-profit corporation – that would “provide quicker, lower-cost dispute resolution,” the release said. The authority would be required to publicly disclose information and be subject to oversight by the provincial Auditor General. To fund its services, the authority would have the power to set its own fees, including a small fee for all condo corporations — about $1 per unit a month, which would be collected from unit owners as a monthly common expense.

Regulations under the proposed Protecting Condominium Owners Act would also clarify rules related to reserve funds by defining what adequate reserve funds are and how condo corporations can determine if their reserve funds are sufficient, the release noted.

The bill amends the Condominium Act and the Ontario New Home Warranties Plan Act and would enact the Condominium Management Services Act to address five key areas of reform: dispute resolution, consumer protection for owners and buyers, financial management, how condos are run and condo manager licensing.

For example, the proposed act:

• Requires developers to give condo buyers a copy of an easy-to-read guide to condominium living at the time of sale;

• Provides “clearer, more comprehensive rules to prevent buyers from being surprised by unexpected costs after purchasing a newly-built condo;”

• Enables the government to create regulations for standard condominium disclosure statements and other documents, such as declarations; and

• Amends the Ontario New Home Warranties Plan Act so that most of the warranty protections available to buyers of new condos would also apply to certain condo conversion projects.

The proposed act would also establish a separate piece of legislation – the Condominium Management Services Act. Under this act, a new delegated administrative authority would regulate condo managers and management firms by establishing a compulsory licensing system. Regulations under the act would set training and education requirements for condo managers and a code of ethics.

The bill was proposed following a review of the current Condominium Act (passed in 1998), involving more than 2,200 submissions from condo owners, developers, managers and industry experts.

Ontario currently has about 700,000 condo units and 10,000 condo corporations. About 1.3 million Ontarians live in a condo and more than half of new homes under construction in the province are condos, the ministry reported.