Wednesday, May 8, 2013
Greetings everyone! Searching for ideas for this week’s blog post, I began pealing through some interesting statistics. Now, I’ll admit that some of these numbers came as a surprise, even to a practitioner whose out in the field everyday! For example, did you know that over 1.3 million people in Ontario reside in a condominium?
Yup, condominium apartments and town-homes account for nearly half of all new homes built in Ontario. In total, there are roughly 589,000 units distributed throughout the province, the bulk of which are in urban centers such as Toronto/GTA & Ottawa. But… these numbers alone are not the center topic of today’s post.
We know that the condominium sector has seen rapid growth within the past few years. It stands to reason then, that changes to the legal framework ought to have kept pace with the inevitable changes to competing dynamics spurred on by such expansion, right? Well, not really… The provincial law that governs condominium ownership is called the Condominium Act and was created in 1998.
Since its inception fifteen years ago, the law has seen virtually no changes. As this type of housing option has expanded, so too has the size and complexity of the market, and the number of Ontario residents affected. As one report highlighted:
“…the issues today are not only legal or technical in nature. Increasingly, they are about relationships within the condominium sector— tensions between owners, other residents, board members, condominium managers, developers, lawyers and others.”
So why did it take regulators more than a decade to act? Your guess is as good as mine. The Ontario Ministry of Consumer Services oversees the Law and has recently began carrying out a three-stage collaborative, public engagement process aimed at modernizing this somewhat archaic body of law.
Stage 1 began in the fall of 2012 and involved condominium stakeholders—owners, developers, property managers—who met to discuss what changes they would like reflected in a modernized version of the Act.
Stage 2 is currently in progress and will see experts in condominium issues reviewing the findings from Stage One, including the public comments & feedback that were generated.
The goal at this stage is to develop a report of options and recommendations to the government on potential actions to address the issues, including how the Act could be updated. The report is expected to be available for public comment by the end of summer 2013.
Recommendations from the Toronto Real Estate Board (of which this writer is a member) are very much on point. Here’s a summary of some ideas we’ve put forward to the Ministry. Your feedback is always welcome!
Condominium Board Members should be subject to higher standards and qualifications and should be required to undertake specific
standardized training regarding their duties and obligations.
- Such training should be completed within a time period prescribed by the Act or regulations.
- Minutes from Annual General Meetings should be distributed to owners in a more timely fashion. They could be provided in draft format well before their formal approval at the subsequent meeting.
- Ensure management continuity by establishing procedures and requirements for document retention and transfer when there is a change in property management firms.
An independent, arms-length, agency/tribunal should be established to provide assistance and enforcement in condominium dispute resolution matters.
- The agency/tribunal could provide a number of services including mediation, advice, information, and, ultimately, an authoritative decision-making ability for disputes involving condominium owners and condominium boards.
- The mandate and scope of the agency/tribunal should be carefully considered and it should be ensured that there is no overlap with the mandates of other agencies including the Landlord and Tenant Board and the Real Estate Council of Ontario
Reduce the maximum waiting period for a Status Certificate from 10 days down to five business days.
- Expand the amount of financial information provided in the Status Certificate by requiring that financial statements for the preceding two years be included, along with those of the current year.
- Require that the most recent Reserve Fund Study, in full, be included with Status Certificate.
- Improve responsiveness by ensuring that Status Certificates are made available in electronic/digital format.
- Improve transparency for potential condominium buyers by facilitating easier and earlier access to the condominium Declaration, By-laws, and Rules, separate from the Status Certificate.
Condominium property managers should be subject to increased/minimum standards to ensure expertise and consumer protection. New standards should:
- Recognize that there is a diversity of condominium types
- Account for differences between high-rise and low-rise condominiums
- Ensure qualified property managers but should not overly-regulate or capture unintended individuals (e.g. individuals who may act as a property manager for only a few condominium units).
- The definition of property manager needs to be carefully considered.
- Third-party enforcement/auditing of reserve funds to ensure adequacy and accuracy is needed.
- Reserve Funds and audited financial statements should be filed annually with provincial government and/or new arms-length agency/tribunal with mandate over condominium issues.
- Ensure clear and plain-language disclosure of purchaser’s ability/right regarding assignments, including any restrictions on marketing.
- Ensure that condominium rules do not unduly interfere with owners providing third-party access to their units and ensure that owners are provided with access to secure and convenient options and/or a location for the placement of devices (e.g., lock boxes), to allow for third-party access to their condominium unit for important/needed services (e.g., contractors, REALTORS®, etc).
- Provide for a plain-language summary of all necessary disclosures and information needed by purchaser to make informed decisions.
- Provide better protection for consumers by stipulating a time frame/limitation for interim occupancy and prescribe remedial measures if such time frames are not met by builder.
- In addition, ensure clear disclosure of purchaser’s ability/right to lease/rent unit during interim occupancy period.
- Provide greater protection for consumer in contracts (e.g., greater restrictions on builder’s ability to change contracts before closing)