Law Times

Law Times • OctOber 27, 2014 Page 9 www.lawtimesnews.com Lawyers waiting for condo law changes Major reforms floated during recent provincial consultations by arshy mann Law Times O ntario will be getting a new Condomini- um Act, but it's still unclear when that will happen. With the current Condomin- ium Act dating back to 1998, the Ontario government has em- barked on a three-stage effort to modernize the legislation since 2012. It released a report outlining more than 100 possible updates to the act late last year. After that, it undertook and completed the final stage of public consultations at the beginning of this year. But since then, the government has stayed quiet. "There was a lot of move- ment about a year ago on this," says James Davidson, a partner at Nelligan O'Brien Payne LLP. "But I haven't seen anything more at all. It just seems to have ground to a halt." Davidson says that while he knows the provincial election was a major disruption, he's surprised the government is taking so long to bring legislation forward. But while lawyers wait for a draft bill to get to the f loor of the legislature, the earlier report gave them a lot to chew in terms of the expected changes. Jason Rivait, an associate at Aird & Berlis LLP, says the changes will have an effect on all condominium stakeholders. Condo buyers will likely ben- efit from a host of new consumer protections, including smarter and more comprehensive dis- closure packages. "When you purchase a condominium, you're provided a disclosure package of sometimes 100 pieces of paper that you have to funnel through," says Rivait. "The report recom- mended promoting awareness and really just focusing on key issues in the disclosure statement and to make that information easy to find and readily available." It also talked about creating an easy-to-read condo guide that contains essential facts about condo living, says Rivait. Lawyers also expect the legisla- tion will create a condo office that would provide general education to owners and could play a role in regulating condo managers. It would also act as a dis- pute resolution mechanism for conf licts between condo own- ers and the condo corpora- tion. "So rather than going to mediation, arbitration or ini- tiating legal proceedings, if an owner has a dispute with a con- do corporation and if it's a small issue, they could go to the condo office," says Rivait. There may also be a manda- tory education requirement for condominium directors. At the moment, while many condomin- ium directors do go out and edu- cate themselves, the law doesn't require them to do so. "What's amazing in Ontario is that we've got all of these very complex businesses, condomin- ium corporations, and they're functioning reasonably well just through the efforts of volunteers," says Davidson. "But I guess the thinking is those volunteers need to have a little bit more education or at least it needs to be mandatory." Rivait thinks an education re- quirement makes sense. "Some of these corporations have budgets upwards of $5 million," he says. "And you could have three people who have never lived in a condo, have no idea what con- do living is about, operating and managing this building." There's also discussion about licensing property managers and having a government body over- see that process. Davidson says that could mean the introduction of separate legislation alongside a new Condominium Act to imple- ment a new licensing regime. Another important area for consumer protection has to do with selling or leasing the com- mon elements of a corporation. Rivait says that at the moment, a developer can obligate a condo corporation to purchase a guest or superintendent suite through a vendor take-back mortgage. That guest suite then becomes a com- mon element, but the fees typically don't kick in until the second year. The increased fees often surprise many condo owners. "You try to budget appropriately for your liv- ing, and if your common expenses take a drastic jump after Year 2, you may be in a bind," says Rivait. The new act is likely to pro- hibit developers from that sort of practice. Reserve fund planning is also likely to change. According to Davidson, while mandatory contributions to reserve funds are part of the current act, they're often inadequate. "That's one of the key financial management issues that would be tackled by the amendments," he says. According to Rivait, reserve- fund contributions are often a percentage of the budget of a con- dominium corporation rather than a ref lection of what it would actually cost to maintain or re- place the common elements. "If you have a million-dol- lar budget and the minimum requirement is to contribute a percentage of that budget, how does that relate to how much it's actually going to cost to repair the building if the roof falls apart 20 years from now?" Davidson says that overall, he felt the government did a good job with the consultation process. "I think that they've done a re- ally nice job of considering all the concerns," he says. "If anything, they've maybe bitten off more than they can chew and that may be slowing the process a little bit." But Davidson also thinks the government should have looked at changing the procedure for owners to amend the common elements. "I think the way the act works right now is a little cumbersome and I thought that might be cleaned up," he says. While the recent issues around Meerai Cho, a lawyer ar- rested and charged with fraud over missing property deposits, has put the spotlight on condo- minium fraud, Davidson thinks the protections currently in place under the act are adequate. "We've gone for many years with the current protections in place and they've been very effective," he says. LT James Davidson thinks the government should have looked at changing the procedure for owners to amend the common elements in condos. FOCUS Order # 986346-65203 $215 Hardcover approx. 600 pages June 2014 978-0-7798-6346-4 Shipping and handling are extra. 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