Law Times

Law Times • July 13, 2015 Page 13 www.lawtimesnews.com condo lawyers gearing up for new era By michael mckiernan For Law Times ondominium lawyers are pre- paring for the biggest shakeup in their practices in more than a decade after the provincial gov- ernment finally introduced amendments to Ontario's Condominium Act. Bill 106, the protecting condominium owners act, passed first reading on May 27 and contains 160 pages of proposed amendments to the original Condomini- um Act that came into force in 2001. John Deacon, a partner at Deacon Spears Fed- son and Montizambert, a Toronto firm that acts mostly for condo corporations, says a major revamp is long overdue. "We actually knew there would be a need for amendments almost as soon as the act came into force in 2001 because various groups had presented issues in the lead up and three-quarters of them were just ignored by the government," says Deacon. "What has really spurred this change are cases of management fraud and the cost complaints about dispute resolution." Since 2001, the number of condomini- um units has almost tripled in Ontario to 700,000 with another 50,000 under con- struction. Between them, they're home to an estimated 1.3 million people, a tenth of the province's population. To answer concerns about the cost of dispute reso- lution, bill 106 provides for the creation of a condominium authority. In addition to overseeing the training of condo di- rectors, the authority will have a tribunal that aims to keep condo-related disputes out of the courts. Deacon says unit owners he has spo- ken to at annual general meetings are unhappy with the idea that they'll pay for the tribunal through a monthly levy of $1 per unit. "Owners are not particularly happy about that aspect, but I can't see the gov- ernment backing away from it because the last thing they want is to throw those disputes back into court and have to pay for that," he says. Rod Escayola, a partner in the Ottawa office of Gowling Laf leur Henderson LLP and cofounder of the Ottawa-based Condominium Directors Group, says he's skeptical that $1 per month will gen- erate enough income for the authority to fund itself and the tribunal. With 700,000 units in the province, the levy would raise $8.4 million per year. By comparison, the province's Landlord and Tenant Board operates with an annual budget of about $30 million, he says. "There's still a long way to go there. It's true that there will also be some user fees, but we're not sure how that will work yet," says Escayola. Chris Jaglowitz, a lawyer at Gardiner Miller Arnold LLP, says $12 per year is a bargain for unit owners in order to re- duce the financial uncertainty that can result from legal actions involving condo corporations. "Of course, nobody wants to pay for the tribunal, but it's a pretty good invest- ment to have a place where condo dis- putes are heard more quickly and more cheaply," he says. "It's better than taking the risk of getting involved in lawsuits and spending a lot of unbudgeted money on a lawyer to engage in a long, expensive process." According to Jaglowitz, the user fees associated with the tribunal will also help filter out frivolous complaints. "It won't be like the Human Rights Tribunal where there are no fees charged and you can get free resources to help you make a complaint. You need a fee to keep some check on the volume of complaints and make sure people aren't complaining about everything under the sun," he says. If passed, bill 106 would also create a new piece of legislation, the condomini- um management services act, designed to institute a regulatory regime for condo managers after a f lurry of fraud cases involving companies hired to manage condo properties. Calls for reform of the Condominium Act hit their peak in late 2011 after the president of Channel Prop- erty Management f led to Bangladesh, leaving an alleged $20-million hole in the finances of several condominium corpo- rations across Toronto. "This really is an extraordinary step to protect consumers," says Jaglowitz. "The guy selling hotdogs across from city hall is the subject of far more regula- tions than any condo manager right now even with the millions of dollars running through their bank accounts each year." Deacon, however, says he's not sure the licensing process will be stringent enough to weed out fraudulent condo managers. He points out that Channel Property Management held a service quality designation from the Association of Condominium Managers of Ontario. "I'm not sure how licensing managers will eliminate or even reduce fraud un- less it comes with a mandatory bonding requirement," says Deacon. According to Deacon, the full details of the licensing process are impossible to discern because they're dependent on regulations made under the act. Escayola says the level of reliance on regulations made under the act is note- worthy in bill 106 and is something that leaves a lot of room for things to change even once the bill becomes law. "Everyone is getting very excited about the bill and maybe the condo industry is celebrating, but it's a bit premature to have a party because we're just past the first reading and the meat is often in the regulations," he says. "The act itself is a bit like the skeleton. The regulation is where you get the de- tails." According to Jaglowitz, the large number of regulations still to come will make life more difficult for lawyers who operate in the area covered by the Con- dominium Act. He says the 2001 version has very few regulations under it. "That makes it relatively user friendly," he says. "You don't have to switch back and forward a lot between the legislation and the regulations. But a lot of these changes make reference to regulations. It's a pro and a con because it means the govern- ment will be able to make changes very quickly on the f ly. But it will require us to spend more time f lipping between the act and the regulations. You get the f lex- ibility but it also adds a level of complex- ity. I guess it's something we'll have to live with." LT FOCUS law.utoronto.ca/ExecutiveLLM GPLLM Global Professional Master of Laws [Get a Master of Laws] Because business issues are legal issues. So if you want to get ahead in business, get the degree that gets you there faster. 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