The Ontario Condo Law Blog

The Ontario Condo Law Blog

Serving Ontario's condominium communities since 2008

Introducing the Condominium Management Standards Act, 2015 — Part 2: Early Steps

Posted in Legislation & Regulation

In this second instalment of our close examination of the proposed new Condominium Management Standards Act, 2015, we look at the steps taken by the condo managers themselves to improve standards, forming the genesis of a true self-regulated profession and paving the way for Bill 106 to take root.

Early steps to raise the bar

While condo owners and directors have called for improved standards during the Ontario government’s Condo Act review process since 2012, the loudest and longest call for educated, licensed and regulated condo managers has come from the condo managers themselves.  Their association has been leading by example. Continue Reading

Introducing the Condominium Management Standards Act, 2015 — Part 1: Context

Posted in Legislation & Regulation
businessman and his business team

Condo manager licensing and regulation is the focus of our first in-depth examination of the changes proposed in Bill 106 (Protecting Condominium Owners Act, 2015). This is a natural choice considering that manager licensing and regulation constitutes the largest change in our condominium law since 1967, in terms of how condominiums in Ontario are operated, the credentials of the people who operate them and the protections afforded to unit owners.

Of all of the proposed changes set out in Bill 106, none are nearly as profound or as desperately-needed as establishing mandatory qualifications, licensing and regulation for condo managers.

This post kicks off the first of a multi-part series.  We start with the current state of affairs in condominium management and why the time has come for substantial change.

Continue Reading

Condo law reform bill introduced

Posted in Condominium Act, 1998, Legislation & Regulation

The Province of Ontario has rolled out proposed new legislation to reform the existing Condominium Act, 1998 and establish mandatory licensing and regulation of condo managers.

Following a careful review and elaborate public consultation process from 2012 to 2014, the Protecting Condominium Owners Act, 2015 was introduced in the legislature on May 27, 2015 as Bill 106.  It was given and passed first reading that day.

Bill 106 contains various proposed amendments to the Condominium Act, 1998 and includes the Condominium Management Services Act, 2015, a proposed new standalone statute to regulate condo management services.  The government announced its commitment to implement manager licensing and regulation in July 2013, following a string of significant frauds by managers and complaints from condo owners.

The status and full text of the Bill is available on the legislature’s website here.

The Ministry has announced that Bill 106 is intended to address several key points, such as:

  • Improving governance, operations and financial management provisions;
  • Training for condo directors;
  • Enhancing communication to unit owners;
  • Establishing a Condominium Authority to provide information and streamlined dispute resolution services for certain topics;
  • Mandating licensing and education for condominium managers;
  • Expanding Tarion warranty coverage to conversion buildings;
  • Prohibiting certain developer practices like delaying or downloading hidden costs;
  • Increasing and improving disclosure to purchasers about condo living, operations and increased costs after closing;

and more.

Keep in mind that after first and second reading, Bill 106 will be referred to a Standing Committee of the Legislature in order to enable legislators to hear and consider submissions from stakeholders with respect to further revisions.  So there is still plenty of work to be done.

After being involved throughout the entire consultation process, including the working groups, expert panel and technical meetings leading to its introduction, GMA lawyers are now closely reviewing the bill.  We will continue to pursue the extensive, constructive input that we provided at earlier stages and offer further help to improve the bill.  Bob Gardiner had suggested over 100 improvements to the existing Act when he co-drafted the Legislative Brief provided by the Canadian Condominium Institute (Ontario) and ACMO Joint Legislative Committee.  Chris Jaglowitz was deeply involved throughout the review from 2012 to 2014 and will continue that work throughout the legislative process, in concert with other organizations and by speaking in the media.  Following his attendance at the minister’s announcement last week, Chris was quoted in the Toronto Star and interviewed on CBC radio.

We will keep you informed as major developments arise and will provide further analysis in the coming days.  Meanwhile, be sure to review the bill and gather your questions, comments and suggestions and be ready to share them. Together, we can take this opportunity to make significant and lasting improvements to our condo law.

Because we see many of the concepts raised by owners and other stakeholders being addressed in the new bill, we extend congratulations and thanks to the Ministry personnel for undertaking a broad yet detailed public consultation and for preparing what appears to be a thorough and thoughtful bill.

A reasonably prudent director

Posted in Case Studies, Governance, Living Together

Condo directors in Ontario are expected to exercise a certain degree of attentiveness, caution and prudence while carrying out their duties. This expectation is known as the “standard of care” and is set out in section 37(1) of the Condominium Act, 1998, which provides:

37.  (1)  Every director and every officer of a corporation in exercising the powers and discharging the duties of office shall,

(a) act honestly and in good faith; and

(b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

While the wording of this standard of care seems pretty simple, some directors don’t entirely understand what it means.  A recent Superior Court case illustrates that some directors don’t understand it at all, or don’t care. Continue Reading

Common expense collections policy redux

Posted in Financial Issues, Governance
Past Due

We published a piece last May recommending that condominium corporations enact policies to collect common expenses in an orderly, systematic way. Unfortunately, we continue to see condo boards deliberately delaying the commencement of power of sale proceedings on liened units. Such delay brings added cost, wasted board time, greater hardship on unit owners in trouble and cash flow disruptions.

Aside from poorly-informed boards of self-managed condos, a major cause of problem collections is management agreements requiring the board to instruct management to commence power of sale proceedings on liened units. Whatever the reason behind such clauses, none is compelling and the concept is hopelessly flawed. We say: Continue Reading

Superior housekeeping at Superior Court

Posted in Legislation & Regulation
spring cleaning

Though the weather suggests otherwise, spring has finally sprung in Ontario. As many condo corporations begin their seasonal cleaning and maintenance routines, our courts are likewise gearing up for significant housekeeping.

Recent changes to the Rules of Civil Procedure will automatically sweep away pending lawsuits brought in the Ontario Superior Court that are not moved forward in a timely way. Condominium corporations, their directors and managers should take note. Continue Reading

Condo lien enforcement hits the highway

Posted in Legislation & Regulation
Source: Ontario Ministry of the Attorney General

Until now, mortgagees could commence their enforcement lawsuits anywhere in Ontario they pleased, regardless of where the mortgaged property is located. That option is now gone.

On March 31, 2015, rule 13.1.01 of the Rules of Civil Procedure is amended by adding the following new subrule (3):

Mortgage Claims
(3) In the case of an originating process, whether it is brought under Rule 64 (Mortgage Actions) or otherwise, that contains a claim relating to a mortgage, including a claim for payment of a mortgage debt or for possession of a mortgaged property, the proceeding shall be commenced in the county that the regional senior judge of a region in which the property is located, in whole or in part, designates within that region for such claims.

Stated more simply, mortgage enforcement actions must now be brought at one of the court locations in the judicial region where the property is located that is designated by the local regional senior judge. Continue Reading

The common expenses conundrum

Posted in Financial Issues

PennypinchMany people who work with condominiums raised an eyebrow after reading a recent Toronto Star story entitled “Maintenance fees take a toll on Toronto condo owners.”

The piece highlights the divergent philosophies about the interplay between common expenses and market values and the growing trend towards gathering, tracking and comparing common expenses data from building to building. Most notably, it cites the example of a local condominium that reduced its common expenses by 30% (probably by slashing contributions to the reserve fund) and is now witnessing a boom in unit resale values compared to nearby condos.

Continue Reading

Owners cannot requisition by-law amendments

Posted in Declaration, By-Laws & Rules, Governance

While the Condominium Act, 1998 permits owners to requisition meetings for certain business and for informational purposes, there are limits on what can be accomplished using this process.

Some owners at one of our smaller condo corporation clients recently submitted a requisition to amend the corporation’s general by-law to increase the size of the board from 3 to 7 directors and impose a new qualification that only owners are eligible to be directors.   For the reasons that follow, this is business that cannot be requisitioned by owners. Continue Reading

Top 10 condo law cases of 2014

Posted in Case Studies

Happy New Year!Happy New Year.

Our picks for the top 10 condo law cases of 2014 is an all-Ontario batch, with half being important Court of Appeal rulings.   Some of them highlight the dire need for significant revision to our condo law.

10.     TSCC 1908 v. Stefco Plumbing & Mechanical Contracting, 2014 ONCA 696

Expired condo lien rights cannot be revived. Unpaid common expenses are not damages that can be recovered with a compliance order (where 100% costs recovery is typically assured).  If you snooze, you lose and must sue the owners for a liquidated debt as any other unsecured creditor and any shortfall should be paid by the person(s) who allowed the debt to age beyond the 90-day lien period.   Condo corporations can minimize the odds of losing their first-place security over unpaid common expenses by working with a professional condo manager and enacting a collections policy.

9.       Boily v. Carleton 145, 2014 ONCA 574

The Court of Appeal upheld a contempt order against board members who breached a court order but significantly reduced the penalty and the costs payable by those directors personally.  While one of the court’s motives in softening the penalty and costs award was presumably to avoid dissuading people from serving on condo boards, the ruling leaves this corporation (and its entire ownership) holding the bag for a lot of costs arising from a board run amok. Similarly, the individual unit owners who spearheaded this litigation to hold the board to account are likely financially devastated from their effort and the hollow result.   No good deed goes unpunished.

8.       Gordon v. YRCC 818, 2014 ONCA 549

The Court of Appeal upheld a condo by-law permitting the board to disqualify directors after an internal “ethics review.”  Some observers hail the approval of such by-law as a victory, but it may cause more problems than it solves.  Allowing the majority of a condo board to unseat directors may periodically be helpful, but it strikes at the heart of condominium democracy and creates a real potential for abuse.  While the ownership may recall and remove directors at a whim, boards holding their own “ethics review” must do so in accordance with procedural fairness, good faith and act reasonably, failing which the process is open to judicial review, thereby giving rise to needless litigation and cost.  If the purpose of the by-law is to provide for swift, painless removal of bad-apple directors, it is defeated by the increased likelihood of a lawsuit and the prospect of a shining knight or whistle-blower being ousted by rogues.   Just because it may be possible to implement such a process to remove directors doesn’t mean it’s a good idea. Continue Reading