Ontario Condo Law Blog : Toronto Condominium Lawyer & Attorney : Gardiner Miller Arnold Law Firm : Ontario, Ottawa, Hamilton, Kitchener

At long last, the official electronic version of the Condominium Act, 1998 has been updated to show the latest amendments made in December 2009.  Most of those amendments were made by the Good Government Act, 2009, which amended over 300 Ontario statutes, and hence the long delay in updating the official electronic version of most statutes.

Condominium owners, directors and their professionals should always check to be sure they're consulting the latest version of legislation and regulations before making decisions.   The best way to do this is consult the Ontario Government's e-Laws website at www.e-laws.gov.on.ca.

At the top of every statute and regulation on e-Laws is a currency date, as well as a reference to the latest amendment.  See below picture.

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In a special update released this week, CCI-Toronto and ACMO announced that they have successfully lobbied the provincial government to amend the regulations under the Condo Act so that corporations registered before May 5, 2001 will have 15 years (not 10 years) from the date of their first reserve fund study to top-up their reserve funds.

[Update (March 7, 2010):  The regulation making this amendment is now published here.]

Condominium corporations existing as of May 1, 2001 were required to have their first official reserve fund study under the New Act within three years after that date. Generally speaking, that means that they must top up their reserve funds by the year 2016 or 2019.

CCI-Toronto and ACMO deserve kudos for securing this concession to help condo corporations offset the deleterious effects of the ever-looming HST.   We wish them well in their continued negotiations with government.

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Another small amendment to our Condo Act came into force on December 15, 2009, this time by virtue of Bill 218, the Ontario Tax Plan for More Jobs and Growth Act, 2009.

Clause (b) of the definition of "eligible security" in subsection 115(5) of the Condominium Act, 1998 is amended to include certain financial instruments issued by institutions located in Ontario insured by the Deposit Insurance Corporation of Ontario ("DICO").

Subsection 115(5) now reads as follows (with amendment underlined):

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The Ontario Legislature passed Bill 212, the Good Government Act, 2009 on December 3, 2009.   The bill received Royal Assent with very little fanfare on December 15, 2009 and is now law.

This omnibus bill is intended to modernize statutes by correcting errors and plugging loopholes.  It also does the following things:

• makes minor amendments to almost every Ontario statute, mostly by updating language and terminology
• repeals a few outdated or ineffective statutes
• makes significant improvements to the City of Toronto Act, 2006 and the Municipal Elections Act
• legalizes the until-recently covert process of conducting criminal records checks on jurors
• replaces the old Public Inquiries Act with a new one

The bill also makes three minor amendments to the Condominium Act, 1998 and a few small consequential changes to related statutes.   Here is a brief description of the changes:

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Q: What percentage of unit owners is required to approve a modification of the maintenance and repair obligations contained in a condominium declaration?

A: 90%, as required by section 107(2)(d) of the Condominium Act, 1998.

Q: If two different proxy holders show up at an annual general meeting and they each hold a proxy from the same unit owner but the proxies were signed on different dates, which proxy is valid?

A: The most recent proxy is the valid one, often because most forms of proxy contain the words: “I (We) revoke all proxies previously given.”

Q: Is it correct that no board member can sit more than 2 - 3 year terms? What happens next? Do they take a year off and run again the following year?

A: The Condominium Act, 1998 contains no restrictions as to the number of terms a director can serve. Some corporations’ by-laws may contain term limits, in which case the by-law may specify any additional restrictions or procedures. Term limits are not a very good idea because it is often hard to find volunteers willing to spend the time and effort to serve on the Board.

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A troubled condo project in Ottawa is being taken over this week by the developer’s major creditor. The Ottawa Citizen reports that this creditor announced it is terminating the existing purchase agreements and that:

The former purchasers of the condos were told they would receive their deposits back. But it’s not clear about other expenses, such as upgrades and fixtures that have already been purchased.

This situation illustrates that while a purchaser’s deposit for the purchase price is protected by section 81(1) of the Condominium Act, 1998 (“the Act”), not all monies paid to a developer are covered by this statutory requirement that money be held in trust by the developer’s lawyer or another trustee.

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The saga of the doomed luxury condo development at 1 Bloor in Toronto took an interesting turn earlier this month when the project was sold.

Great Gulf Homes announced that it had purchased the land at the corner of Yonge and Bloor Streets from developer Bazis International as part of a court-approved process to keep the project from falling into receivership. Bazis had initially purchased the land for $61 million but had defaulted on its loans before construction could begin.  

Despite the insolvency of the developer, those purchasers who braved the cold and lined up outside for days in late 2007 to buy units at 1 Bloor won’t lose a dime of their deposits (reportedly over $70 million). They can thank section 81 of the Condominium Act, 1998, which provides that deposits paid for the purchase of proposed condo units must be held in trust by a trustee or a law firm.  Section 82 provides that developers must pay interest on these deposits. 

Though their deposits are safe, those who purchased units at 1 Bloor are wondering what kind of condo they are going to get for their money.   The fate of the project won’t be known until after the sale to Great Gulf Homes closes in September but the new concept will probably be far less ambitious than the 80-storey, half-billion dollar skyscraper that was originally planned.  GMA's very own Gerry Miller shared his view on the project in this article in last Friday’s Globe and Mail.

Update (Sept 4/09):   Kris Scheuer of the Town Crier reports on her blog that 1 Bloor purchasers are now being refunded their deposits.

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Sections 132 and 134(2) of our Condominium Act make it mandatory for condo corporations and unit owners to mediate many types of disputes before proceeding to arbitration or commencing litigation. Among the disputes that must be mediated are disagreements over the declaration, by-laws or rules.

Despite the fact that mediation is mandatory in declaration, by-law and rule cases, this step is often by-passed where the parties don't agree on the selection of the mediator, as per section 132(1)(b) of the Condo Act.  This is a shame since the case will then proceed directly to arbitration and, in some instances, to court. The cost, complexity and level of animosity between the parties all increase sharply as the dispute progresses through the various stages. Early resolution  is almost always preferable.

In cases where mediation actually does take place, the likelihood of the dispute being resolved successfully depends heavily on a number of factors such as the skill of the mediator and counsel, the preparation and goodwill of the parties and, quite importantly, the ability of the parties to really listen to each other. Without proper preparation and anticipation of the likely concerns of the opposing party, mediation is often doomed to fail.

In a recent posting on the California HOA & Law Blog, attorney Beth Grimm shares her views on why mediation is the perfect way to solve condo disputes, why mediation often fails and what can be done to improve the odds of succeeding. Her comments are worth reading since they are perfectly applicable to condo disputes north of the 49th parallel.

Because mediation is mandatory for many condo disputes here in Ontario and since mediation represents an excellent opportunity to resolve disputes and heal divisions quickly and economically, board members, property managers and unit owners must equip themselves with the knowledge and tools to come to the mediation table to solve disputes.

Stay tuned in the coming weeks for more tips and insight into making the most of mediation.

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Condo unit owners and directors are often uninformed about their rights and responsibilities or about how condos work. This is largely due to a lack of comprehensive information online to address basic condo concepts.

A new website may help fill that void.

The Condo Information Centre (found at www.condoinformation.ca) was launched on June 30, 2009 by Anne-Marie Ambert, a retired university professor and condo director, who offers her knowledge of how condos work. Her site offers an impressive digest of original text and commentary on a number of topics, including:

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The proposed Green Energy Act (“GEA”) is moving forward quickly and will be considered in committee later this month. As it now reads, nothing in the GEA contemplates any amendment to the Condominium Act, 1998 (“the Condo Act”).

That may change, but not in a way we would like.

The Toronto Atmospheric Fund (“TAF”), together with a local condo developer and their respective lawyers, made a written submission to the Minister of Energy and Infrastructure on the implementation of the GEA. A copy of the submission is available here. [Hat tip to environmental law blogger Dianne Saxe.]

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Where a unit owner, tenant or a guest causes damage to an owner’s unit, section 105 of the Condominium Act, 1998 permits condo corporations to charge back certain repair costs by adding those costs as common expenses to that owner’s unit and collecting them by way of lien. Corporations can pass by-laws extending the circumstances under which they can charge back repair costs. The underlying concept is that an owner who is responsible for damage should pay any repair costs not covered by the corporation’s insurance.

This type of charge back is typically limited to the deductible amount under the corporation’s insurance policy, which can range from $500 to $10,000 for most water escape or fire claims. In larger condominiums or those with a poor claims history, the deductible can reach $50,000.

No matter what the amount, few owners can easily afford these charge backs. Thankfully, they can obtain insurance to significantly lessen the impact of such charge backs and protect their personal property and improvements to their unit, none of which are covered by the corporation's insurance.

The problem is that a surprisingly large number of owners do not secure proper insurance because they do not understand the limitations of the corporation’s insurance and mistakenly assume that they don't need to obtain their own coverage.  The truth emerges very quickly in the aftermath of a water escape or fire, but too late.   

Failure to obtain proper insurance can result in a crippling financial burden that can rob owners and their families of their financial security and their home. There are few things as heartbreaking or as avoidable.

Condo boards and managers should take concrete steps to help educate their unit owners about insurance on an ongoing basis and especially when new standard unit by-laws or insurance deductible by-laws are proposed.  Here are some ideas:

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