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

A legislative history is also available and can be accessed from the alphabetical list of current consolidated law.  The e-Laws site also hosts repealed statutes and allows you to view the wording of a specific statute at a specific point in time, which is very handy if you need to know the state of the law as of a certain date.  Detailed help and FAQs are available throughout the site.

As a special feature, we're offering a weekend giveaway that tests your knowledge about our Condo Act and helps you get to know e-Laws a little better.

The Giveaway:

The first condo unit owner, director or property manager to post a comment correctly identifying the number of times the Condominium Act, 1998 has been amended wins a $25 Esso gift certificate.

Terms:

1. Comments must be posted on this site in response to this entry.
2. You don't have to give your last name.
3. Valid email address must be provided (it won't be displayed).
4. Ontario residents only.
5. Prize awarded in sole and absolute discretion of the author.

Good luck!

Definition

(5) In subsections (6) and (7),

“eligible security” means a bond, debenture, guaranteed investment certificate, deposit receipt, deposit note, certificate of deposit, term deposit or other similar instrument that,

(a) is issued or guaranteed by the government of Canada or the government of any province of Canada,

(b) is issued by an institution located in Ontario insured by the Canada Deposit Insurance Corporation or the Deposit Insurance Corporation of Ontario, or

(c) is a security of a prescribed class.

In practical terms, this amendment allows condominium corporations to purchase investments issued by credit unions or caisses populaires that are located in Ontario and are insured by DICO. This effectively destroys the monopoly enjoyed until now by CDIC-insured banks and trust companies and provides greater choice of investment products and providers.   

A list of CDIC-insured institutions is here.  A list of DICO-insured institutions is here.

Condominium corporations that are unhappy with the investment choices offered by their banks now have more flexibility as to where to purchase investments.  This provides considerably more leverage when negotiating rates and terms.  Choice is good.

Qualifications of Directors

Clause 29 (1) (c) of the Condominium Act, 1998 is amended by striking out "a mentally incompetent person" and replacing that with "incapable of managing property within the meaning of the Substitute Decisions Act, 1992".

Clause 29 (2) (a) is amended by striking out "a mentally incompetent person" and replacing that with "incapable of managing property within the meaning of the Substitute Decisions Act, 1992".

The words “mentally incompetent” are being phased out of all Ontario legislation in favour of the more precise definition provided in section 6 of the Substitute Decisions Act, 1992, as follows:

Incapacity to manage property

6. A person is incapable of managing property if the person is not able to understand information that is relevant to making a decision in the management of his or her property, or is not able to appreciate the reasonably foreseeable consequences of a decision or lack of decision.

The Substitute Decisions Act also provides for a court to order a person to be assessed and for a guardian to be appointed to administer an incapable person's property. 

Powers of an Inspector

With the repeal and replacement of the Public Inquiries Act, subsection 130 (3) of the Condominium Act, 1998 is repealed and replaced.   Here's the original s. 130(3):

Powers of inspector

(3) The inspector shall have the powers of a commission under Part II of the Public Inquiries Act that the order states and when the inspector exercises those powers, that Part applies to the inspector’s investigation or audit as if it were an inquiry under that Act.

And here is the new one, to come into force on a day to be proclaimed:

Application of Public Inquiries Act, 2009

(3) Those provisions of section 32 of the Public Inquiries Act, 2009 that the order states apply to the inspector's investigation or audit.

While this new wording may appear to reduce the clarity of the earlier wording as to an inspector’s powers, the new wording still allows a court to pick and choose the powers granted to an inspector and also the protections afforded to witnesses that give evidence during the course of the inspector’s investigation or audit.

As always, great care must be exercised in drafting the court order appointing an inspector.  A poorly-drafted order may leave the inspector with insufficient power to complete the assigned duty and witnesses lacking the maximum protection from reprisal by employers or others for making representations or giving evidence in an inquiry.

Creation of Common Elements Condo Corporations

For the creation of common elements condominium corporations, the following minor amendment clarifies the reference to the now-repealed Certification of Titles Act:

Subclause 139 (1) (a) (iii) of the Condominium Act, 1998 is amended by adding "as that Act read immediately before subsection 2 (1) of Schedule 17 to the Good Government Act, 2009 came into force" after "the Certification of Titles Act".

This amendment, which is now effective, has no bearing on existing common elements condominiums.

Reference in other statutes

Both the Land Titles Act and the Registry Act are amended by striking out "the Condominium Act" wherever it appears and substituting "the Condominium Act, 1998 or a predecessor of that Act".   Other minor modifications are made as to the powers of the Director of Titles and in respect of registering a condominium declaration on title to certain lands.

Check it out

Most of the amendments described above came into force on December 15, 2009 when the bill received Royal Assent.   The changes related to the Public Inquiries Act will come into force on a day to be proclaimed.

The most current version of the Condo Act and any Ontario statute can always found on the government's e-Laws website.    Because of the vast number of statutes amended by Bill 212, however, it will likely take a few more days until all statutes are updated.  

For more details on Bill 212, see the legislative notes and complete bill here and see the government's news release here.

It is difficult to predict the effects of the increased monetary limit in small claims proceedings, but there is a strong possibility that a greater number of litigants will bring claims. Condominium boards and managers should therefore be prepared for an increase in the number of claims made by unit owners, service providers and other condo stakeholders and know how to deal with them effectively. 

Because a defence must typically be filed within 20 days of being served with a claim, the manager should notify the corporation’s lawyers as soon as possible after being served with a claim, and have ready all information and documents relevant to the case. In cases covered by an insurance policy, written notice of claims should be given to the corporation’s insurer, and all claims should be disclosed on status certificates and referred to in the annual audit inquiry letters to the corporation’s lawyers.

Condominium corporations can also take advantage of the increased small claims limit to commence their own claims to recover money owing by unit owners and third parties. As always, they should get legal advice to help weigh the benefits and costs of legal proceedings in small claims court as compared to other available options. Often a stern letter seeking compliance or registering a lien against a unit owner is sufficient to obtain your objective.  Get legal advice before posting chargebacks, however, so as to minimize the chance of a claim for a wrongful lien -- These types of claims are becoming increasingly common.

It is also important to remember that lawsuits must be commenced within 2 years of the date the debt became payable or the date that damage occurred, after which time the right to sue is forever lost. As we described in an October 2008 entry (see here), what used to be a 6-year limitation period was reduced to 2 years in 2004.  

• confirmation that the costs of services provided to unit owners by the association will enjoy the benefit of the association’s statutory lien;
• considerable discretion for an association to decide whether or not to strictly enforce its rules and governing documents;
• new provisions dealing with termination or restructuring of a project in the face of a natural disaster;
• creation of a ‘cooling off’ period before an association commences construction litigation against a developer;
• increased mandatory insurance, and other topics.

In terms of owner/association issues, UCOIA 3.0 introduces as a major new feature a stand-alone bill of rights for owners, known as the Uniform Common Interest Owners Bill of Rights Act ("UCIOBORA"). Some of the highlights of this bill of rights include:

• Powers and duties of a unit owners association and their executive boards.
• Treatment of association bylaws, rulemaking, operation and governance, notice methods, meeting and voting procedures,together with governing provisions for the adoption of budgets and special assessments.
• Authority to discipline unit owners for failure to pay assessments.
• Flexibility for Boards to decide whether to enforce the letter of each provision of its declaration, bylaws, or rules, ordecline to enforce or compromise on such.
• Guidance for record keeping.
• Procedures for the removal of officers and directors, and protections for declarant-appointed directors.

Whether any state enacts law incorporating any or all of the features of this new bill of rights remains to be seen.

Feel free to post a comment and share your thoughts on this important milestone or if you discover any helpful lessons in the American model laws that can help improve our own condo law.

Each condominium unit is still assessed as a single-family residential unit for the purposes of the municipal tax bill.

This is the case because the Assessment Act of Ontario (the legislation which specifically covers the way properties are assessed in Ontario for municipal and school taxation purposes) does not identify condominiums as a specific category of assessment. Thus a condominium-specific tax rate cannot be created by the local municipality, since the municipality can only do those things granted to it by provincial legislation. Since the Assessment Act of Ontario does not permit a distinct category of assessment for condominiums, the municipality does not have the authority to create a specific tax rate for condominiums, even if they wished to do so.

Thus the Assessment Act of Ontario must be amended to permit a category of assessment for condominiums and therefore permitting the municipality, if they chose to do so, to create a condominium-specific tax rate. 

However, we must be aware that although the municipality would have the ability to establish a condominium-specific tax rate with this amendment, they would probably not be mandated to do so by this change.

Our condominium Board of Directors recognized this deficiency in legislation some time ago. They felt, that if this change is ever to occur, it will not happen on its own. The Ontario-wide condominium community must ask for it, in fact must lobby for it.

Our Condo Board of Directors felt so strongly about this issue, that they felt something had to be done and were ready to take action. They also felt that their action had to be shared with other condominium Boards of Directors in Ontario.  

We undertook the following five-part plan:

1)    We submitted a letter to our local municipality (the Town of Markham) asking Council to pass a motion requesting the Province of Ontario to amend the Assessment Act of Ontario to create a specific category of assessment for condominiums. Once this motion was passed, we asked them to send their motion to the Association of Municipalities of Ontario (the municipal lobby group) requesting them in turn to support this motion and so notify the Government of Ontario of this legislative requirement.

2)    We sent a letter to our local MPP requesting him to support our action to amend the Assessment Act of Ontario and to so petition the Minister of Finance (whose Ministry is responsible for the Act.) to make this amendment.

3)    We met with the principals of our property management company, Del Property Management Company and asked them to place this issue before the Boards of Directors for each condominium they manage.

4)    We sent copies of all the correspondence we had taken to the Toronto Chapter of the Canadian Condominium Institute and asked them to use their offices to lobby the Government of Ontario accordingly.

Although our condo corporation initiated this action, we feel that success can only be achieved if the many other condo corporations in Ontario undertake to do something similar, if not the same thing that we did. Only with our collective many voices, representing this sizeable voter bloc in Ontario, can we hope to be successful in our endeavors.

What has happened since we began this initiative in February, 2008:

1)    We met with our MPP, Michael Chan, and presented him with a letter requesting his support for our action. He wrote a letter to Dwight Duncan, Minister of Finance, on our behalf and asked the Minister to respond to our petition. Recently, we received a letter from the Minister, the Hon. Dwight Duncan, acknowledging receipt of our letter. Although he did not unilaterally accept our petition, he did not outright reject it either.

2)    The Town of Markham, after receiving our letter, referred it to their ad-hoc Condominium Working Group, made up of Councilors and municipal staff to discuss this issue and others around the explosive growth of condominiums in Markham. We requested recognition and appointment to this committee. On June 24, 2008, the Council of the Town of Markham appointed a representative from our condo corporation to this committee. We are now at the table.

3)    The Canadian Condominium Institute – Toronto Chapter has adopted this issue as one of its priorities and, in conjunction with the Association of Condominium Managers of Ontario (ACMO), hired a lobbyist to champion these issues before the Government of Ontario.

4)    Del Property Management reacted positively to our initiative. They agreed to take our initiative and put the information in 2 in-house Del newsletters. The first would go in their “Del-o-gram” which primarily goes to Boards of Directors and Property Managers suggesting that this topic be on a future agenda of the Boards of Directors of each condominium they manage. The second would be to reprint this article in “Condominium Life” magazine which generally reaches all condominium owners in the various properties they manage.

Success in this endeavour cannot be accomplished overnight. Nor did we expect that it would. However, we are in this effort for the long haul.

At this moment, we believe that we are only one of a very few condominium corporations to undertake this initiative. But to be successful, we believe that all condo corporations in Ontario need to undertake an effort similar to ours. 

Finally, remember that condo living is now a way of life for an ever-increasing number of people in Ontario. We have now become a very sizable voting bloc among the electorate of Ontario and because of this; we should start using this influence.

Therefore -- The board of directors of our condominium urges all the other condominium board of directors in Ontario to lobby their municipal council and MPP for this change. 

Together we can be successful.

Ernest (Ernie) Nyitrai
Member, Board of Directors
YRCC 636
25 Austin Drive
Markham, ON  L3R 8H4
(905) 477-1511
enyitr618@rogers.com

Recommendation #1: Exempt developer-made agreements and loans from statutory rescission

The first part of the submission calls for the amendment of section 112 of the Condo Act to disallow a post-turnover condominium board from using that section to terminate agreements, easements or leases related to the financing, development, supply and installation of green energy systems.

It is easy to understand that third-party suppliers and lenders would be hesitant to finance, supply or install green energy systems to a new building when there is risk that the post-turnover board will terminate the arrangement. The problem, however, is that the wording proposed by TAF is far too broad and open to significant abuse by developers. The amendment to section 112 that is proposed in item #1(a) on page 3 of the submission is that:

a loan to a condominium corporation which has been fully advanced to the corporation (or to whomsoever it may direct) is not within the purview of subsection (1) [and therefore the loan cannot be terminated or rescinded by the post-turnover condominium corporation]

This clause does not limit or restrict the type of loans that are exempt from termination or rescission under section 112 to those made for the supply/installation of green energy projects. If accepted, this proposal could result in post-turnover condominium corporations starting life with a significant debt but with no ability to terminate or rescind arrangements that were made by the corporation while under the developer’s control. Such loans could be made for any purpose, including the purchase of developer-owned units or assets (including green energy equipment), and could contain improvident terms and unfavourable interest rates.

The most likely outcome of this proposal, if accepted, is developers downloading to new condo corporations the cost of energy-efficient equipment, which may or may not be “green energy projects” as defined in the GEA. This outcome seems to be contemplated by the proposed amendment to section 112 set out in item #1(b) on page 3 of the submission, which provides that:

any agreement, easement or lease involving the development of a green energy system for a condominium corporation (including the provision of any equipment, labour, materials, supplies and/or services in connection therewith) that is entered into by or on behalf of the condominium corporation with one or more third parties (e.g., geothermal, solar photovoltaic, wind turbine or other types of systems, where the third party will have to invest significant funds prior to registration in order to ensure that the system is installed, operative, and functioning properly when people move in) is not within the purview of subsection (1) [and therefore such an agreement, easement or lease cannot be terminated or rescinded by the post-turnover condominium corporation]

While this amendment is nicely couched in the environmental lingo, its underlying purpose is clear – to permit developers to download the cost of equipment or require the condo corporation to purchase that equipment from the developer. The justification for the amendment, however, is flawed. If a developer provides a building component, such as an elevator or a greenhouse as part of a building, what agreement might there be for a post-turnover board to terminate or rescind? How about an equipment/asset purchase or finance agreement? How about an agreement for division of the profits from electricity sales? If the developer wants to provide a fancy green power project as part of its project, it can do that, but it ought to be bearing the cost and passing it along as part of the purchase price.

Moreover, just because a green energy project is green doesn’t necessarily make it desirable, wise or prudent, or worthy of stripping condo corporations of the statutory right to rescind agreements that they entered into while under the control of their developer. The legislature would be doing a great disservice to unit owners by giving effect to this recommendation and watering down the consumer protection afforded by the Condo Act.

Recommendation #2: Give creditors access to special condo remedies

The second part of TAF’s submission (item #2 on page 3) is considerably more problematic. It calls for amendments to Part IX of the Condo Act that would entitle “creditors” to apply to the Superior Court of Justice for remedies under sections 130 (appoint inspector), 131 (appoint administrator) and 134 (obtain compliance order), presumably to help enforce creditors’ rights over loans in default. There are several serious problems with this proposal:

First:  The proposed wording will include all creditors, rather than just lenders for green energy projects. Any lender, as well as trade creditors, unsecured creditors, judgment creditors, etc., would be included by this wording and would be given the same standing and rights as unit owners and mortgagees to obtain special condominium remedies to wrestle control away from the democratically-elected board of directors. Granting these special rights to this group is both unprecedented and unjustified and could open the floodgates to a whole host of evils.

Second:  Whether intentional or not, TAF’s proposal seems to exempt creditors from the mandatory requirement to submit a disagreement to the mediation and arbitration mechanism under section 132 of the Condo Act, which applies to agreements between condo corporations and their unit owners, sister condo corporations, managers and declarants/developers. Seeing as how the legislature has made mediation and arbitration mandatory in a wide variety of circumstances, giving “creditors” the ability to side-step mediation/arbitration and to fast-track their cases into court is inequitable.

Third:  Giving creditors the right to seek the appointment of inspectors, administrators or to obtain compliance orders is unnecessary overkill. At present, private and public lenders alike routinely advance loans to condominium corporations for sums from $100,000 to multiple millions of dollars to finance major repair and replacement of common elements and other projects. All of those creditors have contractual protections that provide the lender with security and rights, and creditors always have the right to go to court for a suitable remedy or an order for the payment of money.

Fourth:  On obtaining a money judgment, a creditor can examine a representative of a judgment debtor condo corporation in aid of execution. In addition, section 23(6) of the Condo Act states that a judgment for the payment of money against the corporation is a judgment against each owner. In other words, even if the condo corporation becomes insolvent, an aggrieved creditor can pick the pockets of each of the unit owners. Creditors and lenders, regardless of the purpose of their loans, do not require the ability to appoint administrators, inspectors or obtain compliance order to collect a money debt against a condo corporation. This proposal simply allows unfriendly creditors to (ab)use these special remedies as a sledgehammer against a condo corporation. Why give a front door key to the barbarians at the gates?

Fifth:  It is hardly plain or obvious that giving creditors access to these remedies is reasonably required to encourage lenders to finance green energy projects, given that there is already a booming finance market for condominium corporations and their special projects. TAF’s submission offers nothing other than a bald statement that the current wording of sections 130, 131 and 134 are “barriers in the Condo Act that deter or restrict the supply of financing for green energy projects to new or existing condominium projects.” That is a gross overstatement and is misleading.

Because of the many evils that would be created in exchange for no appreciable benefit to lenders, the legislature would be wise to reject item #2 in the TAF submission. The fact that TAF and the condo developers would put forth this recommendation is highly surprising, and needlessly (and fatally) taints what might otherwise have been a fairly reasonable and positive submission.

The role of TAF

The fact that this developer-slanted pitch was made under TAF’s letterhead bears some comment. As an agency of the City of Toronto, it is surprising that TAF is championing the developer’s side to such a great extent and appears to have given little or no thought to the consequences to post-turnover condominium corporations and their unit owners. The fact that there appears to have been no consultation with the rest of the condominium industry (i.e., ACMO and CCI) further gives the strong impression that TAF’s focus and priorities are less than ideally balanced. In order to maintain its credibility with the rest of the condominium industry and the public, TAF must be careful to be attentive to the needs of the other players in the field, namely the unit owners, and to be more inclusive. We will be watching.

Don’t miss the forest for the trees!

Both TAF and the Ontario Government must remember that, in this quest to become greener, it is paramount that we do not weaken effective consumer protection (such as the Condo Act) and create problems that did not previously exist. Being green is important, but defending consumer protection is more important. The condominium marketplace is complicated enough for consumers without further tipping the balance in favour of developers. While legislative change may be necessary to help allow for greener development, the potential negative impacts on consumer protection must be closely examined, considered and discussed by all stakeholders before changes are legislated.

Update (May 8, 2009):   Harry Herskowitz, who was involved in preparing TAF's submission, responded to most of these issues.  His response is posted on the Saxe Envirolaw blog.   Check it out here.

While these codes are highly technical and are largely unintelligible to most of us, there is probably still room for improvement.  The more technically-inclined condominium unit owners, board members, managers and building professionals, as well as their related associations across Canada, might have a number of helpful comments or be able to provide other input to help revise these national codes for everyone's benefit. 

Here’s how you can participate:

1. Request a change to the codes:
2. Review the proposed changes;
3. Submit your comments/suggestions as part of the public consultation process;
4. Attend and observe the proceedings;
5. Volunteer for membership on one of the standing committees.

Comments on the proposed changes for 2008 are now closed but another public review on proposed technical changes to the 2005 National Model Codes will be held in 2009. Stay tuned to the CCBFC’s website for updates on the review process for 2009 and express your interest before February 2009 to sit on one of the standing committees.

At the beginning of this decade, when the small claims court monetary limit had last increased (from $6,000 up to $10,000), the enabling regulation was made on November 22, 2000 and became effective on April 2, 2001, less than five months later.  In the absence of an explanation, there appears to be little reason behind the 12.5 month lead-up to implementing the increases announced this week. 

There is no doubt that some of the more complicated reforms will require time for the bar, bench and the courts to prepare, but the monetary increases could and should have been enacted separately from the other initiatives and made effective much sooner to maximize the benefit and to help relieve some of the burden on the courts and litigants now, or at least during 2009.

It may be true that these reforms will actually lead to lawsuits being resolved faster and more affordably as promised in this week’s news release, but we will be waiting until 2010 to find out for sure. They say that justice delayed is justice denied. The same might be partly true of justice reforms.