What Bill 106 brings
Bill 106 (the Protecting Condominium Owners Act, 2015) was introduced in the Ontario legislature on May 27, 2015. Schedule 2 of Bill 106 contains the proposed Condominium Management Services
Standards Act, 2015 (let’s call it “CMSA”) which will be a completely separate statute from the Condominium Act, 1998.
For clarity, keep in mind that Schedule 1 of Bill 106 contains a myriad of amendments to the existing Condominium Act, 1998. Because the existing Condo Act will retain its current name, it is technically incorrect to say that we are getting a “new Condo Act.” Our existing Condo Act is merely getting a whole bunch of minor changes, and we will tackle some of those changes in subsequent pieces.
For now, let’s focus on the CMSA in more detail, beginning with what it covers.
“Condo management” defined
What is condo management?
The working group that formulated much of the intellectual groundwork for manager licensing during the Condo Act Review reported that:
The working group proposed a broad-based and preliminary definition of “management,” as follows:
Management is the act of handling or overseeing the collection or distribution of funds on behalf of a condominium corporation and/or performance of any of the administrative duties assigned to the condominium corporation or the board of directors by the [Condominium] Act.
This concept has been adopted in the CMSA, which contains the following definition:
“condominium management services” means any of the following services provided to or on behalf of a condominium corporation:
- Collecting or holding contributions to the common expenses or other amounts levied by, or payable to, the corporation.
- Exercising delegated powers and duties of the corporation or its board of directors, including,
i. making payments to third parties on behalf of the corporation;
ii. negotiating or entering into contracts on behalf of the corporation, or
iii. supervising employees or contractors hired or engaged by the corporation,
but does not include an activity excluded by the regulations.
So anyone handling condo money would, at first blush, be captured by the CMSA regime and is subject to scrutiny, even if that person does not perform the traditional “management” functions set out in 2 i, ii and iii. Similarly, performing those traditional functions brings people within the sphere of the CMSA even if they don’t handle money. This expansive definition of management services is intended to cast a broad net, and it will.
The regulations listing the activities excluded from this definition are yet to be devised but will likely exclude ancillary work performed by other licensed, regulated and insured professionals like lawyers, engineers, accountants and others and will, to some extent, carve out an exception for self-managed condominiums. More on self-managed condos later.
Who are “condo managers?”
Until now, there has been little or no practical distinction between management firms and individual managers. The term “manager” has historically been used interchangeably for a firm (being any type of business association) and an individual (a single human being). The CMSA now distinguishes between firms and individuals by creating the following two definitions:
“condominium management provider” means a corporation, partnership, sole proprietor, association or other organization or entity that, on behalf of others and for compensation or reward or the expectation of such, provides condominium management services or holds himself, herself or itself out as such;
“condominium manager” means an individual who has the prescribed qualifications to be licensed as a condominium manager under this Act and who provides condominium management services to,
(a) a client on behalf of a condominium management provider, or
(b) a client directly, if authorized by a regulation . . .
The importance of the distinction between individual managers and management firms (now called “providers”) becomes obvious when considering the different types of licenses, to be explored below, and the different information requirements for each.
This distinction between firms and individuals also addresses the prevailing business model in which condominium corporations enter into management agreements with condo management firms (now “condominium management providers”) which, in turn, employ a number of individual condo managers and other support staff to administer and serve the providers’ portfolio of condominiums. The only direct contractual or legal link is between the condo corporation and the management provider, but the individual manager is typically seen as the management representative since that individual is the front line at the on-site management office. The individual managers answer only to their employers, though the condo boards may obviously have some influence in whether or not that individual continues to manage a particular site. The differing interests and roles make it sensible to require different types of licenses.
It’s also noteworthy that the term “property manager” becomes obsolete with the passage of the CMSA. A “property manager” is not necessarily the same as a “condominium manager” as the former need not hold a license but the latter must. There will continue to be call for “property managers” for rental buildings and other non-condominium arrangements for which management remains unregulated, but only a “condominium manager” may manage a condominium. We might therefore expect that “property manager” will likely fade from the condominium lexicon over the next generation and as management firms (oops, I mean “condominium management providers”) update their corporate monikers and documents to reflect the new reality and distinguish themselves from non-condominium service providers.