This year marked the 20th anniversary of the annual ACMO/CCI-Toronto Condominium Conference. Taking place from November 11-12, 2016, the theme of this year’s conference was “Shaping the Future”.
With the regulations under the amended Condo Act expected to be rolled out in the coming year, the condo industry has reached a pivotal juncture in its evolution. The education sessions offered at the conference focused on fundamental changes that will shape the condo world over the next several years, with topics such as the use of technology in condo living and condo dispute resolution taking front stage. It is vitally important to keep abreast of industry developments, and part of that entails learning as much as you can from industry leaders and experts.
Here are some of the key takeaways from the conference education sessions I attended this year. I have broken down each session into subsections based on the nature of the topics discussed.
Rapid Fire Legal Issues
a) New Condo Act
- Bill 106 (i.e. the new Condo Act), which amends the Condominium Act, 1998 (the “Condo Act”), has received Royal Assent, but it is not yet law, as the regulations thereunder have not been released.
- The new Condo Act’s regulations will have transitional provisions to allow for smooth compliance during the transition period.
- If a condo corporation wants to redo its reserve fund and wants more leeway in terms of timing, this should be done before the new Condo Act comes into force.
- The new Condo Act will affect developers, managers, owners, etc., so it is important that everyone in the condo industry continue to educate themselves.
- Under the new Condo Act, the sale/mortgage back of superintendent suites will be prohibited (with some exceptions).
- Under the new Condo Act, shared facilities agreements will have to set out shared costs so that one party does not end up subsidizing the other. Furthermore, subsequent owners will not be able to avoid paying for shared facilities.
b) Dispute Resolution
- The goal of the new Condominium Authority of Ontario is to streamline the condo dispute resolution process and correct the power imbalance in the process.
- Online dispute resolution is the future of condo dispute resolution, as it is better, cheaper and faster. The British Columbia model represents a good test case for the efficacy of online dispute resolution.
- Residential condo fees are exempt from HST, whereas commercial condo fees are not.
- HST registration is required if commercial condo fees are over $50,000.
- If a condo corporation has never reported HST, then it would never have been assessed by the CRA, so liability could remain open for many years.
- A condo corporation should not claim an HST commercial credit if it is not actually charging HST.
- If a condo corporation has not been claiming HST to date, it should go back to the beginning and make voluntary disclosure to the CRA.
d) Medical Marijuana
- It is unlikely that there will be legalization of medical marijuana dispensaries in residential areas.
- Registered patients cannot be stopped from growing their own medical marijuana in their residence if they comply with the Access to Cannabis regulations, zoning requirements and any other legal obligations.
- Condos can pass rules to regulate marijuana production. For example, the condo corporation should require the marijuana producing owner to prove that they are a registered patient. Additionally, the condo corporation should require the right to access a unit to ensure production is being undertaken safely.
e) Changes, Maintenance, Repairs and Reserve Funds
- When making a change to the common elements, the estimated cost to make the change is important. A “change” is different than “maintenance” or “repair”.
- When funding a change to the common elements, it is like having a mini-reserve fund with only one lump sum contribution at the outset.
- Under the new Condo Act, there will be a longer reserve fund period (i.e. an increase from 30 to 45 years).
f) Arrears and Lien Rights
- Payment for common expense arrears should be applied to the oldest arrears to preserve lien rights and to make use of roll forward entitlements. The unit ledger should reflect how the payment is being applied and the owner should be made aware.
- If there is any doubt regarding arrears or lien rights, a condo corporation should simply go ahead and register a lien rather than risk having its lien rights expire.
- If a condo corporation is charging back amounts to an owner, make sure to give the owner a due date to avoid the risk of starting the lien period too early.
g) Tarion and Condo Conversions
- In condo conversion scenarios, Tarion will not provide warranties on the common elements.
- Under the new Condo Act, there will be more pre-registration disclosure requirements for condo conversions.
- Under the new Condo Act, there will be more Tarion warranty coverage. Performance audits will still be required.
- In the recent review of Tarion, part of the major recommendations included updates to construction guidelines and increased warranty coverage.
h) Harassment and Sexual Harassment Policies
- Condo corporations should update their harassment and sexual harassment policies regarding employees. Condo corporations should also pass similar rules to protect directors, owners, etc.
i) Cancelling Condo Contracts
- Section 112 of the Condo Act allows condos to cancel certain long-term developer contracts, thereby avoiding downloading developer costs onto the owners.
- The Condo Act is silent regarding whether cancellation penalty clauses are applicable in the case where a condo corporation exercises its right under section 112 of the Condo Act to cancel a contract. Future legal battles may clarify this point.
j) Electronic Communication
- Challenges with electronic proxies include the lack of signature and the difficulty with identifying the issuer.
- Use of electronic addresses makes condo-related communication easier, but there is concern surrounding the issue of spam.
1A – Human Rights/Barrier-Free Accessibility
a) HRC, HRT and AODA
- The Human Rights Code (the “HRC”) provides for equal treatment without discrimination. There are 15 grounds of discrimination, one of those being disability.
- Condos are obligated to provide accommodation to the point of undue hardship.
- The Human Rights Tribunal (the “HRT”) can award damages and non-financial measures (e.g. forcing a change in policies) where a condo corporation breaches the HRC.
- It will be necessary to file an accessibility report to show compliance with the Accessibility for Ontarions with Disabilities Act (the “AODA”).
- There are significant fines under the AODA, including up to $100,000 for corporations.
b) Accessibility and Accommodation
- When considering accessibility features, condos should look to the needs of the individual owners. There is no one-size-fits-all to accommodation.
- Examples of accessibility features include the implementation of secondary entrances and accessible parking.
- Condos should communicate with both the disabled owner requiring the accommodation and the other owners.
- It is the owner’s responsibility to request accommodation where required. The owner should put any accommodation requests in writing and should be clear as to his/her needs.
- It is the owner’s right to request further accommodation as his/her needs change.
- The future of accessibility will focus on social sustainability, national accessibility standards and more use of technology.
- A perfect time for a condo corporation to consider accessibility is when renovating existing facilities.
- In terms of accommodating visitors, a condo should consider quality of life issues. For example, if a lack of accessibility will prevent an owner from seeing his/her family, this would be an issue requiring rectification. The key is to be sensible.
- The owner is responsible for paying for accessibility-related accommodations in his/her unit, and the corporation is responsible for everything outside of the unit. Check your condo documents regarding the delineation between units and common elements.
- If there are physical constraints to the property, get creative with accommodation efforts. For example, consider switching the use of a room.
- Consult with people with disabilities for accommodation ideas. The Accessibility Advisory Committee is useful.
- Thinking ahead about accommodation can save the condo corporation money by avoiding human rights complaints. Accessibility-related renovations can be inserted as a budget line item in the reserve fund.
- With respect to accommodation, it is important to think ahead, communicate and engage with the relevant stakeholders and be proactive rather than reactive.
- Do not single out disabled unit owners. Instead, talk generally about the condo’s policies regarding accommodation.
- If an owner requires a service dog, the condo corporation has the right to require proof that the dog is trained and certified.
2A – Technology in Condos: Managing a Smart Condo Building
- Fibre optics are the newest, best way to deliver fast speeds for telecom services in condos.
- The CRTC has forced condos to give access to service providers in order to prevent anti-competitive behaviour in the telecom industry and to maximize consumer choice.
- There is no obligation on a condo corporation to enter a marketing agreement with a telecom provider. The CRTC has only ruled on access agreements.
- If a condo corporation is considering adding a bulk provider, it should look at its declaration to see if it has the authority to add telecom as a utility.
- There is no requirement for a unit owner to allow an internet service provider into his/her unit.
- Fibre optics installation varies based on building age, size, location, available conduits, fibre paths and access to suites.
b) Security Cameras
- IP cameras are useful for providing high resolution recordings and maintaining building security.
- Security cameras can now be installed with smart self-learning analytics to only sound an alarm if actual nuisance is detected.
- The issue with having free Wi-Fi access in a condo is that you do not know who is using it and for what purpose. Condos providing free Wi-Fi should have terms and conditions for use and should block access to certain websites.
d) Building Access
- The future in building access technology is the use of digital “keys” via smartphone apps. These digital keys may replace FOBs one day.
- Drone operators must have insurance, a special flight operation certificate and sufficient experience and skill.
- Drones are useful for looking at building masonry and cracks in condos. Drones can also be used to get a thermal view of the building to assess energy loss.
- Privacy is a big issue with drone use. Recently, a new tort of “invasion of privacy” was established at law.
- Condo corporations should warn owners regarding drone use (so they can close their blinds, for example) to mitigate against privacy issues.
3A – Rapid Fire Mediation: The Evolution of Conflict Management
a) Mediation and Condo Act Requirements
- Mediation is not arbitration. A mediator is not a decision-maker. The mediator facilitates negotiation and is neutral and impartial. The mediator provides a safe space for the parties to tell their stories.
- A mediator is not necessarily a lawyer. The mediator is not there to provide legal advice.
- A mediator’s goal is to move parties from “positions” (i.e. wants”) to “interests” (i.e. needs).
- The Condo Act supports and often requires mediation as a first step. The process is typically mediation, then arbitration and then court.
- Mediation is applicable for all types of scenarios, including condo vs. owner, condo vs. developer and condo vs. condo (in the case of shared facilities).
- The Condo Act does not set out a mediation process. Some condos will have a process set out in their by-laws.
- There can be a long time between when an initial letter regarding pet removal is delivered and when the pet is actually removed. Litigation can take years, so mediation is a good option.
- Mediation is not appropriate where there is a dangerous situation requiring immediate action or a limitation period is set to expire.
- Even if mediation is not mandatory, it can still be useful to resolve disputes. You should follow the advice of your lawyer.
- Mediation topics include disputes regarding the declaration, by-laws and rules.
- Under the new Condo, there is a movement from “dispute resolution” to “conflict management”, with the goal of early intervention.
- Where there are cultural differences between mediating parties, the key is respectful communication. The mediator needs to determine what is important to the parties.
- Usually, each party contributes equally to the cost of mediation. There is no formal process to a mediation (unless required by a condo’s documents), so payment for the mediation is open to negotiation.
- A mediator can be approached directly or through a lawyer. The ADR Institute and CCI provide lists for mediators.
b) Online Dispute Resolution
- The Civil Resolution Tribunal (the “CRT”) implemented in British Columbia is the first online tribunal in Canada.
- The CRT is effective because it operates 24/7, can be used anywhere, is affordable, provides for a case management process, avoids duplication issues and expedites the dispute resolution process.
- CRT orders are enforceable like court orders.
- Online dispute resolution uses technology to find solutions quickly.
- We do not yet know Ontario’s timeline for online dispute resolution implementation.
- The issues with online dispute resolution are that it is impersonal, the quality of communication may be lower, there is no non-verbal communication and there may be the occasional tech blip.
- With respect to the BC CRT, if a matter goes to adjudication, typically the winning party is reimbursed (e.g. for filing fees). Otherwise, the parties can negotiate payment terms for the process.
4A – A Modern Family: Resolving Challenges within Multi-generational Condos
a) Elderly Residents and Dimentia
- Dimentia is a major issue with elderly residents in condos. A person suffering from dementia can often be in denial.
- Due to cognitive impairment, someone with dementia may leave a stove on or bring a stranger back to his/her unit, creating a risk for other owners.
- If a resident has dementia, the condo corporation should establish a relationship with the resident’s family and obtain emergency contact information.
- When a resident can no longer care for himself/herself, the condo corporation can make arrangements for in-suite care.
b) Deceased Owners
- If an owner passes away, use sympathetic language when going about collecting outstanding condo fees.
- If an owner passes away, his/her accounts will be automatically frozen. The condo should take care right away and establish a relationship with the next of kin.
c) Noise and Nuisance
- Noise and nuisance prohibitions can be found in a condo’s documents. Rules must be reasonable, but the declaration need not.
- Condo corporations can charge back the cost of enforcement of noise and nuisance provision.
- Condo corporations can use communal bonding events to bridge the generational divide amongst owners.
- Long-term residents may rely on unwritten rules, but such rules cannot be enforced it they are not in writing.
- Handle noise and nuisance disputes with a light touch. It is the condo corporation’s duty to investigate complaints objectively.
- A condo corporation can get an engineer test to objectively determine noise level.
- Noise may or may not be a breach of a condo’s documents; ordinary residential noise does not constitute a breach.
- The typical noise/nuisance enforcement case involves sending a compliance letter to the offending party and providing the party and opportunity to remedy the issue. If an elderly resident is involved, it is good to get family assistance.
- Noise is personal and subjective, so do not rush to judgment. Get the appropriate diagnostic info to make an objective assessment.
- Some solutions to noise transmission issues include gasketting doors, putting extra drywall and inserting damping material.
- Face-to-face meetings are helpful for addressing noise complaints.
d) Age-based Restrictions
- Age-based restrictions are okay if they do not discriminate.
- Rules can be drafted to require children to be accompanied by an adult if safety concerns exist.
- “Adult only” provisions are prohibited in Ontario. That being said, the HRC permits restrictions on 65+.
- In Dellostritto v. YCC 688, the court held that children could access the condo’s pool only during limited hours.
- In Pantoliano v. MTCC 570 and YCC 531, the court held that diapers were prohibited in the condo’s pool.
5A – Insurance: What is now and what will be
a) Insurance Basics
- Liability insurance acts as indemnity if someone sues the condo corporation. Property insurance provides protection for the condo corporation’s assets.
- Director and officer insurance should be purchased to cover wrongful acts of directors and officers. Damages must be suffered for the insurance policy to be triggered.
- The standard of care of a director is to exercise the skill and diligence of a reasonably prudent person.
- Directors must rely on professionals (e.g. lawyers and engineers) to avoid liability.
- The insurance claim process involves making a claim to the broker, which then goes to the insurance company. Coverage is then confirmed and an adjuster is sent in.
- The insurance adjuster meets with the property manager and claimants and deals with the parties directly.
- Consider the premium and deductible when deciding whether to make an insurance claim.
- Insurance premiums are set by the underwriter based on what they feel should be the cost of the policy.
- Deductibles are also set by the underwriter, who will look at the loss history and nature of the property.
- An insurance policy may be voided if there is a material misrepresentation. Also, reprehensible behaviour may reduce entitlement to a claim.
- If bad behaviour is found, the insurer may raise the deductible to make it more difficult to make a claim.
- Unit owners are expected to have their own policies to cover unit contents and betterments.
- If two insurance policies are in place, look at the wording of the policies to see which one applies.
- Consult with your lawyer to determine if it is the appropriate time to make a claim to an insurer.
- The insurance policy will provide the process for reporting a claim.
- There should be WSIB insurance for property managers to insure against workplace injuries.
b) Condo Act and New Condo Act
- Under the Condo Act, a condo corporation can charge back an insurance deductible to the owner, who will be liable for the lesser of the repair costs and the deductible.
- Under the Condo Act, a condo corporation cannot charge back on insurance if there was no act or omission by the owner causing damage to the unit. However, a condo corporation can implement a charge back by-law with no-fault language.
- Under the new Condo Act, there will need to be an amendment to the declaration for charge back regarding insurance in a no-fault scenario.
Case Law Update
a) Board Discretion
- The business judgment rules applies to condo corporations.
- The board of directors is in the best position to make decisions concerning its condo community.
- If the board’s decision is reasonable, the board should be given deference. For example, in one BC decision, the court would not force a smoking ban, leaving the decision to the condo.
- In a recent BC decision, an owner was ordered to stop smoking until a human rights decision was released.
- There are arguments for and against the enforceability of a prohibition on smoking in a unit. Grandfathering of current owners may be appropriate.
- Keep records and timelines when grandfathering owners.
- In the case of smoke migration, the standard of repair is reasonableness, not perfection.
- Newer buildings will have a higher standard of reasonableness regarding maintenance and repairs as compared to older buildings.
- Not all buildings are treated the same when considering smoke infiltration and migration rectification obligations.
- Condo corporations should document efforts of exercising reasonable behaviour.
- It is necessary to look at reasonableness over time to determine if a condo has breached its maintenance and repair obligations.
- In one HRT case, the tribunal found that there was no discrimination when a meeting was held on a religious holiday, as accommodation was made by proxy voting.
- However, if a condo meeting is held on Christmas Eve, for example, this may be deemed discriminatory on the basis of an implied intent to exclude.
d) Disability Accommodation
- If an owner requires a service pet, he/she must provide evidence of a disability and that the pet medically addresses the disability.
- Condo corporations are entitled to ask for evidence to confirm a disability requiring accommodation (even if the info is private).
- A “strong doctor’s note” is an insufficient basis for proving a need for accommodation. There needs to be medical evidence (see SCC 89 v. Dominelli regarding requirements for medical evidence production).
- If a disability accommodation measure is disruptive to others, the condo corporation may need to find an alternative. The condo corporation is only required to accommodate to the point of undue hardship. Creativity may be necessary.
e) Cancelling Condo Contracts
- With respect to cancelling agreements under Condo Act, a condo corporation may need to issue a statement of claim to protect its rights, as it only has 12 months to decide regarding such cancellation.
- In one case, the court held that “single family” wording in a condo’s documents was not consistent with hotel-like use.
- There is a debate whether AirBnb, by its very nature, is commercial, or if the use of the unit by the renter can be said to be residential (even though the owner is engaging in a commercial activity by renting it out).
If you missed this year’s conference, consider attending next year. We look forward to seeing everyone at next year’s conference when the many exciting developments that are shaping the condo industry’s future become our present.