Improved protection for buyers and owners, new powers for boards of directors and new kinds of condominium development
If you are thinking of buying a condominium, or already own a condominium -- residential or non-residential -- Ontario's new Condominium Act is important to you.When buying, you will receive more information than in the past to help you make an informed decision on whether a condominium is your best choice and if a particular condominium development meets your needs. For owners, it will improve the day-to-day running of the condominium and your investment will be more protected. And, as a result of the Act, new kinds of condominium developments may come on to the market to meet changing needs.
Some frequently asked questions and answers:
Lots of information is good when thinking about buying a condominium, but what's being done to cut through the fine print?
When the new Act is proclaimed, the developer must provide a table of contents as part of the disclosure statement. Prospective purchasers will find information quickly and easily in the declaration, by-laws, rules or disclosure statement about such things as whether a building on the property has been converted from a previous use, the percentage of units the developer intends to lease and any restrictions on pets.
Will my monthly condominium fees go up as a result of the need to review how much money should be in the reserve fund?
Condominium corporations must conduct periodic studies of their reserve fund to determine whether the fund and the level of contributions from owners are adequate for the expected costs of major repairs and replacement of the common elements and assets of the corporation. It will be up to the board of directors to make sure the reserve fund has enough money in it. Otherwise, unit owners could be faced with large special assessments to cover the costs. There have been cases where the reserve fund has not had enough money in it and owners have been hit with major, unforeseen expenses.
How do owners get more say in the running of their condominium corporation?
Voting for members of the board of directors is based on the number of units in a building, not the number of owners. The more units you own, the more votes you have. This has sometimes resulted in owner-occupants having no representation on the board of directors. However, the new Act will reserve one position on the board for election by owner-occupants if at least 15 per cent of all the units are owner-occupied. This will ensure they do have a voice on the board, even when most of the units in their condominium are owned by a small number of owners.
What's being done about the use of proxies?
Proxies must be for a particular meeting of owners, not for voting purposes generally. If the proxy is for the election or removal of a director or directors, the proxy must state the name of the director or directors and whether the vote is for or against election or removal. The corporation must keep all proxies for 90 days following the meeting.
What notification must my board give when it plans to make changes I might not agree with?
The new Act will clarify rules regarding a wide range of subjects, including changes to the common elements, assets or services the corporation provides. Certain changes can be made without notice. Other changes can be made on notice to the owners and a meeting must be held if the owners of at least 15 per cent of the units want one. If the change is substantial, the owners of at least two-thirds of the units must vote in favor. These rules are spelled out in the Act.
Is there anything I can do, other than going to court, if I'm in dispute with the condominium corporation?
Until now, going to court was often the only option. The new Act will require mandatory mediation and, if this fails to resolve a problem, mandatory arbitration. You can still go to court if mediation and arbitration don't resolve the dispute.
Does the new Act help make it easier to change the declaration?
Changing the declaration requires consent by all the unit owners and mortgagees and many condominium corporations have found it difficult to achieve 100 per cent agreement. Now, changing the declaration regarding the allocation of common expenses, for example, will require the support of owners of at least 90 per cent of the units. Changing the declaration for some other matters, such as the keeping of pets, for example, will require the consent of owners of at least 80 per cent of the units. In both cases, certain other conditions must be met.
Will the new Act help me to get permission to keep a pet?
If a condominium's declaration prohibits pets, the declaration could be amended to allow pets if the owners of at least 80 per cent of the units consent in writing and certain other requirements are met. The old Act required the owners of all units and all mortgagees to agree.
Will the new Act help us to get the condominium designated as an adult-only building?
The Ontario Human Rights Commission has ruled that adult-only buildings discriminate against families. The new Act does not make any changes in this area.
How is my investment in my home going to be protected better?
Your investment is protected more when your home and the condominium development continue to be attractive and well maintained. The new Act will help in several respects. The condominium corporation can choose to deal with overcrowding by adopting a municipal occupancy standards by-law as a by-law of the corporation, which would give the corporation enforcement powers, or by making a more restrictive by-law based on the design of the building. If an occupancy by-law is contravened, the board may levy charges against the unit for the increased cost of maintenance and repair of the common elements and use of utilities. For common elements condominiums, residential and mixed use condominiums, the new Act will also require a post-construction audit of the common elements to preserve warranty coverage under the Ontario New Home Warranty Program. Periodic studies of reserve funds are required to determine whether the fund and the level of contributions from owners are adequate.What can be done to restrict the high number of renters in my building?
The Act makes no reference to how many units may be rented because this would be a severe restriction on owners' property rights. If the board makes an occupancy standards by-law, this could help to control overcrowding that may result from renting out units.
Does the new Act prohibit phantom mortgages?
In the past, developers could refuse to accept full payment during interim occupancy and required purchasers to make payments on a "phantom mortgage" on the outstanding balance. This resulted in buyers having to pay interest on the "mortgage" until ownership was actually transferred to them. Now, developers can no longer refuse to accept full payment when the purchaser takes interim occupancy.
How will individual unit holders benefit from condominium corporations being able to amalgamate more easily?
At present, each "phase" of a condominium development has its own condominium corporation, each with its own organization, record-keeping, directors and insurance policies, for example. If they amalgamate they can pool resources and possibly reduce costs for unit owners. Also, it will be easier to find people for one board of directors rather than, say, four or five boards. Owners of at least 90 per cent of the units of each condominium corporation must consent in writing within 90 days of a meeting called for the purpose of considering amalgamation.
I hear condominium corporations have new rights regarding access to telecommunications services?
The new Act will ensure that a condominium created under the new Act, with one or more residential units, can install its own telecommunications services rather than having to accept what is made available by the developer. In certain circumstances, both existing and new condominium corporations will be able to terminate existing telecommunications agreements entered into before the condominium's turnover meeting.
Does the new Act do anything to help condominium corporations collect on liens for unpaid common expenses against non-residential units?
Liens registered against non-residential condominium units for non-payment of common expenses do not enjoy the same priority as liens registered against residential units. The new Act will extend priority for such liens and will go a long way towards helping condominium corporations collect arrears of common expenses against non-residential units.
Is there anything in the new Act about the requirement that directors of condominium corporations attend meetings in person? This is sometimes difficult for directors of non-residential corporations, many of whom have other business responsibilities?
The new Act will permit a meeting of directors to be held by tele-conferencing or another form of communications system that allows the directors to participate at the same time, if the by-laws authorize it and all directors consent.
What kind of new condominium developments will be possible?
1. Condominiums in which common elements are defined but the land is not divided into units. For example, homes could be freehold but facilities such as a recreational centre, roads and sewers, could be common elements.
2. Phased condominium developments, which would allow a single condominium to be built in phases.
3. Vacant land condominiums, in which each owner may decide what type of structure, if any, will be built on his or her lot. This is subject to restrictions in the declaration. This kind of development may be suitable for a mobile home development, for example.
4. Condominiums on leasehold land. The initial term of the lease must be from 40 years to 99 years and the leasehold unit owner could sell the unit without the consent of the landlord. This would free up land donated to hospitals and universities, for example, but not needed for such purposes.
The new Condominium Act replaces the enacted in 1967 to govern the creation, administration and termination of condominium corporations in Ontario.
There has been a dramatic increase in condominium ownership and many new developments in the marketplace since that time. As a result, the existing Act no longer meets today's needs.
The new Condominium Act will help ensure having a condominium is everything you want it to be.