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Administrative authorities signal new reality for condo sector

2016-03-01

Given the rapid change in Ontario's condominium industry over the past two decades, the recent creation of two new separate administrative authorities (AAs) to oversee the sector is a welcome development, Toronto lawyers Armand Conant and Joel Berkovitz write in Lawyers Weekly.

The AAs are being introduced as part of Bill 106, which consists of two separate acts: the Protecting Condominium Owners Act, 2015 (PCOA) and the Condominium Management Services Act, 2015 (CMSA).

The first AA will handle functions under the amended Condominium Act, 1998, explain Conant, partner and head of Shibley Righton LLP’s condominium law department, and Berkovitz, associate in the law firm’s condominium law department. These include providing director education, administering a registry of, and data about, condominium corporations and overseeing a specialized tribunal to adjudicate certain disputes, especially those between condo owners/residents and their corporations.

The other AA will handle licensing and discipline of condo property managers under the CMSA, and will be known as the Condominium Managers Licensing Authority (CMLA).

As Conant and Berkovitz explain, “The use of AAs in the condo industry is a brave new world, and one we believe has significant merit.”

AAs differ from other regulatory entities in that they are not government bodies, nor an arm of government.

“They are distinct legal entities (not-for-profit corporations) which are at arm’s length from the government. The AA assumes complete control over its financial, operational and legal responsibilities under its operating statute. This includes day-to-day services such as inspections, setting and collecting fees, licensing and enforcement,” write Conant and Berkovitz.

The AA is governed by an independent board typically drawn from key members of the industry over which the AA has jurisdiction. AAs are overseen in a hands-off manner by their respective ministries.

“The ministry can also develop policy recommendations and suggest changes to the AA’s governing statute. Though the ministry liaises with the AA regularly on issues of its operation and management and may appoint up to 49 per cent of the board members, the real decision making authority for the AA lies exclusively with its board of directors,” Conant and Berkovitz explain in the article.

From the government perspective, a key benefit to using AAs is that they are self- financed by fees collected from the businesses or professions which they regulate.

“It is expected that the Condo Authority will be primarily financed from a monthly fee per condo unit (hoped to be in the range of $1) collected by the corporation as part of its annual operating expenses. There will also be a user fee for those who wish to pursue disputes before the tribunal and access the condo registry data. The CMLA will be financed by licensing fees,” they write.

In Ontario, there has been recent growth in the use of the AA model, which Conant and Berkovitz say “reflects a broader government trend toward their use as specialized regulatory bodies for specific industries.” Given their financial benefits and governance flexibility, the government has also signaled greater use of AAs in the future.

“The two AAs being created in response to the passage of Bill 106 reflect a newer approach to governing that is intended to be both cheaper and more efficient,” write Conant and Berkovitz.

This story also appeared on advocatedaily.com and in Lawyers Weekly.

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2016-03-01