Condo Act amendments 'significant': Kleiner


Amendments to the Condominium Act that took effect in November 2017 marked the most significant changes to the condominium industry since its inception, writes Toronto condominium lawyer Warren Kleiner in Condo Voice.

With approximately 10,000 residential condo corporations in Ontario and 800,000 residential units, it was time for some modifications to the 1998 Act, says Kleiner, a partner with Shibley Righton LLP's Toronto office.

While changes to the Act will unroll in stages, the November amendments relate primarily to governance matters, communications with owners, mandatory disclosures and training for directors, meetings and voting, corporation records and the creation of the Condominium Authority of Ontario (CAO), the article says.

The CAO — focused on consumer protection and supporting healthy condo communities across Ontario — will be a source for information, training, dispute resolution, and other services, Kleiner writes.

“The CAO will offer a new, online dispute resolution process, called the Condo Authority Tribunal (CAT), starting Nov. 1, 2017,” he says. “The CAT will have the exclusive jurisdiction to hear and make legally binding and enforceable decisions about condo disputes. Only disputes identified by the government in the regulations can be [filed] with CAT, which at first will be limited to disputes about records of the Corporation.”

Kleiner says with the changes, condo corporations will now have to provide new information certificates to owners — Periodic Information Certificates (PICs), Information Certificate Updates (ICUs) and New Owner Information Certificates (NOICs).

“The PICs will have to be sent twice per fiscal year, within 60 days of the end of the corporation’s first and third fiscal quarters,” he writes. “They will include information about legal actions and judgments, insurance information including the maximum insurance deductibles that can be charged back to owners, information about directors involved in legal action and if they are in arrears 60 days or more, budget information, reserve fund balance, remaining contributions, anticipated expenditures, projected increases, and more.”

In addition, the article says that preliminary notices containing information about the upcoming owners’ meeting will now have to be sent at least 20 days before the actual notice of meeting. The notices will indicate the date and purpose of the meeting and, if it is to elect directors, it will also include a deadline for submitting a candidacy and candidate disclosure.

Kleiner says a welcome new requirement is the disclosure obligations for board candidates.

“Each candidate will have to disclose whether he/ she is 60 days in arrears or more in the payment of common expenses, whether he/she is an owner or occupier of a unit, has been convicted of an offence under the Act or regulations in the past 10 years, is (or a family member or tenant is) involved in legal proceedings with the corporation, or is a party to or has a material interest in a contract or transaction with the corporation or the developer,” he writes.

“These disclosures must be submitted in writing to be included with the Notice of Meeting or made orally at the meeting. Corporations will be able to pass bylaws to require additional disclosures. All directors will now have to complete prescribed training within six months of being elected, re-elected or appointed to the board. The courses are free and available online. There is no test or exam. The training must be renewed every seven years.”

With respect to records, most will have to be kept for a minimum of seven years, including financial records, operating records and status certificates, Kleiner writes.

“Fundamental documents such as the declaration, bylaws, rules, current agreements and insurance policies will have to be kept indefinitely,” he says. “Proxies and ballots have to be kept for 90 days unless the corporation receives notice of a claim.

Records must be maintained in paper or electronic format and electronic records must be capable of being reproduced within a reasonable amount of time and include a mechanism to protect against unauthorized access the article says, adding steps must be taken to protect against loss, damage or inaccessibility such implementing an automatic backup system.

Kleiner says that core documents — the declaration, bylaws, rules, shared facilities agreements, the current budget, the most recent financial statements and auditor’s report, record of owners and mortgagees, information certificates sent within the last 12 months, recent minutes of owners and board meetings and the most recent plan for future funding of the reserve fund — are generally provided at no cost, but when a charge is applicable, the maximum is to be 20 cents per page.

Requests for records must be made using the prescribed form, he writes.

“The request must be related to the person’s interests as an owner, purchaser or mortgagee and have regard to the purposes of the Act, although the requester does not have to provide the reason,” Kleiner says. “The board will have 30 days to respond to the request using the prescribed form, and if a request is denied, the reason must be given. There is a form to then be used for the requester’s response.”

The Condominium Services Act, 2015 (CMSA) creates a new regime in Ontario for the regulation and licensing of condominium managers and management service providers, the article says.

Licensing is another area that will be amended to reflect new educational and examination requirements, Kleiner explains.

“Anyone providing ‘condominium management services’ will have to be licensed, subject to some exceptions,” he writes. “The CMSA defines 'condominium management services' to mean collecting or holding contributions to the common expenses or other amounts levied by, or payable to, the corporation, or exercising delegated powers and duties of the corporation or its board of directors including: making payments to third parties on behalf of the corporation; negotiating or entering into contracts on behalf of the corporation; and supervising employees or contractors hired or engaged by the corporation.”

There are two main categories of licences: a general licence and a limited licence as well as temporary categories of deemed licences for those working as property managers at the time the legislation comes into force, Kleiner says.

“Those working for less than two years at the time the CMSA comes into force will hold a deemed limited licence and will have to apply for a limited licence within 90 days,” he writes. “Those with more than two years’ experience will hold a deemed transitional general licence and will have 90 days to apply for a general licence or a transitional general licence. An applicant for a transitional general licence must hold a deemed transitional general licence and will have three years to apply for a general licence.”

There are also new rules for disclosures of interests, the article says.

A licensee who, directly or indirectly, has a material interest in a contract or transaction to which the client is a party or a proposed contract or transaction, is required to disclose the nature and extent of the interest, in writing, in accordance with the prescribed requirements, Kleiner says.

“If the interest arises after the client enters into the contract or transaction, the interest must be disclosed as soon as the licensee becomes aware of the interest. If a licensee is required to disclose an interest in a proposed contract or transaction, the licensee cannot enter into the contract or transaction on behalf of the client unless the licensee has disclosed the interest and has obtained the written approval of the client to enter into the contract or transaction.”

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