Condominium Law Reform Steams Ahead
Readers of Building already know that the Province of Ontario is undertaking another massive review of the Condominium Act (see “And So It Begins…” Building, June/July 2012) – that is old news and altogether not that interesting. Governments announce all sorts of studies and talk a great deal about legislative reform, but many of these initiatives end up collecting dust and never seeing the light of day as tangible changes in the law. Against this rather cynical backdrop, recent events have certainly piqued our interest in terms of real condominium law reform.
The first round of the government’s broad, consensus-based law reform movement is now complete. The conclusions from the first stage of a three-stage review process were just published at the beginning of this year. Launched in September 2012, this first stage review consisted of four major information-gathering initiatives.
Firstly there was some serious dog and pony “Public Information Sessions” conducted by the Ministry of Consumer Services. These were essentially open town hall forums conducted in five Ontario communities. Approximately 500 citizens got to voice their views at these town hall Public Information Sessions. Secondly, a specific “Residents’ Panel” was assembled with 36 representative condominium residents from across the Province for three, full-day workshop sessions designed to elicit candid discussions about issues and proposed solutions for problems plaguing condominium life.
A similar round of four, full-day “Roundtable Workshops” was conducted for other stakeholders in the condominium industry, including builders and developers, to identify issues and discuss solutions from their perspectives. Finally, there was an “open mike” sort of invitation to the entire condominium community to provide written input, which forum netted 180 formal submissions from various groups having a vested interest in the outcome of any condominium law reform.
The results of this Stage One Review provided a decent overview of the current issues affecting condominium living and development in the Province. Five major heads of interest were identified in the Stage One Review.
Not surprising to those of us who routinely deal with condominiums, board governance was at the top of the list in the Stage One Review summary. The chronic lack of adequate training and support for condominium boards of directors, particularly first-time directors, was noted, with criticism being levied against many boards of directors for their lack of responsiveness, transparency and accountability about almost everything from community rights and responsibilities to the financial state of their condominium. Owners also caught some flak, for the apparent lack of engagement in the process and their seeming unwillingness, on whole, to accept greater responsibility for good governance and management of their condominium communities, including chronic and ever decreasing participation in annual general meetings.
More effective and efficient rule and by-law enforcement was repeatedly raised, but so too was the need for better information, access to impartial advice, and reliable, trusted mediation mechanisms that might expedite dispute resolution. The need, in particular, for an independent, authoritative agency or organization to oversee condominium dispute recognition seemed to play prominently in the Stage One Review summary, setting the stage perhaps for some sort of tribunal or other bureaucracy that could serve as a “Condominium Court”.
Again, it came as no surprise to those of us who regularly advise condominium boards, but the adequate capitalization of reserve funds was identified as a hot topic in the Stage One Review summary. No kidding. It has long been a landmine waiting to explode, with many condominium corporations in the province avoiding common expense increases through chronic and ever increasing reserve fund deficiencies. It is almost certain that any condominium law reform will see the rules around the use of operating funds, special assessments, and reserve funds revisited and adjusted with greater emphasis on accessible, timely and reliable financial information for condominium unit owners.
While much of the foregoing will affect unit owners of existing buildings, readers of Building will be particularly impacted by proposals for changes to the documentation relating to the sale of a condominium unit. These changes include calls for more “plain language” summaries that will more fully explain the key information buyers need to make an informed choice on whether to purchase including: fully transparent financial projections; costs to be included in the first year; and more stringent criteria for any exceptions or exemptions from such onerous full disclosure, all to ensure that consumers can make a more informed decision.
Another key topic affecting condominium living today seems to be the dearth of truly qualified property managers with condominium wherewithal. The Stage One Review summary identifies the need for higher standards of skills and training for managers and management firms. This call for greater management skills will almost certainly involve regulation of the management industry by government or some organization acting on its behalf, and we in the business already see the mobilization and organization of that end of the industry.
Although the publication of the Stage One Review results was done with a relatively big splash and has garnered a fair bit of mainstream press, it is what the government seems to be doing behind the scenes that makes these authors suspect that the government really is quite serious about implementing substantive condominium law reform in the near future. Marko Djurdjevac, one of the best condominium lawyers in the private sector, and the author of the condominium law volume of the prestigious Halsbury’s Laws of Canada, was recently recruited by the Ministry of Consumer Services specifically to exploit his expertise in condominium law. While it may be premature to look at Djurdjevac as the next “Condo Czar,” the fact alone that the government plucked him from what is arguably the country’s biggest private condominium law practice to chain him to a desk dedicated to amendments to the Condominium Act is pretty telling, if you ask us, about how serious this government really is.
This is, however, a long road. Stage Two of this review process – the drafting of various options and solutions – is now under way, but the condominium law world will largely be oblivious to the behind-the-scenes activity being undertaken as part of this stage. In Stage Three, which will begin in the fall of 2013, these options will be brought to light, and will be reviewed and critiqued by condominium owners and other stakeholders. Only then will they be presented to the government for consideration in any condominium law reform. But even long roads have a beginning, and we seem to already be well down this particular road.