There are a number of important changes to the Condominium Act, 1998 (the Act) and its regulations. Some of these changes came into force on November 1, 2017, and others will come into effect over the next two years.
The Protecting Condominium Owners Act is the product of the government’s comprehensive review of the existing Condominium Act.
It marks the first overhaul of the province’s condo law in over 16 years. It:
Many important aspects of the reforms will be implemented through regulations and by the new administrative authorities to allow for flexibility in a rapidly changing market. Regulations will be prepared in consultation with the public, condo owners and the condo sector, including consultation through the regulatory registry.
The majority of the provisions of the act are not yet in force. Most provisions will come into force on a date (or dates) set by proclamation of the Lieutenant Governor. Ontario plans to work quickly to develop regulations and implement the key commitments of this act.
Due to the growth and change in Ontario’s condo sector over the past 16 years, Ontario announced a review of the Condominium Act in June 2012.
The Condominium Act Review was an 18-month collaborative public engagement process. It gave condo owners, developers, managers, and other experts an opportunity to identify issues in condo communities and to work together to develop long-term solutions.
Overall, the Condominium Act review generated over 200 recommendations. This included significant reforms to strengthen consumer protection and support the needs of both current and future condo owners. Ontario’s new law includes a vast majority of recommendations received through this consultation process. Learn more about the consultation process
The review of the Condominium Act revealed a frequent power imbalance during disputes between condo boards and owners.
The basic tools for resolving disputes under the existing act are mandatory private mediation-arbitration and the courts. These processes can be time-consuming and legal costs can be expensive.
The goal of the legislation is to correct this imbalance by providing a faster, more effective, less expensive and fairer dispute resolution process.
To do this, the Condominium Act Review Stage 2 Solutions Report recommended setting up a single “condo office” to oversee education, dispute resolution, condo manager licensing and to maintain a registry of all condos in the province.
The act, when in force, will split the functions between two new administrative authorities, delegating these functions to two independent, self-funded bodies:
Some stakeholders have pointed to the need for two separate bodies to avoid actual or perceived conflicts of interest.
While the two bodies would operate separately, they may share premises and various services in order to contain costs.
The Condo Authority will provide:
The Condo Authority will operate as an administrative authority. It would be an independent, self-funded, not-for-profit corporation. Its employees would not be members of the Ontario Public Service.
To ensure accountability and transparency, the Condo Authority would:
The province would provide start-up funding for the Condo Authority.
After the initial start-up, the authority would set its own fees. It would charge:
The fee to all condo corporations is intended to help keep dispute resolution costs lower, and would cover the cost of the Condo Authority’s dispute prevention services (e.g., condo buyer’s guide, online self-help tools).
The Condo Authority would determine and set this fee, in accordance with processes and criteria approved by the Minister of Government and Consumer Services. In line with the Stage 2 report, it is estimated that the fee will be approximately $1 per unit a month.
For example, the authority would charge a condo corporation with 100 units about $100/month.
This fee structure reflects the fact that all condo owners would have equal access to dispute resolution from the Condo Authority.
Condo corporations would collect the fee from unit owners as part of monthly common expenses. As with all monthly common expenses fees, each unit’s contribution would be calculated using the proportions set out in the condo declaration.
Fees will not be collected until the Authority is in place in 2017.
The amendments to the Condominium Act delegate to the Condo Authority the responsibility to administer the Condominium Authority Tribunal, which will resolve disputes through case management, mediation, and adjudication.
Regulations will set out which disputes (primarily between owners and corporations) would have to be heard by the tribunal. They may include:
Certain disputes would be excluded and would need to go through mediation and arbitration or court, such as disputes relating to:
The Condo Authority will set its own budget and fees in accordance with the processes and criteria approved by the Minister of Government and Consumer Services.
It is anticipated that the cost of resolving a dispute through the tribunal would be substantially lower for owners and boards than the legal fees and other costs that are paid today. It is also expected that the tribunal would resolve disputes more quickly.
As recommended in the Condominium Act Review Stage 2 Solutions Report, extra safeguards to protect condo buyers and help them make more informed decisions are a key part of the act and related regulations.
As part of the drive to improve awareness among condo owners and other stakeholders, the amendments will require the province to publish an easy-to-read condo guide, containing essential facts about the roles and responsibilities of living in a condo. This task could be delegated to the Condo Authority.
The condo guide would include information such as:
Developers will be required to give a copy of the guide to all buyers of newly-built condos at the time of sale. This would enable buyers to read it during the 10-day “cooling off” period that they have to consider their purchase.
Some developers have been separating building components that could have been part of the common elements of a condo property (e.g., amenities like a gym or party room). In some cases, developers will then sell or lease these components back to the condo corporation. This practice has increased in recent years.
The review’s Stage 2 report concluded that this practice inflates the cost of units and has become an unnecessary source of tension within condo communities.
Regulations will be able to specify what components must form part of the common elements or be owned by the corporation at the outset. These specifications would only be subject to future changes made by a particular post-turnover owner-elected board, in accordance with any other requirements in the legislation.
In addition, the amendment will forbid:
Regulations will allow for some flexibility and exceptions to these prohibitions. For example, one exception could be that developers would be able to sell or lease certain energy-efficient equipment, which would benefit owners, to a condo corporation before turn-over (e.g., solar heating system, energy-efficient boilers and water heaters). Other exceptions may include certain facilities to be shared between a condo property and other types of properties. Any such exceptions would be determined during the regulation-making stage.
There have been cases where developers do not install separate electricity, water or gas meters for commercial property users who share these utilities with an adjacent condo property. Instead, there is just one meter and one bill. The total cost is then split among residential units and commercial tenants.
There are situations where a non-condo commercial enterprise (e.g., coffee shop) has used far more electricity and water than individual residential units in a condo property. In these cases, without separate meters, unit owners end up paying a disproportionate share of the utility costs.
There are other cases where a condo property shares the use of land, services or facilities with a non-condo property and no shared facilities agreement has been put in place to deal with matters such as the sharing of costs with respect to maintenance and repair.
The amendments will require a written shared facilities agreement between condo corporations, developers and other parties who share services, land or other property (e.g., swimming pool, underground garage).
Regulations will be able to set out provisions for these agreements. For example, they may set out if these agreements would have to include a method for distributing shared costs.
Regulations will also be able to address other issues, such as whether separate utility meters or sub-metering arrangements would have to be installed.
A disclosure statement is a document compiled by a developer that tells purchasers about the condo they are buying. It provides vital information about the future or existing condo property and corporation (e.g., corporation’s first-year budget, the proposed or actual declaration, by-laws, and rules).
A declaration or a developer’s proposed declaration sets out matters of ownership, such as the boundaries of the unit, the designated use of the unit, the proportion (expressed in percentages) of common expenses allocated to the unit, and repair and maintenance obligations.
Declarations and disclosure statements vary widely and are often difficult for condo buyers to read and understand.
Regulations will be able to create rules for standard disclosure statements and declarations, in terms of their form and content. Developers would not be able to alter these aspects of disclosure statements and declarations. They would also be easier for buyers to understand.
Among other items, standard declaration provisions would be able to cover unit boundaries, maintenance and repair obligations, and insurance requirements. A standardized disclosure statement summary would replace the current table of contents.
At present, a condo developer may defer some of a corporation’s operating costs and not include them in the first-year operating budget. A unit’s monthly fees can rise sharply once these costs take effect.
As a result, the act requires developers to disclose any circumstances that they know of, or ought to know of, which may lead to an increase in common expenses within a set period of time after the corporation’s first year (e.g., elevator maintenance contract). In some cases, developers would also have to disclose the amount of the potential increase in common expenses.
A growing number of condo projects center on the conversion of an existing building, where construction incorporates pre-existing elements like the façade of a church or school or the entire frame of an office building.
The Ontario New Home Warranties Plan Act (ONHWPA) does not currently extend to these condo conversion projects, creating inequities for consumers and exposing them to risks.
The legislation amends the ONHWPA so that most of the warranty protections available to buyers of new condos would also apply to certain condo conversion projects. Such an extension would provide a necessary safeguard for buyers of this type of condo.
Some ONHWPA warranties would not apply to the pre-existing elements of a condo conversion, namely that the pre-existing elements have been constructed in a workmanlike manner and are free from defects in materials. All other ONHWPA one-year warranties, as well as all other two-year and seven-year warranties, would apply to both pre-existing elements and new elements of a conversion.
Regulations could require developers or a related company to include specific items of information on websites dedicated to their condo projects (e.g., the proposed declaration, by-laws, rules, other key documents, a search function for key words and terms).
A buyer can currently cancel a condo purchase within an initial 10 day “cooling-off” period for any reason whatsoever.
In addition to the initial 10 day “cooling off” period, a buyer may cancel a condo purchase in the event of a “material change” to the information contained, or that should have been contained, in the disclosure statement.
The act amends the definition of “material change” to exclude certain changes, such as an increase of less than 10%, or another threshold set out in the regulations, to the amount of the projected common expenses previously disclosed to the buyer. This amendment would provide greater predictability to purchasers about increases to the projected common expenses that they could expect once they become an owner.
The definition of “material change” has been amended to exclude certain changes, such as an increase of less than 10% (which will be calculated and determined in the regulations), to the amount of the projected common expenses previously disclosed to the buyer (or an increase of another threshold that will be set out in the regulations). This amendment would provide greater predictability to purchasers about increases to the projected common expenses that they could expect once they become an owner.
Additionally, the amendments will allow a purchaser or past purchaser to make an application to court to seek compensation from the developer for any losses the purchaser incurred if the developer does not comply with the "material change" disclosure requirements of the Act.
The status certificate for a resale condo contains important information on the financial status of the unit and the corporation.
During the Condominium Act Review, many experts expressed the view that status certificates should include extra information as a way of improving the understanding of the financial health of the corporation.
The act will expand the information that needs to be included in a status certificate. Regulations may also require that additional information be included in status certificates.
The review process revealed that many condo owners are disturbed by recurring noise caused by their neighbors.
The act will recognize the right to quiet enjoyment by prohibiting the creation of an unreasonable noise or any other nuisance, annoyance or disruption to an individual in the condo property.
The act will enable the province to regulate how important documents (e.g., disclosure statements, status certificates, and material change notices) are delivered.
The amendments will give owners more information about financial matters affecting their investment and more control over important changes.
The Condominium Act Review raised numerous issues involving condo corporations’ operating budgets and insurance practices. It also revealed that some corporations lack funds to pay for major repairs. This can lead to costly special assessments – a type of common expense in addition to regular monthly condo fees.
The Stage 2 Solutions Report recommended that:
In addressing these concerns, Ontario has aimed to strike a balance between:
Changes “without notice” enable a board to authorize an addition, alteration or improvement to the common elements, a change in the assets, or a change in the service the corporation provides without consulting owners.
The current law allows such "without notice" changes under certain circumstances, such as if the estimated cost in any given month is not more than $1,000 or 1% of the annual budget, whichever is higher. However, some boards have been able to manipulate this limit at the owners’ expense.
The amendments will be updated and clarify when boards may carry out modifications to the common elements, any assets of the corporation, or services the corporation provides without notice to owners. For instance:
The Stage 2 report concluded that boards need to communicate more openly with owners in the event of a sizeable unforeseen repair or an unexpected cost overrun on a scheduled repair.
Under the amendments to the Condominium Act, a condo board will have to notify owners within a specified time if it proposed an expense exceeding the budgeted amount by more than a set margin. Regulations will determine the margin, the form of the notice and the time for notification.
The review identified improved communication and education among condo owners, especially on financial matters, as a cornerstone of a healthy and vibrant condo community.
In one of several provisions aimed at greater transparency, the amendments will require every condo corporation to prepare an annual budget covering operating accounts and the reserve fund. The act would also set rules governing the date on which the corporation’s first fiscal year would end.
The Stage 2 report called for greater clarity on who is responsible for paying for repair and maintenance of various parts of the condo property.
Under the amendments to the Condominium Act, a condo corporation would be responsible for repairing and maintaining the common elements and any assets of the corporation. Unit owners would be responsible for maintenance and repair of their units.
Condo declarations would be permitted to provide further details on some of these obligations and to alter them to some extent. The rules regarding when a corporation is required or permitted to carry out an owner’s repair or maintenance obligation would also be clarified, including an owner’s responsibility for reimbursing the corporation for its costs.
The terms “repair” and “maintain” would also be clarified so that each would have a distinct meaning.
Every condo corporation is required to set up a reserve fund and must ensure that it is adequate to pay for major repairs and replacement of the common elements and any assets of the corporation as they age. These items typically include the roof, the exterior of the building, underground parking garages, roads, sidewalks, heating and cooling equipment, plumbing, elevators and recreational facilities.
Reserve funds are mandatory in Ontario. The current Condominium Act requires that boards must undertake periodic reserve fund studies as a way of ensuring that a corporation’s fund is adequate. This step has made an important contribution towards improving the management of condo communities.
Even so, many reserve funds are too low to meet their corporations’ needs, especially in older properties. As these properties age, owners are being called on to make significant extra contributions for repairs that many neither planned for nor expected — and often cannot afford.
Furthermore, participants in the Condominium Act Review agreed that owners should be encouraged to gain a better understanding of how their reserve fund operates.
The act has several provisions to address these concerns.
1. Adequacy of reserve funds
Although the current Condominium Act requires that corporations have adequate reserve funds, it does not define the term “adequate.” Regulations under the act establishes how adequacy would be determined for:
2. Purpose of reserve funds
The amendments will broaden the purpose of reserve funds to include:
The regulations will be able to set out what constitutes a “major repair.”
3. Expert opinion on the reserve fund balance
Under the amendments to the Condominium Act, if a reserve fund were to fall below the level set out in regulations, the board would be required to obtain an outside opinion on whether it should conduct a study on the adequacy of the fund before the next required periodic study.
4. First-year reserve fund contribution
Under the amendments to the Condominium Act, developers would need to specify, in the corporations’ first year budget, the amount of the common expenses to be paid into a condo corporation’s reserve fund.
Regulations would set out how that amount would be calculated. One option might be a minimum percentage of the operating budget.
5. Accountability for a first-year deficit
Under the amendments to the Condominium Act, if a developer does not comply with the act’s rules for calculating the first year budget reserve fund contributions, the developer would be liable to the corporation for the amount of money that it would take to be in compliance.
The Condominium Act Review process highlighted numerous gaps and shortcomings in condo insurance practices.
Some of the most troublesome issues relate to the definition of a “standard unit” in a condo building. Without a clear definition, it is difficult for owners to know exactly what they are responsible for insuring.
The review of the Condominium Act resulted in a recommendation for a set definition of a standard unit. A corporation would have authority to amend the definition through a by-law.
In line with this recommendation, regulations will set out a basic, default definition of a standard unit in cases where a condo corporation has not passed its own by-law spelling out such a definition.
The condo corporation would be required to obtain insurance for all standard unit components of a unit, as well as the common elements.
Sometimes an owner’s carelessness results in damage to the common elements, assets of the corporation or to another unit. The existing law was unclear about who pays the corporation’s insurance deductible for the damaged property, although a board does have the option to pass a by-law assigning this responsibility.
The Stage 2 report recommended greater clarity on this issue. The act makes it clear that the responsibility for damage lies with the owner of the unit where the person (or, if set by regulation, the thing — such as a pet) who caused the damage lives — provided the damage was not caused by agents or employees of the corporation.
If, for example, a unit’s resident damages a unit, any assets of the corporation or common elements covered by the corporation’s insurance, an amount will be charged back to the unit owner’s contribution to common expenses. This charge-back will be calculated as the lesser of:
A condo board would not be able to make certain alterations to this obligation through a by-law (as is the case under the current act). It could be changed only by amending the condo declaration.
A charge-back is an extra fee added to a condo unit’s monthly common expenses. Under the current act, a condo board can issue a charge-back to recover costs that the corporation incurs for items like:
Most condo declarations also contain indemnification clauses. These clauses set out when a corporation may add a cost that it incurs to an owner’s common expense fees.
The Stage 2 report recommended that the act clarify what a charge-back is and when it can be charged.
In the amended Condominium Act this will be done through:
Corporations would also be required to provide a notification to owners on any charge-backs that the unit owners owe, which would include a deadline for payment.
Owners would be able to submit certain charge-backs to dispute resolution within 30 days of receiving a charge-back notice.
Payment would be suspended during dispute resolution proceedings related to the charge-back. However, if the owner transfers the unit, he or she would have to make sure that the unpaid amount in dispute is held in escrow before the transfer, and until the dispute is resolved.
At present, a condo developer may defer some of a corporation’s operating costs and not include them in the first-year operating budget. A unit’s monthly fees can rise sharply once these costs take effect.
As a result, the act requires developers to disclose any circumstances that they know of, or ought to know of, which may lead to an increase in common expenses within a set period of time after the corporation’s first year (e.g., elevator maintenance contract). In some cases, developers would also have to disclose the amount of the potential increase to common expenses.
Condo boards now have little flexibility to decide how to invest a corporation’s funds. The Stage 2 report recommended consideration of a wider range of options.
With respect to investments, the act allows a greater measure of flexibility – to be set out in the regulations. However, it would also maintain, and in some cases clarify, some fundamental protections.
The Condominium Act Review raised several issues related to condo governance. For example:
Regulations under the act provide a transition period during which corporations could change their existing by-laws with a lower threshold of required votes. This would enable condo corporations to align their by-laws with the requirements of the new act.
In line with the Stage 2 report, the act continues to give corporations flexibility to decide on term limits for directors. Corporations can include such decisions in their by-laws.
One common thread running through the review process, the Stage 2 recommendations and the act are the need for improved communication and education in condo communities.
The amendments will require boards to issue regular information on topics such as the corporation’s insurance, legal proceedings, the names and addresses for service of the corporation’s directors.
Regulations will set out how and how often boards would have to issue these updates. The act states that some of the updates would have to be sent out as “information certificates.” An information certificate would be similar to a newsletter and be sent to the owners on a regular basis or at other specific times.
Under amendments to the Condominium Act, condo boards will no longer have to pass a by-law to allow for conference calls and similar off-site meeting technologies. This makes it easier for condo boards to hold regular meetings.
Regulations will set out more details for this rule. Also, condo board members would need to agree to hold meetings in this way.
The review concluded that “kickbacks” on contracts or payments made to maintenance companies associated with condo board members are a serious concern for some condo owners.
The Stage 2 report concluded that the best protection would be having a well-executed, sealed-bid, contract procurement process.
Because of this, the act will forbid condo corporations from concluding procurement contracts unless they fulfill certain requirements, such as a sealed bid process. Regulations will set out the procedures that would need to be followed and under what circumstances (e.g., for contracts exceeding a certain value).
Many condo boards already provide an informal “preliminary notice” of a meeting as a way of encouraging owners to nominate candidates for director positions or to suggest items for a meeting agenda.
The amendment will support this practice by requiring boards to provide a formal “preliminary notice” of a meeting of owners.
The notice would have to include:
The board would not have to include all suggested items in the final agenda, apart from those required by regulations.
A board would have to give preliminary notice at least 20 days before sending out the actual meeting notice.
One pillar of accountability in condo communities is the owners’ ability to call special owners’ meetings – known as requisitioned meetings – to address issues of concern, including proposals to dismiss board members.
Requisitioned meetings are part of the democratic process set out in the current act. For example, if owners wish to vote on a rule proposed by the board or to vote on certain modifications the board wishes to make to common elements, they have to requisition a meeting.
They are sometimes used to compel board members to account for their actions when owners believe that they are not acting in the best interests of the corporation. For example, if owners wish to call a meeting to vote for the removal of a director, they can requisition a meeting for that purpose as well.
At present, a board must call and hold an owners’ meeting if at least 15% of owners sign a petition (e.g., the requisition) calling for a meeting.
The Stage 2 report recommended keeping the current 15% threshold. But it proposed that the process for convening meetings and assessing the validity of a requisition be revised in the interests of clarity, speed, and fairness.
The amendments will make it easier for owners to call a condo board meeting to deal with an important matter. It would also spell out procedures that the board would have to follow in the interests of transparency and communication.
The requisition application would have to be submitted on a standard form that would provide specific information to minimize any confusion about the process. The process following the submission of a requisition is also set out in the act, including time periods that the board members and those owners requesting the meeting would have to follow.
The act paves the way for wider owner participation at meetings by enabling a condo corporation to pass a by-law allowing votes at meetings to be cast by telephone or electronically.
The act allows boards and owners to use electronic communication methods, if owners agree to receive formal notices in electronic form, such as emails. The corporation would be required to keep a record of these communication methods.
The Stage 2 report expressed concern that many owners do not attend condo corporation meetings, making it difficult to achieve quorum.
The amendments will relax quorum requirements for mandatory meetings.
At turnover and annual general meetings, quorum would be reached with:
Boards could not add an item requiring a vote to the agenda on the second or subsequent attempts to hold a meeting.
A corporation could pass a by-law mandating a 25% quorum, regardless of the number of attempts.
The regulations will also be able to set the quorum for any meetings where owners of “non-leased voting units” are exercising their right to vote in respect to a reserved position on the board.
If a condo owner is unable to attend meetings but still wants to have a role in the decision-making process, he or she may complete a proxy form. This gives another person who plans to attend the meeting (i.e. the proxy) the power to vote on the owner’s behalf.
The Stage 2 report recommended that proxies be standardized to avoid tampering and misinformation. Regulations under the act set out a new standard proxy form.
The Stage 2 report set 3 main goals for effective record-keeping by condo corporations. It recommended that the law should:
Regulations will set out procedures:
Currently, in condo properties where at least 15% of units (referred to as “owner-occupied units”) have not been leased during a certain time, one position on the board must be reserved for election by the owners of these type of residential units only.
This was designed to ensure that owner-occupiers have some direct representation on the board, especially in buildings with a large population of renters and absentee landlords.
Under the act, the owner-occupied elected position on condo boards would be retained in the interests of protecting an owner-occupier minority in largely rented buildings.
However, for greater clarity and accuracy, this type of unit would be renamed as a “non-leased voting unit.” This is because this type of unit would be characterized on the basis of whether it was leased during a certain time period and not whether the owner actually occupies the unit.
In addition, this reserved position would no longer be mandatory. Specifically, corporations would have to reserve the position only if the “non-leased voting unit” owners are a minority in the corporation and at least 1 of them requests an election of the reserved position on the board.
The review process found that many condo board directors lack adequate skills for the job. In addition to training mentioned elsewhere, the Stage 2 report recommended that condo board directors comply with several extra conditions, such as disclosure and training rules.
Under the amendments to the Condominium Act, regulations will establish disclosure and training requirements for directors. The amendments will also make director qualifications and disqualifications consistent with other corporate statutes.
The review of the Condominium Act heard that while most condo managers and management firms are competent, fair and honest, this is unfortunately not always the case.
Some participants complained about managers and firms that were disrespectful, unresponsive or dishonest.
Currently, Ontario has no minimum requirements for setting up a condo management firm or working as a condo manager. The Stage 2 Solutions Report urged the province to set clear, mandatory standards to ensure a reasonable level of competence and integrity.
These recommendations are addressed through the new Condominium Management Services Act, 2015 and regulations under that Act that will set out:
A new administrative authority, referred to here as the Licensing Authority, would administer the Condominium Management Services Act.
Like the Condo Authority, the Licensing Authority would be an administrative authority.
The Licensing Authority would be an independent, self-funded, not-for-profit corporation. Its employees would not be members of the Ontario Public Service.
To ensure accountability and transparency, the Licensing Authority would:
Ontario would provide start-up funding for the Licensing Authority.
After the initial start-up funding, the Licensing Authority would raise revenues from licensing fees collected from individual managers and management firms.
The Licensing Authority would set its own budget and fees in accordance with the processes and criteria approved by the Minister of Government and Consumer Services.
The Condominium Management Services Act, 2015 will authorize the regulations to set specific qualifications to be a licensed manager. The process for obtaining a condo manager licence would be largely set out in the act’s regulations.
Regulations will also determine any transition periods for condo managers to comply with the new licensing requirements.
Anyone convicted of an offence under the act could be liable to a fine of up to $50,000 or imprisonment of up to 2 years less a day. Management firms could be liable to a fine of up to $250,000. The Licence Appeal Tribunal would hear appeals against licensing decisions of the registrar.
The Stage 2 report recommended a code of ethics for managers. The Condominium Management Services Act will authorize the Minister of Government and Consumer Services to establish a code of ethics through regulations.
A disciplinary committee could review alleged code of ethics violations. Its decisions could be appealed to an appeals committee.