And So It Begins…

The Ontario provincial government just announced its long awaited public review of the Condominium Act, 1998 (the “Act”), calling for public input from owners, residents and other stakeholders in the condominium community in what is expected to be a major overhaul of the Act and related legislation.

Although industry groups have clamoured that law reform is well overdue in the area of condominium law, the truth of the matter is that the Act itself was completely revamped in 1998 (coming into force in 2001). Compared to the almost glacial pace of legislative reform in other areas of the law, the Act is relatively nascent and the proposed “modernization” and “strengthening” of the Act called for by the government is nothing short of fast and furious.

The announced legislative review comes on the heels of Bill 72, a private member’s bill launched by the New Democratic Party’s Rosario Marchese with a number of proposed amendments to the Act, making it more of a prophylactic consumer protection legislation and adding features such as, most notably, a tribunal to hear the plethora of disputes that are typically involved in condominium living.

What is driving the call for reform is the almost explosive growth of condominium construction in the province since the passage of the 1998 version of the Act. According to a press release by the Joint Government Relations Committee of the Canadian Condominium Institute and the Association of Condominium Managers of Ontario (the “Joint Committee”), there are now over 1.3 million Ontarians calling a condo their home, with over 6,700 condominium corporations representing more than half-a-million individual condominium units. Nowadays, condominiums comprise almost 62 per cent of the new home construction in the province. Although strongest in the Greater Toronto Area, condominium growth has spread throughout much of the province, with 104 of 107 Ontario ridings now having condominium projects.

Although the surge in condominium ownership seems to be causing politicians to seemingly fall over each other in a rush towards condominium law reform, much of the recent clamour for condominium reform does not really derive from the governance issues that are germane to the Act. Instead, most of the recent popular press about condominium “problems” really are construction issues governed by the Ontario Building Code, the Ontario New Home Warranty Program (Tarion) and general tort and contract principles inherent in construction law generally. So, for instance, the cover story of the July 2012 Toronto Life issue entitled and highlighting “Trouble in Condoland” focused on some construction defect disputes in certain high-profile Toronto buildings (mainly, but not exclusively, the notorious “falling glass” cases), but it is not really clear that the issues at the heart of those disputes are even governed by the Act, reformed or otherwise. They are, at most, construction issues that might happen just as readily in office construction, apartment construction or any other high rise construction.

Condominium law maven, Audrey Loeb, of Miller Thomson LLP, the unchallenged “Condominium Queen” of the real estate bar, and an architect of the existing version of the Act, feels that, on a macro basis, the amended Act will have to address the ever-increasing phenomenon of investor-owned buildings with large numbers of tenanted units. Loeb feels that a disenfranchised minority of the future will be the remaining owner-occupiers “who are living in communities of tenants rather than in the condominium community environment that government originally anticipated would be there when condominium communities were built. Condominium communities were intended to have people of like mind who shared the running of their home.”

Although the announcement really just begins the consultative stage of legislative reform, it is widely anticipated that, at the end of this law reform process, the amendments to the Act will likely include increased consumer protection for buyers, more comprehensive rules for condominium finances and reserve fund management, revisions to condominium board governance, accreditation of condominium managers, and enhanced dispute resolution protocols governing condominium life generally.

Many eyes are turning to British Columbia, which recently introduced legislation to develop an online dispute resolution protocol. If the legislation is passed, an independent tribunal will be created to provide 24/7 online dispute resolution tools and, where necessary, independent tribunal hearings will be held to address condominium related disputes. On the one hand, this may result in a noticeable increase in the number of condominium disputes; but, on the other hand, such a mechanism would take these issues out of the hands of the courts, which have shown time and again that they do not want to be dealing with what they perceive to be relatively “minor” condominium enforcement issues, such as noise complaints and pet restrictions.

Finally, it should be noted that not all condominium lawyers are convinced of the need for wholesale reform of the Act. While the Toronto Life article does highlight some notorious problems faced by unit owners in certain buildings, the overall unrelenting demand for units suggests that, by and large, the vast majority of condominium owners and occupants are likely satisfied with (and presumably well served by) the existing Act. Instead of wholesale legislative reform, to what really is relatively current legislation, it may be just a matter of tweaking the existing legislation and persuading the courts to properly enforce the existing provisions of the Act.  Condominium law jurisprudence has been wildly inconsistent and, in many cases, blatantly inconsistent with the plain meaning of the Act.

Whatever legal reforms eventually come our way, it is unlikely that there will be anything that substantially dismantles the system already in place. While far from perfect, the blemishes of the existing system have seemingly not slowed, one iota, relentless demand for more condominium stock, and like it or not, condominiums have become, at least for urbanized Ontario, the de facto source of rental stock and the only remaining entry point to home ownership available for most first-time buyers.  

 

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