Bill 106, Protecting the Condominium Owners Act, 2015 


November 2015

Real Estate Bulletin

Earlier this year, the Province of Ontario introduced Bill 106, Protecting the Condominium Owners Act, 2015 (the "Act"). If passed as currently drafted, the Act will amend the Condominium Act, 1998 and the Ontario New Home Warranties Act ("ONHWPA") and enact the Condominium Management Services Act to address five main areas of reform:

  1. Dispute resolution
    • Consumer protection for owners and buyers
      • Financial management
        •  How condominiums are run
          • Condominium manager licensing

This update addresses the proposed changes from the Act relating to condominium disclosure and consumer protection. However, we would be happy to provide further details regarding the proposed changes in the other areas to interested parties.
Proposed Changes Relating to Disclosure and Consumer Protection

1. Condominium Guide
  • The proposed Act would require a newly created Condominium Authority to publish a Condominium Guide containing facts about the roles and responsibilities of living in a condominium. This Guide would include information such as: (i) how condominium corporations are governed; (ii) owners' rights and responsibilities; (iii) care and maintenance of common elements; and (iv) how owners can request an information meeting.
  • Developers would be required to provide a copy of the Guide to all buyers of newly built condominium units at the time of sale (to be reviewed by buyers with the balance of the disclosure material during the 10-day rescission period).
2. No Leaseback
  • Regulations under the proposed Act would set out what components must form part of the common elements or be owned by the corporation at the outset.< >The proposed Act would prohibit:< >A condominium corporation from acquiring an interest in property unless the particular post-turnover owner-elected board agrees; and Attempts to circumvent the above prohibition in agreements of purchase and sale with buyers. Regulations will contain certain exceptions to the prohibitions, which may include:< >Developers may be permitted to sell or lease certain energy efficient equipment, that would benefit owners, to the condominium corporation before turn-over (such as solar heating systems or energy efficient boilers and water heaters); andCertain facilities to be shared between a condominium property and other types of properties.The proposed Act would require a written agreement between condominium corporations, developers and other parties that share services, land or other property.< >Details would be set out in regulations. These may include a method for distributing shared costs and other issues, such as whether separate utility meters would have to be installed.Regulations under the proposed Act are anticipated to create rules to standardize     Disclosure Statements and Declarations (in terms of form and content). The intention is to make the Disclosure Statement and Declaration easier for purchasers to understand.
  • Standard Declaration provisions may provide for unit boundaries, maintenance and repair obligations and insurance requirements.
    •  A standardized Disclosure Statement summary would replace the current table of contents.< >As drafted, the Act requires: (i) a statement in Declaration as to how the proportion of each owner's common expense and common interests are determined; and (ii) disclosure of the final first year budget at least 10 days prior to closing.The proposed Act would amend the ONWHPA so that most of the warranty protections available to buyers of new condominiums would also apply to certain condominium conversions.< >Some ONWHPA warranties would not apply to the pre-existing elements of a condominiumconversion, namely that the pre-existing elements have been constructed in a workmanlike manner and are free from defects in materials. All other ONWHPA one-year warranties, as well as all other two-year warranties and seven-year warranties would apply to both preexisting elements and new elements of a conversion. The proposed Act would require developers or a related company to include specific items of information on websites dedicated to their condominium projects (e.g. the proposed Declaration, by-laws, rules and other key documents, with a search function for keywords and terms).
      • The proposed Act would amend the definition of "material change" to exclude certain changes, such as an increase of less than 10%, or another threshold set out of the  Regulations, to the amount of the projected common expenses previously disclosed to the buyer.
      8. Delivery of Documents
      • The proposed Act would enable the Province to regulate how condominium documents (e.g. Disclosure Statements, status certificates and material change notices) are delivered.
      9. Status Certificates
      • The proposed Act would expand the information that needs to be included in a status certificate. Regulations may also require that additional information be included in status certificates.
      Bill 106 received second reading on May 27, 2015 and we understand from industry contacts
      that it could receive third reading and be passed before the legislature adjourns on December
      10th, 2015. We will continue to monitor the Bill and provide updates as it progresses.
      a cautionary note

      The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

      © McMillan LLP 2015