Protecting Condominium Owners Act – Status Certificates, Noise, Notices and Operating Budgets

Protecting Condominium Owners Act – Status Certificates, Noise, Notices and Operating Budgets

This marks another excerpt from the Ontario Governments web-site publications on this new act and what it means. To read the entire article, please click on the link at the bottom of this article.

Status certificates

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.

Unreasonable noise

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.

Delivery of documents

The act will enable the province to regulate how important documents (e.g., disclosure statements, status certificates and material change notices) are delivered.

Strengthen financial management

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:

·         owners need timely and reliable information and access to their corporation’s financial records

·         some corporations need clearer rules when it comes to setting and adjusting their budgets

·         clearer rules for setting up insurance be put in place

·         In addressing these concerns, Ontario has aimed to strike a balance between:

·         giving condo boards sufficient flexibility to authorize work that needs to be done on the property

·         the risk of mismanagement if boards have too much leeway in spending decisions

Changes by condo corporations without notice to owners

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:

·         to comply with a shared facilities agreement with, for example, another condo corporation

·         to ensure the safety or security of those in the condo property or prevent imminent damage to the property or any assets of the corporation

·         if the change does not involve spending more than $30,000 or 3% of the budgeted common expenses for the current fiscal year, whichever is less

·         if owners would not see the spending change as materially limiting their use or enjoyment of their own units, the common elements or any assets of the corporation

·         if a law or regulation requires the modification, for example, to comply with fire codes and accessibility laws

·         if the modification is for any other purpose that may be set out in any regulations under the proposed act

Notice of off-budget spending

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.

Communication and education on financial matters

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.

Maintenance and repair

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.

Updated: April 22, 2016 - Published: May 27, 2015

For the full article as published by the Ontario Government, please click on the link below