From reflections of years past to new goals and ultimately, resolutions for improvement as we begin another New Year we are faced with change. The world of property management is certainly no exception, which is why the Condominium Authority of Ontario (CAO) has introduced new condo rules that have taken effect in 2018.
All this to say that, pursuant to the Occupiers’ Liability Act, a Condominium Corporation could be found liable for damages resulting from a dog attack on common elements if the corporation has failed to take reasonable steps to ensure the safety of other individuals on the property. So, what is a Condominium Corporation to do?
Typically, security is a topic that only gets attention and consideration after an event has taken place. A strong understanding of the potential risks, before they occur is a key element in developing a professional property management system that focusing on prevention over reaction.
For those not new to condo living, you inevitably have come across a time when the smells and odours from your neighbours have without warning, entered your unit, much to your shock and chagrin.
These days, the word “downsizing” brings to mind tough economic times and layoffs.
But when it comes to your life, downsizing can actually make you happy! By making the move to a condo property, typically there is a sizable reduction in your livable space.
It’s that time of year, when the snow starts to fall, you can see your breath in the cold winter air, and Christmas carols fill the radio stations and malls. Before you start to decorate your balcony with a string of your favourite sparkling lights, or cut down a tree, best to check your condominium bylaws, declarations and rules, and consult with your condominium property management company.
The importance of rules, especially in shared living environments such as condominium properties, is paramount to having all owners and residents residing in harmony. Or at the very least, ensuring that there is a minimum standard of responsibility and expectation for all to abide by.
Medical Marijuana is becoming more prevalent in today’s society, forcing condominium boards and condominium property management companies to become current with the law.
What does the board have to do if the police attend with a warrant? What if they don’t have a warrant? When should the condominium contact the police because of an incident that occurred on the property?
In the past these questions were not easy to answer. While the condominium’s lawyer could provide general advice, there wasn’t really much case law to support the advice. Fortunately, in the past few years there have been cases that give some guidance.
We have all seen examples where video has been used in reviewing an event or incident, shedding light and exposing the world to the raw details of what happened.
While the media has primarily focused on the use of personal video recordings to further their cause of selling the news by shocking viewers with graphic images, the use of video surveillance at your complex should be viewed with the objective to primarily deter unlawful behaviour, and secondly, to assist in the investigation of criminal activity.
Water leaks in buildings can be very damaging and costly to owners, so take the time to familiarize yourself with all shutoff valve locations.
WHEN A LEAK OCCURS
Close all the shut-off valves in your unit including main valve, and secondary valves that exist in your unit such as individual sinks, dishwasher, washing machine, toilets, and refrigerator.
Notify your property manager or building manager immediately. Mop up and collect any continuing water leakage to minimize water damage to your unit and neighbouring units.
If water leaks from faucet/reservoir into sinks/toilets you should notify the property manager to ensure that it is not causing water damage. It is usually the owner's responsibility to organize to have leaks fixed by a licensed and insured plumber.
DURING A POWER OUTAGE
Locate your electrical panel as well as trip-switches on specific power outlets.
Check if the outage is limited to your unit, check the individual breakers in your electrical panel as well as trip-switches on specific power outlets. If your neighbours' power is also out, notify the property manager or building manager and your local hydro authority.
Turn off all tools, appliances and electronic equipment. Turn your thermostat(s) down to minimum to prevent damage from a power surge when power is restored. Also, power can be restored more easily when there is not a heavy load on the electrical system.
Turn off all lights, except one, so that both you and hydro crews outside know that power has been restored. Don't open your freezer or fridge unless it is absolutely necessary. A full freezer will keep food frozen for 24 to 36 hours if the door remains closed.
Never use charcoal or gas barbecues, camping heating equipment, or home generators indoors. They give off carbon monoxide. Because you can't smell or see it, carbon monoxide can cause health problems and is life-threatening.
Use proper candle holders. Never leave lit candles unattended and keep out of reach of children. Always extinguish candles before going to bed.
Listen to your battery-powered or wind-up radio for information on the outage and advice from authorities.
So you have made the decision to purchase a condo, and beyond the traditional excitement and anxiety that comes with any major life change, there are some fundamental aspects that you must understand before signing on the bottom line, specifically the financial condition of the condo corporation, with regard to the reserve fund.
The Condominium Act requires that the corporation maintain a separate fund to be used solely for the purpose of paying for the major repair and replacement of the common elements and assets of the corporation. Depending on the building, this can include exterior wall claddings, roofing, windows, doors, heating and cooling systems, site elements including roads, sewers, even playground equipment.
A hot topic facing many condominiums in Ontario is the handling of second hand smoke.
The Province introduced the Smoke-Free Ontario Act to help smokers quit, encourage young people to never start, and most importantly, to protect people from exposure to second-hand smoke. Over the years, you have seen first-hand evidence of the Province’s strategy. It is illegal to light or use a tobacco product in a motor vehicle with anyone inside under 16 years of age. Smoking is banned on or around children’s playgrounds, publicly owned sports fields and all bar and restaurant patios.
The Act also prohibits smoking in the common areas of condominiums, which includes elevators, hallways, parking garages, party rooms, laundry facilities, lobbies and exercise areas, but does not attempt to regulate the use of a private dwelling.
The declaration sets out how the condominium corporation is owned. The document:
- defines the units
- defines the common elements
- shows the percentage of ownership each unit has in the common elements
- shows how much each owner must pay in condo fees (owners of a 3-bedroom condo may pay a higher monthly condo fee than owners of a 2-bedroom condo)
Different condo corporations define ownership in different ways. In some condominiums, the outside wall is defined as part of the individual units. In others, the outside wall is part of the common elements. These distinctions are important. They may determine if you will need to pay for window-washing services or repairs to the front porch of your townhouse.
The declaration can be changed, but this happens rarely. Changing the basis of a unit’s contributions to condo fees would require the support of 90% of the owners. Even changing a non-financial matter in the declaration, like pet restrictions, would require 80% agreement.
If you’re buying a unit in a newly-built condo, the proposed or existing declaration is included with the disclosure statement. If you’re buying a resale condo, it’s included with the status certificate.
The by-laws set out how the corporation will be run. They deal with the responsibilities and powers of the board of directors, how meetings will be run and the collection of condo fees. The by-laws must be approved by a majority of the owners.
The board of directors may also make rules to govern day-to-day living. Rules help promote the safety, security and welfare of the owners. These may include how the freight elevator can be used or if owners can have pets.
The declaration, by-laws and rules will set out any restrictions on how you can use your unit or the common elements. If you’re new to condo living, you might find some of these surprising. For example, they may:
- restrict the size or number of pets
- specify the colour of your shades or blinds
- require you to file certain documents with the condo corporation if you want to rent your unit
- restrict certain renovations in your unit
You should review your condominium’s declaration, by-laws and rules to learn about any restrictions and to make sure that the way you want to use your condo is allowed.
In some ways, a condo development is like a small municipality. The owners of each unit are members of the condo corporation and have the right to vote at meetings (1 vote per unit).
An elected board of directors, like a town council, makes decisions on behalf of the owners, and often hires staff to carry out the work. Just as towns have a town manager, condominiums often have a condominium manager.
Condo corporations have to call and hold annual general meetings (AGMs) where owners vote on major decisions.
Can I withhold my condo fees until urgent repairs are carried out in my unit? What should I do if my condo doesn’t respond to a repairs work order? Can a condo property manager enter my unit without notice? Can condo corporations hand out fines?
What legislation and regulations govern condominiums in Ontario?
- Condominium Act
- General Regulation under the Condominium Act
- Description and Registration Regulation under the Condominium Act
Do provincial legislation and/or regulations require that developers of new condominiums provide a new home warranty to buyers?
Yes. The Ontario New Home Warranties Plan Act requires that developers of new residential condominiums provide a home warranty to buyers. These developers must be registered with Tarion Warranty Corporation, a private corporation that administers the Act.
Taxes & Additional Costs
What provincial and federal taxes do condominium buyers pay on their units?
The Harmonized Sales Tax (HST) was introduced in Ontario on July 1, 2010, combining the federal Goods and Services Tax (GST) with provincial sales tax into a single tax. Buyers pay HST on new units but not on previously owned units. There is no HST on condominium fees.
If you are purchasing a re-sale condo, the federal portion of the HST will apply to your purchase if:
- You are buying the unit from someone who acquired and used the unit primarily (more than 50 percent) for business purposes (unless this was to earn long-term rental income);
- You are buying the unit from someone who has claimed input tax credits for improvements to the unit; or
- The unit has been substantially renovated. To find out what qualifies as a substantial renovation, see Substantial Renovations and the GST/HST New Housing Rebate, Canada Revenue Agency.
Be sure to enquire about the above before putting an offer on a re-sale condominium.
Are there any GST/HST rebate programs for condominium buyers?
Yes. Buyers may be eligible to receive an Ontario new housing rebate that reduces the provincial part of the HST, regardless of the price of their new home. The maximum rebate is $24,000. With the rebate, purchasers of new homes priced up to $400,000 pay no more (and possibly less) tax than they would have before the HST was introduced.
Like other homebuyers, purchasers of condominiums can also apply for a GST/HST New Housing Rebate. This rebate reduces the GST and the federal part of the HST on a declining scale, depending on the purchase price of the new home. For eligibility information, see GST/HST New Housing Rebate, Canada Revenue Agency.
Are buyers of new and re-sale condominiums responsible for any other charges levied by the Province?
Yes, a land transfer tax, which is calculated as a percentage of the sale price or the value of consideration*, whichever is higher.
|Sale Price or Assessed Value of Consideration||Land Transfer Tax Rate|
|Up to and including $55,000||0.5 percent|
|More than $55,000 and up to and including $250,000||1 percent|
|More than $250,000||1.5 percent|
|More than $400,000 for land that contains at least one and not more than two single family residences||2 percent|
* In most instances, land transfer tax is calculated based on the sale price. Where the vendor and purchaser are unrelated, this price is typically indicative of the fair market value. “Value of consideration” ensures that tax will also be paid in situations where the payment of the purchase price is to be made, in full or in part, through the assumption of other liabilities or obligations that may not be included in the stated purchase price but are to be undertaken or assumed by the purchaser.
First-time homebuyers may qualify for a refund of all or part of the tax. See Land Transfer Tax Refund for First-time Homebuyers to find out if you qualify for this refund.
Reserve Fund Requirements
Do provincial legislation/regulations require that all condominiums in Ontario have a reserve fund?
Yes. Its amount is determined by a reserve fund study that projects how much is required by the fund for the next 30 years. This study must be done within one year of the condominium’s registration date by a qualified individual, such as an engineer, architect, architectural technologist or certified reserve planner. The fund must be fully funded within prescribed time periods.
After the initial study, a new reserve fund study must be completed within three years. After that, an updated reserve fund study must be completed within every three years of the last reserve fund study. In general, every other study must include a site inspection.
A developer’s initial budget must include an annual contribution to the reserve fund that is based upon calculations of the estimated long-term repair and replacement costs and life expectancies of the common elements and assets of the corporation. The contribution must be the greater of the calculated amount or 10 percent of the other common expenses (i.e., other than contributions to the reserve fund) until such time as a reserve fund study has been carried out.
How is a new condominium corporation registered?
In order to register a new condominium, the developer submits a declaration and description of the property to a Land Registry Office. The declaration describes how the condominium is organized and operated, such as the proportion in which owners are to contribute to the common expenses. The description includes information such as a survey plan of the boundaries of each unit and the common elements.
Once the declaration and description are registered, individual unit titles are created for each unit and its corresponding interest in the common property. The condominium corporation is formed, which is a legal entity that controls and manages the common elements on behalf of the owners.
Sale of Units
What rules does the developer have to follow when selling units?
Under the Condominium Act, developers must (among other things):
- Take all reasonable steps to sell the property’s residential units without delay except for the units the developer intends to lease;
- Take all reasonable steps to deliver to the purchaser without delay a deed to the unit that is in registerable form;
- Hold in trust for the corporation the money, if any, that the developer collects from the purchaser on behalf of the corporation; and
- Deliver to purchasers copies of certain documents.
What documents is the developer obliged to provide to the buyer?
The developer must provide the purchaser with a disclosure statement, which must have a table of contents and contain specific information about the unit and project including:
- A general description of the property;
- A budget for the first year;
- The proportion of units the developer intends to lease to the nearest anticipated 25 percent;
- The proposed completion date for the construction of amenities;
- The existing or proposed declaration, bylaws and rules.
To provide an opportunity for the buyer to cancel the contract (and receive a refund of his or her deposit — with interest), the legislation gives a buyer a 10-day “cooling-off” period from the time he or she receives a copy of the signed purchase and sale agreement or the disclosure statement (whichever comes later). A buyer may have additional time to cancel the contract if there has been a material change as defined in the Condominium Act. The 10-day cooling-off period pertains only to the sale of new condos, not re-sales.
What documents must a condominium corporation provide a purchaser of a re-sale condominium?
If requested, the condominium corporation must provide a status certificate for the unit which includes key information such as:
- Special assessments or increases to the common expenses (including reserve fund contributions) that have occurred since the corporation’s last budget;
- Risks of increases, beyond inflation, known to the condominium corporation;
- Whether the seller has defaulted in paying his or her common expenses;
- A copy of the corporation’s budget and annual audited financial statements;
- A copy of the current declaration, bylaws and rules; and
- Outstanding judgments against the corporation.
Estimating Operating Costs
Are there legislation/regulations that stipulate(s) what happens if a developer inaccurately estimates the operational costs of a condominium?
Yes. A developer of a new condominium is accountable for any shortfall in the budget statement in the one-year period following registration and must pay the corporation the difference.
Because a condominium’s first reserve fund study may not be completed until towards the end of the condominium’s first year, a deficit (relating to the required reserve fund contributions) may not occur until the second year. Consequently, the builder won’t necessarily be held accountable for any inaccuracies in predicted contributions to the reserve fund (after the corporation’s first year).
However, there is a section in the Condominium Act that stipulates that developers must not make statements or provide material information that is false, deceptive or misleading or omit information they are required to provide.
Rules for Initial Reserve Fund Savings
Is the developer of a new condominium obligated to put aside reserves as soon as the condominium is registered?
Does the Province require a condominium to impose any bylaws and rules?
No, the legislation doesn’t require this but a condominium corporation may make its own bylaws and rules.
Does condominium legislation authorize the condominium corporation to borrow money?
Yes, a condominium corporation may borrow to carry out its duties and objectives provided it passes a bylaw that permits this.
Can a condominium corporation place a lien on an individual unit?
Yes, if an owner has not paid the common expense fees, the corporation will automatically have a lien against the unit. The corporation must give the owner 10 days’ notice before registering the certificate of lien on the unit. A notice of lien must be registered within three months of the default, otherwise the lien expires.
The lien may be enforced in the same manner as a mortgage. In other words, the condominium corporation has all of the usual remedies available to a mortgagee — including power of sale, foreclosure, possession and collection of rents.
If the unit owner has a mortgage, the mortgagee (such as a bank) can pay what’s owing under the lien and add the amount to the mortgage.
The lien also allows the corporation to collect any interest and reasonable legal costs and expenses incurred by the corporation in collecting the debt.
Elections & Meetings
What are the requirements for electing the board of directors and for its meetings?
Each board of directors must have at least three directors. Directors must be at least 18 years old, be mentally competent and not be an undischarged bankrupt or have an undischarged lien against their unit for 90 days. Other directors’ qualifications can be specified in the bylaws. Directors serve for terms of three years or less.
Annual general meetings must take place within six months of the end of the condominium corporation’s fiscal year. This ensures that unit owners can review the financial statements in a timely fashion.
If 15 percent of the owners make a written request for a special meeting, the board must call it within 35 days of receiving the request. The request must include what business will be discussed. If it includes removing a director, the director’s name and reason for removal must be specified.
If the board fails to call the special meeting, the person(s) requesting the meeting may call and hold the meeting within 45 days of calling the meeting.
Changing the Governing Documents
How does a condominium corporation change its governing documents?
To change the declaration, approval of either 80 percent or 90 percent of owners is required, depending on the subject matter. For example, changes to certain ownership interests and financial liabilities require 90 per-cent approval, while matters such as pet restrictions require only 80 per cent. For more information on amending the declaration, see Section 107(2) of the Condominium Act.
By-laws may be changed by the board of directors with confirmation by the owners of a majority of the units in the corporation.
Can an owner stop paying condominium fees if he/she is unhappy with the condominium’s board of directors and/or property management?
Rules About Special Assessments
Do provincial legislation/regulations have rules regarding special assessments? If so, what are they?
No. These are typically governed by bylaws.
Expanding the Scope of the Condominium's Assets and Services
What about additional recreational facilities/services? Could a condominium corporation buy a golf course, for example? Could it change the services an owner expects to receive?
Yes. If the board wishes to change (as opposed to repair or maintain) the common elements, assets or services, this may require the involvement of the owners in the decision. The need to involve owners will depend on the nature of the proposed change and the cost to carry out the change. All changes must be in keeping with the objectives of the corporation. See sections 97 and 98 of the Condominium Act, Province of Ontario, for more information.
Other Important Things About Buying a Condominium in Ontario
Do provincial legislation/regulations govern renting or leasing a condo unit?
Yes. Within 30 days of entering into or renewing a lease, an owner must:
- notify the condominium corporation that the unit has been leased;
- provide the corporation with his or her address, the lessee’s name and a copy or summary of the lease; and
- provide the tenant with a copy of the declaration, bylaws and rules of the corporation.
The owner must also notify the corporation in writing when the unit is no longer leased.
For more information on landlords’ and tenants’ rights and responsibilities in Ontario, see Your Guide to Renting a Home, Provincial Fact Sheet – Ontario.
What other constraints do provincial legislation/regulations put on condo corporations, their boards of directors, bylaws and management?
- Bylaws and rules must be reasonable; and
- Directors must act honestly and in good faith, and avoid negligence.
Is there a process for handling disputes or complaints?
- Owners can speak with the board of directors about their concerns.
- For some unresolved disputes, an owner can proceed to mediation where a facilitator tries to help the parties achieve a solution. If mediation fails, the next step is arbitration, where a third party hears both sides and makes a decision. For other disputes, the disputes can be resolved by court application.
- Consult a lawyer.