ONTARIO S CONDOMINIUM ACT REVIEW Minister s Public Information Sessions. Summary

Transcription

1 ONTARIO S CONDOMINIUM ACT REVIEW Minister s Public Information Sessions Summary

2 PROCESS OVERVIEW Throughout fall 2012, the Ministry of Consumer Services held public information sessions across the province as part of the first stage of the Condominium Act Review. Each session was hosted by Minister Margarett Best and local Members of Provincial Parliament (MPPs). Five sessions took place in the following communities: Toronto, September 12 Hosted by the Hon. Kathleen Wynne, MPP Don Valley West and the Hon. Glenn Murray, MPP Toronto-Centre Mississauga, September 19 Hosted by Dipika Damerla, MPP Mississauga East--Cooksville Ottawa, September 27 Hosted by Yasir Naqvi, MPP Ottawa-Centre London, November 7 Chris Bentley, MPP London West was unable to attend Scarborough, November 29 Hosted by Tracy MacCharles, MPP Pickering-Scarborough East The Minister's public information sessions provided an opportunity for condominium owners and other stakeholders in each of these communities to learn more about the review process and share their views. Depending on the location, attendance ranged from 35 to 200 participants at these one and half hour evening sessions. The program included remarks by the local MPP, a description of the review process by the Minister, an overview of the Act by the Ministry s policy director, followed by questions and comments from the floor. While the initial session in Toronto was largely focused on informing the public about the review process, subsequent sessions were redesigned to hear more about the challenges facing condominium communities across Ontario. SUMMARY OF COMMENTS Condominium governance, management, and dispute resolution emerged as common themes across all of the sessions. In particular, comments and questions were largely focused on misconduct among condominium managers and boards, the lack of oversight for the Act, and limited awareness about the rights and responsibilities of condominium owners. Other key issues included the need to improve disclosure and the management of reserve funds. Participants also shared a range of recommendations to address some of the concerns raised. Condominium Governance Board accountability was the most frequently raised issue. Some of the problems identified were abuse of power, lack of transparency, and proxy manipulation. There is a sense of distrust when it comes to board decision making, especially since owners are not always consulted before significant decisions are made. Furthermore, poor communication between boards and owners can lead to misunderstandings and problem escalation. Board incompetence and owner apathy also undermine condominium governance. Participants elaborated on a range of factors that may contribute to owner disengagement, including the short notice given for meetings, the lack of productive discussions, and the delays in circulating minutes. Consider mandatory voting at annual general meetings (AGMs), provide sufficient notice to owners, and require meetings to be conducted in accordance with Robert s Rules of Order. Improve communication between boards and owners through newsletters, information sessions, and regular meetings beyond the AGM. Mandate education for boards and explore existing training options. Develop promotional strategies, such as open houses, to increase uptake for board education. 1

3 Preserve board legitimacy through third party election monitoring, the review and clarification of removal processes, and the establishment of term limits and mandatory gaps between terms. Eliminate the requirement for an owner-occupant elected board position if more than half of the units are occupied by owners. Establish an owners bill of rights, as well as oversight committee or appoint government advisors to prevent mismanagement and keep a record of condominium boards. Explore the potential benefits of developing local or regional condominium owner and board associations. Dispute Resolution Owners would like to see more clarity on where to turn when disputes arise. While mediation and arbitration are included in the Act, such processes tend to be costly and time-consuming. Frustrated with the lack of dispute resolution alternatives, owners raised concerns about minor disputes taken to court and corporation funds used by boards to cover legal fees. Create an alternative dispute resolution mechanism such as a condominium tribunal, review board, or ombudsman office to provide oversight that is straightforward and user-friendly. Investigate bankrupt corporations and ensure that financial institutions use due diligence when dealing with condominium boards and managers. Explore partnerships with local law schools and others to provide more affordable options for dispute resolution. Condominium Management The qualifications of condominium managers are another common concern given the knowledge and experience required to provide effective administration and informed advice to board members that oversee large budgets. Owners complained about being charged exorbitant fees and paying for unnecessary building work, as well as being victims of management fraud, such as contract kickbacks. Another issue is the potential conflict of interest arising from the management of both residential and commercial space. While some managers may be legitimately overworked, others experience relationship breakdowns with boards that are either unresponsive or quick to replace management companies that disagree with their decisions. Regulate condominium management companies and license managers to establish and enforce professional standards of practice. Consider establishing qualification standards and making existing training programs mandatory. Establish stronger rules and regulations regarding contracts and reserve fund expenditures approved by condominium managers. Consumer Protection Most of the comments focused on the need to improve disclosure requirements to better inform buyers of new and resale condominiums. A number of problems were raised by participants, from the inaccuracy of status certificates and the confidentiality of mixed-use building plans to limited awareness of new by-laws and the lack of clarity regarding condominium fees. The current Act is also too complex for the average person to understand, often resulting in diverse interpretations of the same issue. 2

4 Ensure that contracts provide buyers with a realistic assessment of condominium fees. Post condominium by-law information online to enable potential buyers and owners to stay on top of new developments. Require real estate agents and condominium lawyers to update status certificates on a monthly basis prior to closure. Provide better information to resale buyers by including condominium fees, reserve fund values, and status certificates in property listings. Review the Tarion warranty program for condominium conversions and issues that may not be discovered until after the warranty has expired. Financial Management Participants recommended further consideration of the size of reserve funds to adequately reflect changing needs and diverse circumstances in the condominium community. Condominium maintenance can be underestimated if contingencies are not taken into account and if upgrades for older buildings are especially costly. Other issues related to finances include unit insurance and the registration of liens. Revise rules for reserve funds to account for growing maintenance costs and the range of condominium buildings. Provide insurance through the Canada Mortgage and Housing Corporation to enable boards to finance maintenance and upgrades with large loans. Establish a panel of finance specialists to review the feasibility of a reserve fund bond with a guaranteed rate to ensure a better return. Mandate the completion of reserve fund studies prior to sale or conversion to address inadequate funding and rising condominium fees. Explore existing industry programming as a possible template for improving the quality of reserve fund studies. Mandate unit insurance to prevent coverage gaps when corporations pass standard unit bylaws, which could also lead to savings and fewer disputes. Consider extending the 3-month time limit on registering liens. Other Considerations While outside the scope of the Act, additional issues were related to property taxes, condominium conversions, insurance rates, rental units, as well as development trends and power imbalances in the condominium sector. Some condominiums are required to pay residential taxes but are not receiving such municipal services as garbage collection and sewage management. Condominium conversions may also lead to long-term liability for buyers given the lack of warranty and the risk of inadequate funding. High insurance rates for condominiums are another issue given the monopolistic conditions in the insurance sector. In terms of condominium development, suggestions were made to establish regulations for developers in contract negotiations and to prevent building permit applications prior to approval. Information about green development and possible implications for the Act would also be helpful. In addition to the influence of condominium lawyers and large developers, there are concerns that municipalities may be issuing permits as an easy source of revenue without adequate consideration of real demand. Given that 3

5 condominiums may become a key source of rental housing in the future, the overlap between the Condominium Act and the Residential Tenancy Act, 2006 will need to be reconciled. 4