How Bill 106 Will Affect Condo Governance

In the past, condo owners and property management companies have struggled to establish a governing system that is fair for both parties and addresses some of the major concerns within the industry. Bill 106 may be the answer.

While it’s not expected to be enacted as law until late 2016, since its introduction to the Ontario Legislature on May 27, 2015, it has undergone a number of readings and has been referred to the Standing Committee on Finance and Economic Affairs.

The Protecting Condominium Owners Act is the first real change to the established Condominium Act since 1998. During that time, Ontario has seen a condo boom that has resulted in over 1.3 million Ontarians living in condos.

This act was long overdue.

In a press release, David Orazietti, the Minister of Government and Consumer Services said, “In recent years, Ontario has seen huge growth in condo development, and it has become increasingly obvious that our current Condominium Act is not providing enough protection to those living in condos.”

The most outstanding changes revolve around the creation of the Condominium Management Services Act, 2015 within Bill 106 that addresses licensing concerns for managers, establishing a code of ethics, and stricter regulations regarding open communication.

Manager Licensing

The Condominium Management Services Act, 2015 (Schedule 2) of Bill 106 aims to completely overhaul the licensing of condo managers and establish a code of ethics.

Currently, there are an estimated 2500 people managing condominiums. The only certification currently available is an optional Association of Condominium Managers of Ontario program that has been awarded to 850 individuals and almost 50 firms.

Any reputable property management company should ensure that their managers are all certified and abide by a set of rules, but establishing stricter guidelines around licensing will guarantee proper knowledge, training, and history.

Previously, there have been horror stories of individuals who managed to defraud condo owners, such as one case where over $250K was stolen from the reserve fund, and $400K worth of cheques were forged.

These managers simply had to make a good impression on the condo boards, but may have lacked education in proper management, could have been previously convicted of a crime, or financially unstable. There was no method to ensuring that your condo was being managed by a reputable manager.

The future is a little clearer. As outlined in Bill 106, Section 34 (1):

“No person shall provide condominium management services unless licensed as a condominium management provider or as a condominium manager.”

The Act includes recommendations for mandatory licensing requirements, and would establish an administrative authority overseeing the profession and establishing an arena for complaints. The Act would also establish that Property Management Companies or Managers be required to sign a contract when providing management services, protecting the condo board and clearly outlining their responsibilities and agreeing to adherence to the code of ethics.

Definitions

The new Act establishes or redefines some of the terminology outlined in the original Condominium Act that makes it easier for property managers and boards to understand their roles, and the roles of tenants.

• The definition for “Condo Management” creates distinguishing factors between individuals and companies (now called providers) and establishes differentiators in the management of both.
• “Non-leased voting unit” now refers to any unit where the owner is entitled to vote to elect board members and their unit is not pursuant to a lease
• “Repair” was currently defined alongside maintenance. “Maintenance” has now been removed, and “repair” is defined for regular wear and tear or damage that tenants (owners) must take care of.

Governance

The Act establishes a number of ruling bodies that condo directors are required to report to, including a Condominium Registrar, and an overseeing body to be established as the Condominium Authority.

Outlines are established for meetings, such as a mandatory 20 day notice period of any electoral vote for the board and a 15% required quorum requirement to hold a turnover meeting or AGM.

The Condominium Registrar would be responsible for receiving and filing all information from condominium directors such as notices in change of board membership, annual returns, and will oversee the mandatory director training. They will also be responsible for creating and maintaining public access to these documents.

The Condominium Authority will be established as a self-funded, not-for-profit entity that is entirely independent of the Crown. Their roles will be to provide the education and training of directors, provide information and resources on new condo law and regulations, as well as potentially create a Condominium Guide that outlines information for new purchasers including obligations of owners and board members.

The Condominium Authority Tribunal will act on behalf of the authority to mediate disputes between owners and corporations, multiple owners and between corporations relating to condominium matters. Their goals include resolving disputes faster than current models allow and at a reduced cost for all parties, with a legally binding decision process.

While the above are all suggestions in the implementation of the Act and are obviously up for discussion among the Standing Committee’s in the Legislature, these changes are leaps and bounds ahead of what current directors and managers have been looking for. While the Act may not be implemented until 2016 or later, understanding the above changes and how they will affect your board of directors is integral to the success of your condo community.

If you’ve been looking for an established and accredited property management company that has been built on a strong internal code of ethics and accountability to our clients, our team at ICC^® Property Management would love to hear from you. Throughout the Greater Toronto Area, ICC^® has been dedicated to providing excellence in property management through customer service and integrity.