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The Dirt: Condo bureaucracy set to grow as report touts major reforms

Fans of the seminal 1960s conspiracy theorists’ TV series The Prisoner will find the recent release of the government’s second stage report on Condominium Act solutions very ominous indeed.

The report confirmed some of the major themes the government will be pursuing in its “comprehensive approach to reform.” Now to those who have been following the condominium law reform movement, there really isn’t anything shockingly new about the themes, but the release of the new report has brought home the very real possibility of a whole new branch of government dedicated, for better or worse, to all things condo.

One of the first things confirmed by the latest report came as no surprise at all: The government will regulate property managers. This comes as no real surprise precisely because this is one plank of the government’s proposed overhaul of condominium law that had already emerged ahead of this summer’s provincial byelections in response to widespread concern that fraud and embezzlement were becoming seriously problematic in the industry. Like in many other aspects of life, it was obviously an example of a few bad apples spoiling it for the rest but it was a foregone conclusion that the government would regulate property managers regardless of what else came down the pike in terms of condominium law reform.

What did come as a bit of a surprise to me, although perhaps not to industry insiders, was the announcement of the new condo licensing agency, a move that will keep that function in government hands. Also new was the suggestion that such property manager licensing might be a two-staged process with a preliminary entry-level stage followed by advanced accreditation some time later in a property manager’s career. The industry already unofficially rallies around the registered condominium manager designation awarded by the Association of Condominium Managers of Ontario that requires candidates to attend relatively rigorous courses at Mohawk College or Humber College (or the equivalent online program deliveries) on technical, legal, and ethical matters relevant to condominiums. What’s uncertain is whether registered managers will get byes in the accreditation process and, if so, whether the designation will then translate into the entry- or advanced-level equivalent.

The new report also calls for radically new dispute resolution protocols all under the umbrella of a new so-called condo court. Currently, condominium disputes are subject to cumbersome mandatory mediation and arbitration rules for some disputes and both Small Claims Court and Superior Court venues for others. The new report is calling for an overhaul of the mediation and arbitration protocols together with two distinct but parallel tribunal-like bodies: the dispute resolution office and the quick decision-makers both given the eponymous tasks of dealing decisively with condominium matters. Like all new dispute resolution protocols, it will take time for litigators to make the transition. And only time itself will tell if the new condo court dispute resolution paradigm is in fact better or worse — in terms of speed, cost, and perceived fairness — than the one it replaces.

In addition to the new condo licensing agency and the condo court, the report is also proposing the introduction of a new condo registry. While a condominium’s constating documents must already be registered on title, up-to-date information on the corporation’s current directors, property managers, and rules and regulations are rarely publicly available. The report will see to the development of a new public condo registry and corresponding annual filing requirements that are presumably not much different than the corporate registries maintained under the Ontario Business Corporations Act.

A central location known as the condo office will administer (and presumably house) the new condo licensing agency, court, and registry. This condo office, in addition to overseeing the other government condo regulatory functions, will also have staff tasked with the general didactic duties to educate the public on all things condo, including, among other things, the proposed mandatory training of first-time condo directors.

Of course, none of this proposed new condo administration juggernaut is going to be free. While the report doesn’t fix the funding formula for all of this condo largesse, it openly acknowledges that user fees for various services, together with a surcharge of $1 to $3 per unit each month, will fund this new bureaucracy.

Let’s call it a new condo tax for want of a better term (and we’ll see how that goes over with the condo-owning public).

Although fans of The Prisoner will see nothing but the imprint of big government in the latest report, the bureaucracy of the condo office is only a fraction of the themes actually explored in it. Readers should also know that the report advocates far-reaching consumer protection reforms, such as banning developer sales of superintendent and guest suites back to the condominium corporation, and better developer upfront disclosure. There’s also discussion of corporate governance by, for example, lowering quorum requirements and raising proxy-use guidelines and financial management reforms through better budgeting and more flexibility to dip into reserve funds. While some proposals may be controversial, it’s all a reflection of the political reality that comes with more than 50 per cent of all new housing stock coming online in the province now being condo developments.

For related stories, see "Law firm's trust account hacked, 'large six figure' taken."


Jeffrey W. Lem is a partner in the real estate group at Miller Thomson LLP. His e-mail address is jlem@millerthomson.com.

  • Kyle Rae
    I would be interested if there was going to be any recommendations concerning what appears to be a near monopoly situation with the firm that dominates the insurance process for damages in condo units. In my condo building there is said to be enormous delays in proceeding to repair and re-construct units that have been damaged by water or smoke from neighbouring units. There are concerns that the near monopoly conditions make it difficult to get the insurance company to sign off on the repairs in a timely fashion.

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