An outline of the changes to Ontario’s condo laws
Ministry website
Updated: September 22, 2016

This is a summary of the more alarming changes that the Ministry states will be included in the new Act. There are/will be a flood of Internet sites that will explain all of the positive changes. I want to focus on the issues that I am sure will not receive as much attention.

My comments are in italics.

Non-leased units

Voting at meetings

Achieving quorum at meetings

Change existing by-laws with a lower threshold of required votes

Procurement process

Examination of records

Condo disputes

Non-leased units
Currently in condo properties where at least 15% of units (referred to as “owner-occupied units”) have not been leased during a certain time, one position on the board must be reserved for election by the owners of these type of residential units only.

This was designed to ensure that owner-occupiers have some direct representation on the board, especially in buildings with a large population of renters and absentee landlords.

Under the act, the owner-occupied elected position on condo boards would be retained in the interests of protecting an owner-occupier minority in largely rented buildings.

However, for greater clarity and accuracy, this type of unit would be renamed as a “non-leased voting unit.” This is because this type of unit would be characterized on the basis of whether it was leased during a certain time period and not whether the owner actually occupies the unit.

This is extremely misleading. There is no "greater clarity and accuracy". The meaning has been distorted.

The owner-resident position has been so seriously diluted it no longer serves any purpose. Lets look at what "non-leased voting unit" appears to include:
1. All units that the developer has not yet sold (including model suites.)
2. All units where the owners lives overseas and leaves the units empty.
3. All units that are in-between leases.
4. All units where a relative, not the occupant, is on title.
5. All units where the owners have not given a copy of the lease to
    management. (Yes, this is common in many condos.)
6. All units that licences the use of the units. (Short-term rentals.)
7. All retail units that are owned, not leased.
8. It's possible this could also include the guest suites.

If all of these units can vote for the "non-leased" position on the board, then the owner-residents will likely remain a minority of eligible voters for a director's position that, until Bill 106, was reserved for their protection.

In addition, this reserved position would no longer be mandatory. Specifically, corporations would have to reserve the position only if the “non-leased voting unit” owners are a minority in the corporation and at least one of them requests an election of the reserved position on the board.

No longer mandatory. It requires:

1.	The “non-leased voting unit” owners must be a minority of the owners. If you add up the owner-residents and then add all the units listed from 1-8 above, it may be difficult, if not impossible to determine if the “non-leased voting units” are in the minority. The numbers will float.
2.	At least one of "them" requests an election of the reserved position on the board. For this to kick in, you need an owner-resident who will read the Act and understand what it means and who will write a request to the board.

So it looks like this "protection" for owner-residents is now a joke.

Quorum
The regulations will also be able to set the quorum for any meetings where owners of “non-leased voting units” are exercising their right to vote in respect to a reserved position on the board.

At the present, we don't have a clue what the quorum will be.

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Voting at meetings
The act paves the way for wider owner participation at meetings by enabling a condo corporation to pass a by-law allowing votes at meetings to be cast by telephone or electronically.

My main concern with telephone voting is who picks up the telephone and records the vote? I have the same concern with electronic voting.

If it is the property management, then we have a serious conflict of interest as there is a history of property managers rigging election results. Telephone and electronic voting needs to be controlled by a licenced third party. Perhaps it could be the accounting company who audits the corporation or an independent law firm.

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Achieving quorum at meetings
The Stage 2 report expressed concern that many owners do not attend condo corporation meetings, making it difficult to achieve quorum.

The amendments will relax quorum requirements for mandatory meetings. At turnover and annual general meetings, quorum would be reached with:
25%  of owners at the first and second attempts to hold the meeting.
15%  of owners at the third attempt and any subsequent attempts.

It is quite possible that the owners of as few as 7.5% of all the units can elect directors and re-elect the auditor. Is this acceptable in face of the new Act allowing for telephone and electronic voting? This is an extremely low threshold.

Boards could not add an item requiring a vote to the agenda on the second or subsequent attempts to hold a meeting.

A corporation could pass a by-law mandating a 25% quorum, regardless of the number of attempts.

Only the board can put by-laws changes to the owners. The owners don't have the power.

The regulations will also be able to set the quorum for any meetings where owners of “non-leased voting units” are exercising their right to vote in respect to a reserved position on the board.

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Threshold for passing condo by-laws
Regulations under the act provide a transition period during which corporations could change their existing by-laws with a lower threshold of required votes. This would enable condo corporations to align their by-laws with the requirements of the new act.

The problem here is that the lawyers will write by-law packages that will go far beyond the changes needed to comply with the new Act. The sitting board can add by-law changes and additions that may entrench their positions, deny other owners their rights to run to be a director, give the majority of the directors the power to remove directors they do not like and limit the ability of owners to communicate to the rest of the owners.

I wrote about these by-law packages some time ago.

http://www.condomadness.info/instruments-packages.html
http://condomadness.info/instruments-package1.html
http://condomadness.info/instruments-package2.html
http://condomadness.info/instruments-package3.html

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Procurement process
The review concluded that “kickbacks” on contracts or payments made to maintenance companies associated with condo board members are a serious concern for some condo owners.

The Stage 2 report concluded that the best protection would be having a well-executed, sealed-bid, contract procurement process.

Because of this, the act will forbid condo corporations from concluding procurement contracts unless they fulfill certain requirements, such as a sealed bid process. Regulations will set out the procedures that would need to be followed and under what circumstances (e.g., for contracts exceeding a certain value).

All this will do is pretty up the bidding so it looks like it is on the up and up. I have wrote about three quotes being submitted where is obvious that the three-bid process was rigged by the property management company.

The honest managers will stay honest and the dishonest ones will stay dishonest.

What we need is two things:
1. Protection and rewards for whistle blowers.
2. An increase in police investigations when condo owners have evidence of
    fraud in their corporations.

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Examination of records
The Stage 2 report set three main goals for effective record-keeping by condo corporations. It recommended that the law should:
• set clear requirements for how long records must be kept.
• financial records for at least 6 years.
• other records as determined by regulations and by-laws.
• ensure that corporate records are easily accessible.
• ensure that personal privacy is protected and records are not used for
  inappropriate purposes.

Regulations will set out procedures:
• for requesting access to corporation records.
• for a board’s responses to such requests.
• fees for examining and copying corporation records.
• standard forms for such requests.

The big change here is that for the first time, owners will be charged to examine the corporation's records. The present Act says that owners can be charged only for reproduction costs.

Examining records is the equivalent to Freedom of Information laws. Owners should not be charged for wanting to examine the corporation's records. Very few want to see the records, so as long as the requests are legitimate they should be honoured at no cost.

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Tribunal disputes
Regulations will set out which disputes (primarily between owners and corporations) would have to be heard by the tribunal. They may include:
• enforcement of declarations, by-laws and condo rules
• procurement processes
• access to records
• procedures for requisitioning a meeting of owners

Notice the "may".

Certain disputes would be excluded, and would need to go through mediation and arbitration or court, such as disputes relating to:
• liens
• amalgamation and termination of condo properties
• determination of title to real property
• Tribunal dispute resolution fees
• The Condo Authority will set its own budget and fees in accordance with the
   processes and criteria approved by the Minister of Government and
   Consumer Services.

It is anticipated that the cost of resolving a dispute through the tribunal would be substantially lower for owners and boards than the legal fees and other costs that are paid today. It is also expected that the tribunal would resolve disputes more quickly.

An anticipation is not a guarantee. Sounds more like a hope.


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