Bill 106 is proposing a substantial number of changes to the Condominium Act, 1998 (the “Act”). Over the next few weeks we will highlight certain changes and describe the impact these changes may have on condominium developers. Throughout the discussion, one must remember that the Act is consumer protection legislation meant to address the imbalance of expertise and bargaining power between a developer and unit purchasers. Therefore, many of the proposed changes are efforts to increase the protection of consumers.
The Government of Ontario plans to have Bill 106 enacted by the end of 2015 and proclaimed by the end of 2016. However, extensive regulations that will provide further instructions, limitations and clarity to the Act are yet to be drafted and may not be of force and effect for some time after the enactment of Bill 106.
The registration of a declaration is a required step in the creation of a condominium corporation. The declaration is a governing document of a condominium corporation and the requirements for its contents are set out in section 7 of the Act. The declaration must contain certain provisions.
As noted above, an extensive body of regulations will further the purpose of the Act. An important note with respect to changes in section 7 of the Condominium Act, 1998 is that it will be subject to any prescribed regulations as passed by the Government of Ontario.
A notable change with respect to the mandatory provisions to be included in the declaration of a condominium corporation are the addition of subsection 7 (2) (d1).
Subsection 7 (2) (d1) requires that a declaration contain a statement explaining how common interests and common expenses in the condominium are determined. These interests are usually determined by the number or size of units within the condominium corporation. We have generally included such a provision in the past, however, the inclusion of such a provision will be mandatory. A declaration must then provide purchasers with a clear understanding of how common interests and common expenses will be determined in the condominium declaration.
The proposed change to the mandatory provisions to be included in the declaration do not appear to be onerous on a developer. A developer does not acquire additional risk as a result of the changes and the consumer gains a greater level of understanding with respect to how common interest and common expense percentages are determined.
Part 2 of this discussion will speak to changes with respect to optional provision in the declaration.
To view Bill 106 click here.
To view the Condominium Act, 1998 click here.