Changes to the Condominium Act, 1998: Part 1 – Mandatory Provisions in the Declaration

Post by: Evan Holt

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 106.035

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.

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Unresolved Warranty Claims Under The Ontario New Home Warranties Plan Act

Post by: Evan Holt

A recent decision of the Ontario Superior Court of Justice – Blair v Tarion Warranty Corp. (Tarion) –  confirmed that warranty claims under the Ontario New Home Warranties Plan Act (ONHWPA) can only be pursued by the current owner of a home.

The appellant, Blair, took possession of the subject property in February 2010 and complained to Tarion with respect to insufficient heating in the home. Tarion conducted an investigation that was completed in the summer of 2012 and concluded that duct modification needed to be completed.

After the investigation, in November of 2012, Blair installed within her condominium unit, a gas fireplace at a cost of $17,000.00. This installation was completed without the approval of Tarion. Blair claimed the cost of installation but Tarion denied compensation on February 28, 2013.

Blair appealed the refusal of reimbursement to the Tribunal. During the proceedings, Blair disclosed that she had sold the subject property on October 15, 2013. However, Blair stated that as part of the agreement of purchase and sale she had entered a collateral agreement with the purchaser to maintain her claim against Tarion. The Tribunal dismissed the appeal stating that when Blair sold the subject property she lost standing to continue her action against Tarion.

In this appeal, Blair alleged the Tribunal failed to recognize that the collateral agreement assigned the rights of the current owner to Blair.

Blair relied on the decision of the Tribunal in Liddiard v Tarion Warranty Corp., which included the following statement:

Nothing in this decision should be constructed as denying the Applicants the right to approach the current owners of the home and to seek some form of assignment of their claim.

Liddiard v Tarion Warranty Corp. was appealed to the Divisional Court where it was confirmed that a warranty “runs with the home”. The ONHWPA does not extend warranty coverage to previous owners. Additionally, the consumer protection nature of the ONHWPA is best served though fixing buildings and not compensating individual owners.

The court noted that the claim presented by Blair only dealt with the installation of the fire place and not with the insufficient heat provided to the unit. The current owners never assigned the right to pursue a claim with respect to the insufficient heat, such assignment would violate s. 13(6) of the ONHWPA.

In this case, the court concluded that as the purchaser of the subject property from Blair had no right with respect to the fireplace claim against Tarion, and therefore, such a claim could not be assigned. The purchaser acquired the property with the fireplace and benefited from its presence. Thus, when Blair sold the condominium unit she was compensated for the presence of a fireplace.316

Tarion submitted that a previous owner of a home subject to warranty coverage may be compensated for an unresolved warranty claim without contravention of the statutory warranties framework so long as:

  • any warranty claims are pursued by the then owner of the home; and
  • the arrangements still allow for the possibility of the builder or Tarion to remediate any valid defect, as opposed to providing only for the payment of compensation from Tarion.

Tarion goes on to provide 3 examples of how such a resolution could be reached:

  1. the purchase price could be discounted to reflect the uncertainty the purchaser may face with respect to the outstanding claim;
  2. the purchase price of the home is set to reflect the price of the remediated home. The purchaser would pursue the warranty claim and retain any compensation paid. This may also include a risk mitigation clause in which the vendor would be entitled to a portion of the compensation received by the current owner above a certain amount; and
  3. the vendor could provide Tarion with a signed appointment and acknowledgement explicitly stating that the vendor has been appointed an agent for and in the name of the current owner with respect to unresolved warranty claims. Additionally there should be provisions relating to accessing the home, and the authority of the agent. An agreement would need to be in place between the vendor and the current owner so that the vendor could recover any compensation granted to the current owner.

The consumer protection nature of the ONHWPA is for the protection of an owner or subsequent owner within the warranty period of a new home. This decision illustrates that although a previous owner may benefit from a claim brought by the current owner, the rights of the current owner to pursue an outstanding warranty claim may not be assigned.

To read the full decision click here.

Adverse Possession & Land Titles Conversion Qualified Lands

Post by: Evan Holt

A recently released Ontario Superior Court of Justice decision clarifies adverse possession claims with respect to property registered in Land Titles Conversion Qualified (LTCQ). The lands in dispute were converted to LTCQ on December 14, 1998. Here, “the critical time period is the time prior to the conversion of title into Qualified Land Titles”.

On October 22, 2004, the plaintiff purchased 322 King Street, Peterborough. The plaintiff had previously been a tenant of the property for a number of years. On December 22, 2000 the defendant purchased 320 King Street, Peterborough, which lies to the east of the plaintiff’s property.

The plaintiff asserted that the defendant no longer had a right-of-way over the easterly 8 feet of the plaintiff’s land. Additionally, the plaintiff asserted that possessory title had been established with respect to a triangular strip of land on the west side of the defendant’s property which had been enclosed by a chain-link fence, and a 6 inch encroachment on the defendant’s property caused by a garage constructed on the plaintiff’s land.

As of the date of registration, LTCQ lands are subject to:

  1. the limitations, qualifications and reservations contained in subsection 44(1) of the Land Titles Act (Ontario) save and except for the provisions of subparagraph 11 (subdivision control), subparagraph 14 (dower rights);
  2. the rights of any person who would, but for the Land Titles Act (Ontario), be entitled to the Lands or any part of it through length of adverse possession, prescription, misdescription or boundaries settled by convention; and
  3. any lease to which subsection 70(2) of the Registry Act (Ontario), attached hereto, applies.

Although not discussed here, as of the date of registration, LTCQ lands are not subject to provincial succession duties and escheats or forfeiture to the Crown.

“Section 51(2) of the Land Titles Act preserves a possessory title if the length of possession that is necessary has elapsed by the time the conversion in the Land Title system takes place”. Therefore, the plaintiff had to establish that prior to December 14, 1998, the requirements of possessory title were satisfied.


To establish a claim of possessory title, the plaintiff must prove:

  • actual possession for the statutory period;
  • that such possession was with the intention of excluding the true owner; and
  • discontinuance of possession for the statutory period by the true owner.

An affidavit dated October 21, 1998, provided by the now deceased previous owner of the plaintiff’s land stated that:

  • the garage was constructed and used prior to the previous owner’s acquisition of title to the land in 1939. During the occupation of the previous owner the garage was used without interruption or interference;
  • the owners or owner of the defendant’s property had maintained a fence in the same location as the chain-link fence continuously for a period greater than 30 years;
  • that no part of the 8 foot right-of-way had never been used by occupants or other permitted users of the defendant’s land.

The court found the statements made in the affidavit to be reliable despite the inability of the evidence to be cross examined. The court also found that this evidence demonstrated that the garage and fence had been in place for at least 10 years prior to conversion into the Land Titles system. No evidence to the contrary was provided by the defence. The court granted a declaration that the defendant’s land was subject to the encumbrances of the plaintiff.

The court found for the plaintiff with respect to the defendant’s right-of-way over an 8 foot portion of the plaintiff’s land. The court was satisfied that prior to LTCQ registration the predecessors in title to the defendant’s land had abandoned the right. This was demonstrated through the affidavit evidence and the location of the garage and fence that blocked the use of the right-of-way. In the alternative, the court also noted that the right-of-way was granted in 1913 and ceased to be enforceable 40 years after its original registration.

Access the full decision by clicking here.

Only specific relatives can be on title for HST rebate

Post by: Evan Holt

The HST new homebuyer’s rebate entitles qualified purchasers to a substantial rebate. The maximum federal and provincial portion of the rebate is $6,300 and $24,000 respectively.

A Tax Court of Canada decision released at the end of March has further clarified who can qualify for the rebate.

“[T]itle may be held by the buyer jointly with a specific blood relation, including a child and grandchild, a brother or sister, and relationships by marriage or common-law partnerships — even if the relative doesn’t live in the house.”

Here, an uncle was on title with his niece for mortgage financing purposes. As this relationship is not a category recognized by the legislation the purchaser did not qualify for the rebate.

“This means that if just one of the buyers does not qualify, even as the owner of a one percent interest in the property, none of the buyers can get the rebate.”

For the full Toronto Star article click here.

Choosing a Condo Plan That is Right for You – Part 3: Phased Condominiums

Post by: Carly Haynes

Our previous blog post discussed standard condominiums. This week we will offer a discussion on a specific type of standard condominium, phased condominiums.

Phased Standard Condominium Plans

As the name suggests, a phased condominium plan is a condominium plan that is developed and registered in stages.  Currently the Condominium Act, 1998 (the “Act”) only allows standard condominiums to be phased.  In phased condominium projects, there is one condominium plan which is expanded through amendments to the condominium declaration and description plans, with each new registration constituting a phase as new units are constructed. The condominium plan gradually increases in size as phases are added until the project is complete.  This type of project is attractive to builders  as they are able to balance sales of the units and registration of additional phases in order to ensure the project does not become over-extended.  After each phase is registered the builder can complete the closing of the units in that phase which allows the builder to obtain sales proceeds to assist in constructing the next phase.

The registration of the condominium declaration which brings the first building(s) into the condominium plan is not the first phase. Our office usually refers to this first registration as the Initial Registration.  The first “phase “is the next registration after the Initial Registration.  Needless to say this causes confusion.  Most people quite logically assume the Initial Registration is the first phase.  It isn’t.

References in this blog to a “declarant” mean the person/company that registers the condominium.  Often the builder is the declarant.

Typically phased condominium plans are made up of town homes but there are many examples of phased apartment building condominium plans and single family home condominium plans.

When considering undertaking a phased condominium project, it is important to note the first phase cannot register until title to the majority of the units in the Initial Registration of the condominium plan are no longer owned by the declarant and the declarant has delivered certain documents to the condominium corporation pertaining to the phase to be registered (this requirement applies to the first phase only, not subsequent phases). Furthermore, a phase cannot be registered until all facilities and services have been installed as required by the municipality to ensure  the phase being added to the condominium can function properly even if the planned additional phases are never added to the condominium.


Phase Disclosure

There are specific disclosure provisions for phased condominiums. Section 147 of the Act requires that all purchasers be provided with disclosure statements which provide specific information on phasing, including whether the declarant intends to create one or more further phases, the projected timing of registration of subsequent phases and details regarding units, location of buildings etc.

The Act permits the condominium corporation to apply for injunctive relief or damages if the declarant proposes certain changes to the proposed phase from what was disclosed in the disclosure statement which are “material and detrimental”.  This type of application could result in significant delays for a declarant, and as such a declarant  who is uncertain about future plans for future phases should fairly and completely disclose all options for the project that the declarant is considering in its disclosure statement to purchasers to reduce the chances of this complication.

A successful injunction application by a condominium corporation does not necessarily preclude the registration of the proposed phase.   It may simply mean the proposed phase will have to proceed as a separate condominium.  The approval authority may have concerns with this result but if the declarant has carefully drafted the condominium documents with proper cross easements between the registered condominium and the lands being held for future phases the problem should not be insurmountable.

Take Home: Pros and Cons of Phased Condominium Plans

The most substantial benefit of a phased condominium plan is that phasing eliminates the requirement to have all proposed buildings in a standard condominium plan completed before the condominium plan can be registered.  This allows a builder to build and close units in segments (and get proceeds of these sales) rather than having to wait for all of the proposed units in the condominium to be constructed before registering the condominium plan and transferring title to purchasers, allowing the declarant to start paying down their construction loan.  This can dramatically reduce the amount of the declarant builder’s construction loan as he or she is only borrowing enough at any one time to build part of the proposed development.

A phased condominium can allow a declarant to post less security with Tarion.   Rather than having to post security for the whole development (possibly at $20,000 per unit), the declarant is only required to post security for the units in the proposed phase.  This is subject to the declarant not entering into any agreement of purchase and sale for units in phases not covered by Tarion.

The only significant drawback  associated with phased condominiums is increased costs on multiple fronts for each phase due to the costs related to the registration of multiple phases, including application and approval fees, planner, lawyer, engineer and surveyor fees.

Finally, the individual unit sales agreements cannot be closed until the unit is built and registered within the condominium. As such, in order to justify the costs associated with each new phase, a sufficient number of agreements of purchase and sale need to have been entered into for the proposed units in the new phase. However, it often makes more financial and practical sense to create a phased condominium instead of multiple condominiums.

Choosing a Condo Plan That is Right for You – Part 2: Standard Condominiums

Post by: Carly Haynes

Standard Condominium Plans

Our previous blog post offered an introduction to vacant land condominium plans.  In this post we will examine standard condominium plans.

What is a Standard Condominium Plan?

A standard condominium plan is the traditional form of condominium that people tend to be most familiar with. Under previous condominium legislation in Ontario, only standard condominium plans could be created, as such, all condominium plans registered prior to May 5 2001 are standard condominiums.  Under Ontario’s new legislation, the  Condominium Act 1998 (“the Act”), a standard condominium plan is any condominium that is neither a leasehold condominium, nor any of the other types of freehold condominiums provided for in the Act (for example: common elements condominiums or vacant land condominiums).

Defining something by what it is not may not be very helpful, so what exactly is a standard condominium?

This type of condominium plan is typically comprised of completed buildings which are made up of units and common elements.  Some common elements, for example patios attached to the units, may be deemed exclusive use portions of the common elements, meaning that use of those spaces is reserved for specific unit owners only.  Other common elements may include exercise rooms, recreational facilities, roadways, green space and walkways. Notably, some units in a standard condominium can be left empty at the time of condominium registration, such as parking units, or units intended for commercial or industrial (not residential) use.

Finally, prior to the registration of a standard condominium plan all proposed buildings within the plan must be constructed to the level required by the Act regulations, which is also what forms the basis of “Schedule G” of a standard condominium plan.  Schedule G includes an engineer’s or architect’s certificate (or combination), as to the status of the construction of the condominium’s buildings. A completed Schedule G must be included as part of the condominium declaration in order for the declaration to be registered along with the description plans.


Why Develop a Standard Condominium Plan?

One benefit of standard condominiums is that proposed standard condominium units can be marketed to potential unit purchasers prior to obtaining draft plan approval from the approval authority (this is also the case with common elements condominiums and phased condominiums).

Also, pursuant to the regulations, the municipality is not required to provide notice of a public meeting for the approval of a standard condominium plan to the surrounding community nor is any circulation to any agencies required. This factor may increase the efficiency of the development.

The Downside of Standard Condominium Plans

The buildings in a standard condominium plan must all be built at one time, without phasing, therefore substantial construction capital may be necessary at the outset of a project, especially if marketing of the units is slow. Phasing the condominium plan offers a solution to this issue, and will be discussed in the following blog.

Finally, pursuant to the Tarion New Home Warranties Act a developer is required to post security to enroll the condominium in Tarion. Registration with Tarion must occur at least 30 (thirty) days before construction begins.

In our next blog post, we will discuss phasing of  standard condominium plans.

Converting lands to “Land Titles Absolute” before condominium registration

Post by: Craig Robson

In Ontario, before a condominium can register, the lands must be registered in “Land Titles Absolute” or “Land Titles Plus”.  These are the highest categories of title available under the Land Titles Act.  Most Ontario lands continue to be “Land Titles Conversion Qualified”.  The “Conversion Qualified” category has qualifiers that do not apply to the “Absolute” and “Plus” categories, including the qualifier that “Conversion Qualified” lands are subject to “any title or lien that, by possession or improvements, the owner or person interested in any adjoining land has acquired to or in respect of the land”.

The application to convert requires a title search by the project lawyer and a boundary survey by the project surveyor.  The boundary survey is circulated to the neighbouring land owners with a warning that if they do nothing the boundary shown on the survey will be certified as the true boundary of their property.  If a neighbour does not agree with the boundary, then the neighbour can object to the application.

In greenfield developments there are usually far fewer boundary issues than exist in built up areas. In built up areas, very often fences are constructed “off boundary”, sheds encroach and significant use has been made of the proposed condominium property by neighbours.  If the property has been vacant for some time, this use can be significant and long standing.

It is important to respond to neighbour’s objections in a principled fashion to minimize potential for delays in the conversion process, which if lengthy can also delay condominium registration.

For more on options for responding to objections to your LTA conversion application, check out our earlier blog article here: “Responding to Objections to an Application to Convert to LTA”.