Fall 2012
Let’s Talk Condo
Pages 323 - 326
And So It Begins: Condominium
Law Reform in Ontario
and
Ontario’s
Condominium
Law Experts
Odysseas Papadimitriou
416.595.8559
by
Jeffrey W. Lem
905.415.6715
opapadimitriou
@millerthomson.com
[email protected]
The provincial government in Ontario just
announced its long awaited public review of the
Condominium Act, 1998 (the “Act”), calling for
public input from owners, residents and other
stakeholders in the condominium community
in what is expected to be a major overhaul of the
Act and related legislation.
Although industry groups have clamoured that
law reform is well overdue in the area of
condominium law, the truth of the matter is that
the Act itself was completely revamped in 1998
Continued on page 324
A N N O U N C E M E N T
in
this
issue
And So It Begins:
Condominium Law
Reform in Ontario
............................323
Construction
Deficiencies:
To Release or Not?
............................ 325
We are excited to announce that after thirty years of practice, Patricia
Conway will be retiring from the practice of law at the end of 2012.
The provincial government
Patricia’s role in the evolution of Ontario’s condominium law is unrivalled.
in
SheOntario
has, injust
herannounced
practice, been instrumental in forming much of the case
its
law long
whichawaited
governs public
Ontario’s condominium corporations and developers
review
thehas
Condominium
today. of
She
been involved in precedent setting cases, presented at
industry
and written numerous articles on condominium
Act, 1998conferences,
(the “Act”), calling
related
topics.
Patricia
has
been
a
valuable
for public input from owners, residents and other member of our firm’s Condominium Practice
group. Her experience, knowledge and contribution will certainly be missed. We wish Patricia
stakeholders in the condominium community in
all the best in the next chapter of her life.
what is expected to be a major overhaul of the
We have arranged for the transition of Patricia’s files to other members of our firm’s
Act
and related legislation.
Condominium
Practice group. We have already started so that over the next few months
Patrick Greco,
and/or Michael
Although
industryMegan
groupsMackey
have clamoured
that Shell will be taking time to bring themselves
up reform
to speedis on
theoverdue
litigationinfiles
clients directly. Because we have good
law
well
theand
areacontacting
of
lead
time,
we
expect
that
the
turnover
will
be
seamless.
Clients will not be billed for time
condominium law, the truth of the matter is that
required to complete the transition of files to other Condominium Practice group members.
the Act itself was completely revamped in 1998
Miller Thomson is committed to continue its tradition as a leader in the condominium industry.
(coming into force in 2001). Compared to the
Audrey Loeb and the rest of our team will continue to serve our clients as efficiently and
effectively as always.
Our Mission
Our mission is to provide comprehensive, competitively priced, value-added, community oriented solutions throughout Ontario utilizing the range of
knowledge and depth of expertise of a larger firm, while providing professional, friendly and timely service to our clients.
With offices in Toronto, Markham, Guelph, London and Kitchener-Waterloo, our Condominium Practice Group is part of a full service law firm
which provides us with significant strengths in matching your legal needs to our resources. Our office systems and technology assist us in providing quick turnaround on a cost efficient basis.
- 323 -
Continued from page 323
(coming into force in 2001). Compared to the almost glacial pace of
legislative reform in other areas of the law, the Act is relatively nascent
and the proposed “modernization” and “strengthening” of the Act called
for by the government is nothing short of fast and furious.
of investor-owned buildings with large numbers of tenanted units.
Ms. Loeb feels that a disenfranchised minority of the future will be
the remaining owner-occupiers “who are living in communities of
tenants rather than in the condominium community environment
that government originally anticipated would be there when
condominium communities were built. Condominium communities
were intended to have people of like mind who shared the running
of their home.”
The announced legislative review comes on the heels of Bill 72, a
private member’s bill launched by the New Democratic Party’s Rosario
Marchese with a number of proposed amendments to the Act, making
it more of a prophylactic consumer protection legislation and adding
features such as, most notably, a tribunal to hear the plethora of Although the announcement really just begins the consultative stage
disputes that are typically involved in condominium living.
of legislative reform, it is widely anticipated that, at the end of this
What is driving the call for reform is the almost explosive growth of law reform process, the amendments to the Act will likely include
condominium construction in the province since the passage of the increased consumer protection for buyers, more comprehensive
1998 version of the Act. According to a press release by the Joint rules for condominium finances and reserve fund management,
Government Relations Committee of the Canadian Condominium revisions to condominium board governance, accreditation of
Institute and the Association of Condominium Managers of Ontario, condominium managers, and enhanced dispute resolution protocols
there are now over 1.3 million Ontarians calling a condo their home, governing condominium life generally.
with over 6,700 condominium corporations representing more than
half-a-million individual condominium units. Nowadays, condominiums
comprise almost 62% of the new home construction in the province.
Although strongest in the GTA, condominium growth has been spread
throughout much of the province, with 104 of 107 Ontario ridings
now having condominium projects.
Although the surge in condominium ownership seems to be causing
politicians to seemingly fall over each other in a rush towards
condominium law reform, much of the recent clamor for condominium
reform does not really derive from the governance issues that are
germane to the Act. Instead, most of the recent popular press about
condominium “problems” really are construction issues governed
by the Ontario Building Code, the Ontario New Home Warranty
Program (Tarion) and general tort and contract principles inherent
in construction law generally. So, for instance, the recent front-page
Toronto Life article entitled and highlighting “Trouble in Condoland”,
focused on some construction defect disputes in certain high-profile
Toronto buildings (mainly, but not exclusively, the notorious “falling
glass” cases), but it is not really clear that the issues at the heart of
those disputes are even governed by the Act, reformed or otherwise.
They are, at most, construction issues that might happen just as
readily in office construction, apartment construction or any other high
rise construction.
Many eyes are turning to British Columbia, which recently introduced
legislation to develop an online dispute resolution protocol. If the
legislation is passed, an independent tribunal will be created to
provide 24/7 online dispute resolution tools and, where necessary,
independent tribunal hearings will be held to address condominium
related disputes. On the one hand, this may result in a noticeable
increase in the number of condominium disputes; but, on the other
hand, such a mechanism would take these issues out of the hands
of the courts, which have shown time and again that they do not want
to be dealing with what they perceive to be relatively “minor”
condominium enforcement issues, such as noise complaints and
pet restrictions.
Finally, it should be noted that not all condominium lawyers are
convinced of the need for wholesale reform of the Act. While the Toronto
Life article does highlight some notorious problems faced by unit owners
in certain buildings, the overall unrelenting demand for units suggests
that, by and large, the vast majority of condominium owners and
occupants are likely satisfied with (and presumably well served by)
the existing Act. Instead of wholesale legislative reform, to what
really is relatively current legislation, it may be just a matter of
tweaking the existing legislation and persuading the courts to properly
enforce the existing provisions of the Act. Condominium law
jurisprudence has been wildly inconsistent and, in many cases,
Audrey Loeb, Miller Thomson’s condominium law maven, and an blatantly inconsistent with the plain meaning of the Act.
architect of the existing version of the Act, feels that, on a macro basis, Whatever legal reforms eventually come our way, it is unlikely that
the amended Act will have to address the ever-increasing phenomenon
Continued on page 325
NEWSLETTER
TIP
The federal government recently introduced the National Flag of Canada Act. The act encourages Canadians to display the Canadian national
flag and encourages condominium corporations to permit the display of the Canadian national flag. It is important to note that the act does not
interfere with a condominium corporation’s ability to control the uniform appearance of the buildings on the condominium property. The act
only “encourages” the display of the Canadian national flag – it does not create an obligation upon a condominium corporation to permit unit
owners to display the Canadian national flag.
- 324 40 King Street West Suite 5800, P.O. Box 1011, Toronto, ON, Canada M5H 3S1
Tel. 416.595.8500 • Toll Free 1.888.762.5559 ext.2968 • Fax 416.595.8695 • www.millerthomson.com
Continued from page 324
there will be anything that substantially dismantles the system already at least for urbanized Ontario, the defacto source of rental stock and
in place. While far from perfect, the blemishes of the existing system the only remaining entry point to home ownership available for most
have seemingly not slowed the relentless demand for more first-time buyers.
•••
condominium stock, and like it or not, condominiums have become,
Construction Deficiencies: To Release Or Not
builder after resolving some minor deficiencies only to discover, several
years later, more significant building deficiencies that were not
discoverable at the time the Release was executed. A broadly
drafted Release can preclude a condominium corporation from
seeking recourse against not only the builder but also the professionals
and contractors who worked on the construction project and who
may (and likely do) have insurance coverage.
by
Megan Mackey
416.595.8623
[email protected]
A condominium corporation’s first board of directors, after a turnover
meeting, is often faced with a number of construction deficiencies.
Deficiencies can range from minor items, like missing light fixtures,
to significant issues such as structural defects.
The Ontario New Home Warranty Plan Act protects new condominium
developments by providing a construction warranty, which includes
coverage for common elements. The warranty covers defects in and
non-completion of the common elements for one year, against water
penetration and defects in the building for two years, and against “major
structural defects” for seven years. Coverage for common elements
begins on the day the condominium corporation is registered and the
maximum coverage is $50,000 times the number of units, to a
maximum of $2.5 million.
Most issues relating to construction defects are resolved between
the builder and the condominium corporation. However, where a
resolution cannot be reached the condominium corporation may ask
Tarion Warranty Corporation, a not-for-profit corporation, to conciliate
the dispute. The builder has ninety (90) days from the date of the
condominium corporation’s request for conciliation to carry out the
repairs or resolve the claim. The condominium corporation and builder
can reach an agreement regarding the sum that the corporation is
prepared to accept as compensation for deficiencies.
Nevertheless, many builders refuse to compensate the condominium
corporation unless the corporation signs a Full and Final Release.
Releases prepared by builders are often broadly drafted and can
have legal implications which go far beyond the deficiencies in
question. For example, a condominium corporation might release the
NEWSLETTER
Boards of directors often wonder: Do we have to sign a Release?
What benefits are associated with the Release? What happens if
we refuse to sign the Release?
The Tarion conciliation process does NOT require the condominium
corporation to deliver a Release. The builder often demands a
Release to ensure that the condominium corporation has no rights
in the future against it or any of its principals, employees, agents,
etc. The condominium corporation is not obligated to provide a
Release. The scope of the Release should be part of the negotiations
between the builder and the condominium corporation, and should
reflect the compensation being provided by the builder.
Although a Release generally benefits the builder, it may also benefit
the condominium corporation in negotiating compensation. For
example, a condominium corporation might want to sign a Release
if significant dollar amounts are at issue and the builder is prepared
to pay a premium in exchange for the Release.
When asked to sign a Release, the condominium corporation’s
board should first ask its Performance Audit engineers to provide
an opinion on what, if any, matters, which are considered “minimal”
at this time, could present a risk of failure or defect going forward.
A comprehensive Release should not be signed until this review has
been conducted.
The condominium corporation’s board should then determine
whether the monetary compensation being offered by the builder
adequately reflects the scope of the proposed Release. If the
Performance Audit review raises concerns, the builder should be
Continued on page 326
TIP
When a new Standard Unit By-law has been passed, a copy of the By-law should be delivered to all unit owners so that they can provide
it to their insurers and arrange to have appropriate coverage in place. Unit owners should be encouraged to carry their individual unit
coverage with the same insurer as the condominium corporation.
- 325 40 King Street West Suite 5800, P.O. Box 1011, Toronto, ON, Canada M5H 3S1
Tel. 416.595.8500 • Toll Free 1.888.762.5559 ext.2968 • Fax 416.595.8695 • www.millerthomson.com
Continued from page 325
asked to pay a premium in exchange for the Release or the Release
being provided should be limited to the specific defects at issue.
Builders might not accept an amended Release, and the board will
have to decide if the compensation being offered is enough to give
up any future rights.
corporation can simply refuse to provide a Release. If the builder fails
to repair or resolve the claim, Tarion will compensate the condominium
corporation from the guarantee fund or effect the necessary repairs.
In our practice we have not yet come across an instance where the
conciliation process breaks down over the Release.
Condominium corporations should never sign a general Release
unless the compensation reflects the possibility that future defects
may be discovered. As a general rule, the smaller the compensation
the more limited that the Release should be.
As evidenced by the recent amendments, the Tarion conciliation
process is an area of law that continues to develop. Nevertheless,
one thing is certain; condominium corporations should ALWAYS get
an engineering opinion and a legal opinion before signing a Release.
If negotiations with respect to the Release break down, the condominium
•••
NEWSLETTER
TIP
Where possible, we advise all condominium managers to provide a copy of our Let’s Talk Condo newsletter to all board members. Boards
are free to use our articles in their condominium corporation’s newsletters, provided they state who wrote the article and that it is
reproduced from our newsletter.
OUR CONDOMINIUM PRACTICE GROUP
Audrey M. Loeb
General
[email protected]
416.595.8196
Barbara Zeller
General
[email protected]
416.595.8622
André Nowakowski
Employment
[email protected]
416.595.2986
Marko Djurdjevac
General
[email protected]
416.595.8517
Odysseas Papadimitriou
General
[email protected]
416.595.8559
Tamara Farber
Environmental
[email protected]
416.595.8520
Jeffrey W. Lem
General
[email protected]
905.415.6715
Dražen Bulat
Construction
[email protected]
416.595.8613
Megan Mackey
Litigation
[email protected]
416.595.8623
Patricia M. Conway
Litigation
[email protected]
416.595.8507
Patrick Greco
Litigation
[email protected]
416.595.2982
Lizann McInnes
Liens
[email protected]
416.597.4370
Ontario’s
Condominium
Law Experts
This newsletter is provided as an information service to our clients and is a summary of current legal issues. These articles are not meant as legal opinions and readers are
cautioned not to act on information provided in this newsletter without seeking specific legal advice with respect to their unique circumstances. Miller Thomson LLP uses
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Miller Thomson LLP, 2011 All Rights Reserved. All Intellectual Property Rights including copyright in this publication are owned by Miller Thomson LLP. This publication may
be reproduced and distributed in its entirety provided no alterations are made to the form or content. Any other form of reproduction or distribution requires the prior written consent of Miller Thomson LLP which may be requested from Betty Dworatschek Tel: 416.595.2968 Email: [email protected]
- 326 40 King Street West Suite 5800, P.O. Box 1011, Toronto, ON, Canada M5H 3S1
Tel. 416.595.8500 • Toll Free 1.888.762.5559 ext.2968 • Fax 416.595.8695 • www.millerthomson.com