A review of major changes to condominium governance in Ontario’s Bill 106

A review of major changes to condominium governance in Ontario’s Bill 106

February 15, 2016

BY Kevin Zakreski

As noted in a previous blog post, Ontario passed major amendments to its Condominium Act, 1998 late last year. Bill 106 (PDF)—the Protecting Condominium Owners Act, 2015—will see sweeping changes to Ontario’s condominium law in the areas of dispute resolution, consumer protection, condominium-management regulation, and condominium finances.

Some of the most interesting changes in Bill 106 concern condominium governance. This blog post highlights governance changes that introduce new ideas into Ontario law, which—when they come into force—will have no direct equivalents in British Columbia’s Strata Property Act.

Bill 106 was preceded by a lengthy consultation process, carried out by Canada’s Public Policy Forum. Some of the broad themes identified in the Stage Two Solutions Report (PDF) appear to have inspired the approach to governance taken in Bill 106:

• Education: A central challenge of the Condominium Act review is to find ways of encouraging condo owners to look on their homes as part of self-governing communities or neighbourhoods and to understand and accept some responsibility to make those communities work. Education is thus central to the reform process.

***

• Condo board transparency and accountability: The review process has provided ample evidence that many condo owners feel detached from their boards and building managers. Owners have said that they know too little about how or why decisions are made and executed, and they have called for improved transparency and accountability.

***

• Engagement: Many condo community members, especially owners, feel that they have no real power over the decisions and actions of boards, managers and developers. As a result, many of the reforms set out in this report aim to create the conditions for more meaningful owner engagement and participation. The recommendations are not exhaustive, but they make real and meaningful progress on some key issues, and have exceeded expectations. [see page 6]

Bill 106 implements these broad themes with a number of significant reforms.

• Director qualifications and education. [See Bill 106, s 27, enacting s 29 of the Condominium Act, 1998] New disclosure obligations and educational requirements will be imposed anyone who wants to become a condo-board director (the equivalent of a British Columbia strata-council member). The precise details of these changes will only be revealed when regulations for Bill 106 are completed. But the Ontario government’s summary Proposed Condo Changes lists the following as potential requirements:

a criminal record check;

disclosure of legal proceedings between an existing or prospective director and the corporation;

complete a free training course with the Condo Authority and disclose certain information to be set out in the regulations (failure to meet these requirements within a specified time would lead to immediate disqualification as a director).

• Regular information certificates for owners. [See Bill 106, s 25, enacting s 26.3 of the Condominium Act, 1998] The condo board will be required to send regular (every three months) information certificates to owners. The details on these certificates will be spelled out in the regulations. But the summary suggests that they could be used to address “topics such as the corporation’s insurance, legal proceedings, the names and addresses for service of the corporation’s directors.”
• Preliminary notice of owners’ meetings. [See Bill 106, s 39, enacting s 45.1 of the Condominium Act, 1998] Bill 106 will formalize and make mandatory an informal practice in Ontario of using a preliminary notice of an owners’ meeting “as a way of encouraging owners to nominate candidates for director positions or to suggest items for a meeting agenda.” The Ontario government’s summary projects that a “board would have to give preliminary notice at least 20 days before sending out the actual meeting notice” and that the preliminary notice would have to contain:

a call for anyone wishing to run for election as a director to notify the board in writing;

a call for materials (e.g., agenda items) from any owner wishing to include those materials in the formal notice of the meeting;

a request for information from “non-leased voting units” in the event of a vacancy on the board in the position reserved for voting by the owners of those units.

• Sealed-bid contract procurement process. [See Bill 106, s 34, enacting s 39.1 of the Condominium Act, 1998] The Ontario government summed up the rationale for this change by pointing to “ ‘kickbacks’ on contracts or payments made to maintenance companies associated with condo board members [which] are a serious concern for some condo owners.” To address this concern, a condominium corporation will not be permitted to “enter into a prescribed contract or transaction unless the procurement process and other contracts or arrangements that the corporation entered into in relation to the contract or transaction meet the prescribed requirements.” The actual process and the value or type of contracts it will apply to will be described in the regulations.
• Proxies. [See Bill 106, s 48 (3), enacting s 52 (4) of the Condominium Act, 1998] Bill 106 will standardize the form of proxy that must be used at owners’ meetings. The form itself will appear in the regulations.

These changes are not yet in force in Ontario. Many of them still require supporting regulations to be developed in order to spell out the full scope and effect of the change.