Dispelling Some Misinformation
Some strange accusations are being made about the proposed Condominium Authority (CA) and Condominium Authority Tribunal (CAT).
For example, a recent article on the Canadian Real Estate Wealth (CREW) website asks us to consider whether the CA is just a “cash grab” by the Ontario government. (See, Jordan Maxwell, “Condominium Authority: Cash grab or not?”) Based on the comments in that article and otherwise on the CREW site, it seems many people are already quick to buy into that idea, but are slow to read the actual legislation and find the correct answers for themselves. In this blog entry, we address and correct some of the primary points of misunderstanding and misinformation that we have encountered relating to the CA and CAT.
(1) Will the CA and CAT help control condominium managers?
No, they won’t. Control of condominium managers is established under Schedule 2 to Bill 106, which creates the Condominium Management Services Act, 2015. Under that legislation, a separate “administrative authority” will be established to govern and control the condominium management profession. The central focuses of the CA and CAT are governance and dispute resolution for condominium corporations, boards and unit owners.
(2) Will the CA and CAT help defend owners against condominium managers and boards?
Notwithstanding the hope in this regard that is being held out by some embattled and embittered unit owners, the answer to this question is also, “no, they won’t.” The CAT in particular is intended to help resolve some of the most common disputes between owners and corporations/boards, but it will not be advocating or working "for" or "against" either side. Its purpose is not to take sides but rather to help reduce the costs and complexity to which the parties are otherwise subject if the matter goes to court or other legal avenues for resolution. This is certainly a great service – to unit owners in particular, who often bear the greatest proportion of dispute resolution costs. That being said, it does not by any means suggest the CAT should or will take an owner’s side against the corporation or board simply as a matter of course.
(3) Are the CA and CAT examples of bloated government bureaucracy that will create increased taxation and patronage?
These fears appear to be all but entirely unfounded. The CA is not proposed to be a branch or office of the government. If established according to the legislation, it will be an independent and not-for-profit corporation that is functionally, and financially, separate from the government. Although the Ministry overseeing the CA will establish many of its initial policies and objectives, the CA is ultimately intended to be more or less self-governing (within the range of responsibilities delegated to it), with the government providing an “approval” function but not involved in day-to-day services or activities. In fact, the intended function of the CA appears to be to “un-bloat” the process rather than to add to it. The board of directors of the CA will include appointees of the government, but they cannot form a majority of its board. As such, it is not likely that the CA will become populated (in the majority, at least) by government friends and cronies, nor is it likely to have sufficient prestige or rewards to attract such people in any event.
The funds used for the CA are specifically stated in Bill 106 to not be public funds. Fees or assessments paid toward it are not a tax (if they were, then everyone, not just condominium unit owners, would be paying them, which is clearly not a fair idea). Payment of CA fees or assessments does not increase Ontario’s revenues, and their use does not decrease such revenues. This last point speaks directly to the allegation that the CA is just a “cash grab”. If that’s what it was intended to be, then the legislation sets it up all wrong. It isn’t grabbing cash for anyone, and particularly not for the government.
In fact, it should be presumed that the CA and CAT will ultimately save unit owners money. If run properly under the proposed legislation, it will reduce the costs and complexity of the most common condominium disputes. The minimal amount proposed as the likely cost per unit per month of funding the CA (see the following comments) is nothing compared to the costs of condominium dispute resolution processes today.
(4) Is the CA paid for by levies against condominium developers and unit owners?
This question is not as outrageous as some of the others, but it is still somewhat off-target. Bill 106 provides that the CA will be funded by a combination of user fees (for particular services) and an assessment that may be invoiced to condominium corporations. The CA does not appear to have any power to levy condominium developers, and we are not sure where that idea has come from. It is conceivable that developers will have to pay some user fees if there are services the CA provides that developers are required to use, but otherwise the costs of the CA will be paid solely by condominium unit owners and others who use its services.
We don’t yet know what amounts the various user fees might be. They might or might not cover the costs of the services provided. We also don’t yet know what amount will be assessed against condominiums generally, or even whether all condominiums will be assessed. In this regard, the following points should be considered:
- The amount of the assessment is suggested on a government website to be $1 per month per unit. That should be taken with a grain of salt, however, because the legislation does not prescribe an amount and the suggested amount is not certain, conclusive or guaranteed.
- The legislation allows for the assessment amount to be determined by the Authority from time to time with the approval of the Minister.
- The assessment cannot be arbitrary and must take into consideration government guidelines and the other amounts collected by the Authority as user fees.
- The processes and criteria used in determining the assessments are to be disclosed publicly.
- The assessment can be levied against some condominium corporations and not others and can be different based on different classes of condominiums. (For example, it is possible only residential condominium unit owners will be required to pay, if they are the primary beneficiaries of the CA’s services. Also, since the CAT’s jurisdiction can be limited geographically, and other services might also be only available in certain localities, it is possible condominiums in different regions of the province will be assessed different amounts.)
In short, we don't yet know what the CA will cost or what its assessment of condominium corporations will be. The $1 figure may describe the government’s intent but, at this point, it is merely speculative.