Managing Condo Managers
As we have noted before, Bill 106 is not a new Condominium Act. When the Bill is proclaimed into law, the Condominium Act, 1998, will continue to be the legislation governing condominiums in Ontario. But Bill 106 introduces many substantive changes to that Act, and it also does create one new piece of legislation: the Condominium Management Services Act, 2015. In this blog entry, we provide some key information about this new legislation, which we refer to here as the CMSA.
WHY IS THE CMSA NEEDED?
Chris Jaglowitz, in his blog about general condominium law issues, remarked,
It is astonishing but true that hot dog vendors on street corners are far more heavily regulated than condo managers responsible for overseeing the largest asset that most Ontarians will ever own.
The condominium management profession is one that involves a great deal of trust and should require a deep sense of responsibility from its participants. The CMSA is the Ontario government’s attempt to establish a basis for that trust and the motivation for substantially responsible conduct by those management professionals.
To do this, the CMSA first authorizes the creation of a non-profit, self-funded corporation – as yet unnamed – to be the “administrative authority” over the condominium management profession in Ontario. For now, we can call this the CMA – the Condominium Management Authority.
Bill 106 does not set out all details about the CMA and what it will do. Instead, the CMA and the government are to enter into an agreement – known as the “administrative agreement” – which will set out more precise terms relating to the way the CMA will be governed, and the range of its duties and obligations.
What we do know is that the CMA will not be a crown corporation, its funds will not be public money, and, as much as possible, the government will distance itself from liability for the actions of the CMA. However, this does not mean that the CMA will be entirely free of government control. It is a creature of statute – that means its rights and authority can’t go beyond the scope outlined by the CMSA. It will also have to comply with the administrative agreement, including a requirement to comply with amendments to the agreement and other policy directions that may be issued and imposed by the government unilaterally.
We also know that the CMA’s two primary functions will be:
- The licensing and regulation of condominium managers; and
- Managing complaints about and discipline of licensed condominium managers.
The CMSA provides that,
No person shall provide condominium management services unless licensed as a condominium management provider or as a condominium manager.
Not only is a license required to fill either of these positions, but even holding yourself out as able to provide such services without having such license is an offense under the proposed Act unless you meet some prescribed exception. The exceptions are not set out in the CMSA but will likely be set out in regulations to made under it. It is probable that some form of exception will be developed for the boards of directors of self-managed condominium corporations. There will also likely be transitional provisions that give existing management professionals and companies some time to meet licensing qualifications.
Amongst the criteria for licensing, or license renewal, set out in the CMSA, are the following:
- That the applicant for licensing be reasonably expected to be financially responsible; and
- That there be no reasonable grounds for belief that the applicant will not perform management activities in accordance with law, and with integrity and honesty.
COMPLAINTS AND DISCIPLINE
Since such standards will not always be met, the CMSA also grants the CMA power to deal with complaints and to enact disciplinary measures in relation to licensed managers and management companies.
In this connection, the CMSA also provides that the government may establish a Code of Ethics for the condominium management profession, which should, obviously, reinforce the demands for responsible and honest management in accordance with law and the principle of integrity. Compliance with this Code will be mandatory for licensed management providers and individuals.
The CMA will be tasked with receiving and resolving complaints about any breach of the Code of Ethics by a licensed manager or management company, as well as dealing with any other complaints that might not involve the Code but are valid concerns about the conduct or practices of management professionals.
Regular complaints are to be heard by the office of the Registrar of the CMA, and, if a matter involves a breach of the Code of Ethics then it is to be dealt with by a discipline committee appointed by the board of the CMA (or, if the CMA is not yet established, by the Minister overseeing this industry).
The discipline committee has authority to make the following kinds of orders:
- That the manager or management company’s employees take further educational courses, at the licensee’s own cost (or the cost of the management company);
- That the manager or management company pay a fine of up to $25,000 and/or pay costs of the disciplinary process.
An appeal committee will also exist to allow the licensee to appeal the disciplinary committee’s decision.
What appears to be a glaring omission here is that the disciplinary committee does not seem to have authority to suspend or revoke a licensee’s license. But, never fear: The Registrar of the CMA does have that authority.
SUSPENSION OR REVOCATION OF LICENSES
The CMSA provides that the Registrar can suspend or revoke the license of, or refuse to grant a license to, anyone who the Registrar believes does not meet the qualifications for licensing, including the requirements to act in accordance with law or in honesty and integrity and to manage finances correctly. Presumably, then, the Registrar could, on review of a decision of the disciplinary committee, or upon review of the licensee’s response to such decision, elect to suspend or revoke the licensee’s license.
To do so, the Registrar has to notify the licensee of the intention to revoke or suspend the license, and the licensee has 15 days in which to request a hearing if he or she (or it, if it is a company) believes the suspension or revocation would not be appropriate or fair.
INSPECTION AND INVESTIGATION
In addition to reactively responding to complaints, the Registrar of the CMA is also entitled to proactively inspect and investigate the conduct and practices of condominium managers and companies.
The CMA’s investigators have police-like inspection powers, can require police assistance, can obtain warrants to enter and inspect private premises, and can seize certain property believed to be relevant as evidence of a contravention of this Act. Based on such investigations, the director of the CMA can even order assets of a manager or management company to be frozen and take other steps to help prevent such things as criminal fraud and theft of condominium corporation property. In certain circumstances, the director can also make an order freezing assets of a person who is alleged to be carrying out management activities but is not a licensed condominium manager.
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It obviously remains to be seen how well the CMA will work, and how well licensees will strive to meet the raised bar of expectations of their profession, but we have every reason to hope that they will and that, over time, many of the fears and concerns relating to condominium managers that have riddled the industry in the past several years will be eliminated.