Ontario's New Condominium Act?
October 2, 2001

The changes contained within the New Condominium Act are important to you.

The new Condominium Act, 1998 became law on May 5, 2001 and replaces the previous Act, which came into effect in 1967. The new Act hopes to address the changing needs of consumers and the condominium industry by way of some major changes which condominium owners should be aware of. Overall, the focus of the new Act is on greater disclosure of information so consumers can make more informed decisions when it comes to deciding to purchase a condominium.

One of the most significant changes found in the new Act is the requirement of the board of directors of the condominium corporation to conduct periodic reserve funds studies. An inadequate reserve fund can adversely affect the value of your condominium and thus, the investment. All condominiums must maintain this special fund to pay for future repairs and replacement of the major components of the condominium. The purpose of the reserve fund study is to ensure that condominiums have adequate monies to pay for repairs to and the replacement of items owned by the condominium corporation. This is a very important change and should be welcomed by condominium owners.

Because the previous Act did not require reserve fund studies, many older condominium corporations were forced to ask owners to pay for many unexpected repairs such as underground garage maintenance, window replacements and fire code retrofits. You may be surprised to learn that condominium unit owners are collectively responsible for the operating costs of the entire condominium property. While you are the legal owner of your dwelling unit, parking space(s) and locker unit, you share ownership of what are called the common elements of the condominium, including the lobby, recreation area, underground garage, hallways and other areas.

When faced with large repair bills, many condominiums determined that their reserve fund was inadequate to pay for these repairs. As a result, the condominium would have to declare a "special assessment" whereby individual owners would be legally obligated to pay for a portion of the repairs. If the owner failed to pay the special assessment, the condominium could register a lien on the unit, or in some rare cases, force the sale of the unit. The new Act should help owners avoid these surprises by anticipating repairs that will need to be made. Existing condominiums must conduct a reserve fund study within three years of the date of the new Act (May 5, 2001). Newly built condominiums must conduct a reserve fund study within one year of the condominium registering its declaration (the document that legally creates the condominium).

There are many other significant changes ushered in by the new Act. According to the previous Act, when purchasing a brand new condominium, the purchaser had a 10-day

cooling off period during which they could cancel the deal without penalty. This period now begins from the point at which the purchaser receives the signed agreement or the disclosure statement, whichever is later. Additionally, the new Act has provisions for mediation and arbitration for settling disputes between individual unit owners and the condominium corporation.

These changes are important. Should you require more information about the new Act, consult the legal experts at Korman & Associates (www.kormanassociates.com), 905 270 6660.

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Barristers and Solicitors
Mississauga,Ontario
905 270 6660
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