New Condo Law Passes First Reading

Will the new Bill provide a solid foundation for condo owners' rights?

Condominium legislation was introduced in Alberta in the 1960's.  Although popular acceptance of this form of home ownership grew slowly, there are now more than 8,000 condominium corporations in the province, and condos make up 20% of homes sold in Alberta every year.  With rapid increases in population and rising real estate prices, the province faces a potential shortage in affordable homes, a problem that is particularly acute for the large numbers of young couples and families moving to Alberta for jobs.  Municipal governments in the larger cities are implementing policies that favour urban density in an effort to combat sprawl, and the construction of condominium buildings is consistent with that goal.

Need for Reform

Many new condominium buildings and condo conversions have appeared on the market in recent years, but condo owners, developers, realtors, and lawyers have suggested that the existing legal framework is out of date.  The Alberta Condominium Owners Association is concerned about the lack of professional standards and licensing for building managers.  Purchasers and their realtors complain that it is difficult to obtain documents on a property in a timely fashion from boards and building management.    Purchasers of new units don't always get all the information they would like to have, and existing owners can be hit with unexpected special levies for building repairs and other costs.  Condo owners and condo corporations have to resort to costly court proceedings to resolve disputes.

The Condominium Property Amendment Act

In May of this year, the government introduced a bill to improve the protections provided to condo owners under the Condominium Property Act.

According to Doug Griffiths, Minister for Service Alberta at the time, "Buying a condo is an affordable option for Albertans entering the housing market and is often their first real estate experience.  After careful review and discussion with stakeholders and Albertans, our government will update the Condominium Property Act to make it easier for owners and builders to understand their responsibilities on the sale of condos."

The original bill died on the order paper when incoming Premier Jim Prentice prorogued the Legislature in the fall, but the amendments were reintroduced as Bill 9, the Condominium Property Amendment Act, which passed first reading on December 1.  Stephen Khan, the new Minister responsible for the Bill, has expressed the hope that the Bill will pass in the current sitting.

New Disclosure Requirements

The amendments would improve disclosure requirements to include a final date by which the unit is to be ready for occupation and a proposed budget for the new condominium corporation.  The developer is also to provide a copy of the New Home Warranty where the corporation is to be covered by the warranty.

Where an existing building is being converted into condominiums, there is a concern that repairs that are needed due to the age of the building may not be apparent to buyers.  Under Bill 9, the developer has to obtain a Building Assessment Report and summarise the findings for unit purchasers.

Special Assessments and Caveats

Under the current law, condominium owners can be required to pay substantial assessments for building repairs, and there have been cases in which owners complain of a lack of notice regarding impending levies.  Various charges imposed by the board can be registered against an owner's title, even if the amounts are in dispute, and the registration of a caveat makes it difficult for the owner to sell or finance his unit.

These problems are addressed in Bill 9.  Existing owners will be protected by amendments that limit the situations in which the condo board can impose a special levy.  The board will be required to provide owners with information about a proposed levy in advance, and the board will have to hold a special general meeting if 15% of the owners ask for one.

In addition, the registration of a caveat for unpaid contributions will be restricted to those contributions that are permitted under the Act, and that have been found by a court to be valid.  The legal fees and other charges that can be included for the preparation, registration, and discharge of a caveat are capped by the amendments.

Condominium Management

Under Bill 9, the Real Estate Council of Alberta is appointed to regulate condominium managers.  It is intended that RECA will establish standards for education and training for property managers in this sector, and that building managers will have to be licensed.

The specific licensing requirements and professional standards for managers are not set out in the amendments, however.  These matters will be dealt with in regulations that are to be implemented after consultations among RECA and various stakeholders.

Dispute Resolution

The amendments would establish a new Tribunal to hear disputes between unit owners and condo corporations.  The Tribunal will start in a limited geographic area (probably Edmonton and Calgary), but could eventually be expanded to other parts of the province.

It is intended that disputes involving money issues such as common area charges, as well as parking, pets, noise, and other operational issues, will be dealt with by the Tribunal.  Disputes over title, such as foreclosure or changes to the condominium plan, will continue to be dealt with in court.

Important details regarding the jurisdiction of the Tribunal are left to the regulations, so it is unrealistic to expect that the Tribunal will be up and running as soon as the amendments are passed.

The Regulations

Minister Khan hopes that regulations will be put in place within a year of the passage of the Bill.  A consultation process has to take place first, however, so it is unclear when the reforms promised by the Government will be fully implemented.

Representatives of condominium owners have expressed concern that the amendments in their current form are incomplete, and that too much has been left up to the regulations.  The Alberta branch of the Canadian Home Builder's Association has given its blessing to the new Bill, however, and expressed a willingness to work with Minister Khan to develop a set of regulations that "meets the needs of homebuyers".

The Conservative government is in a position to move Bill 9 through the legislative process quickly, provided it makes this a priority, and the government's intentions should become clear over the next few months.


Contact Richard Hayles at Billington Barristers:

(403) 930-4106

RHayles@BillingtonBarristers.com

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Any legal information provided is general in nature and may not apply to particular situations. It does not constitute legal opinion or advice. Please consult your lawyer regarding your specific legal issue.