Canada: Cutting The Red Tape? New Condo Regulations Are On Hold For Further Review

Last Updated: August 7 2019
Article by Erin Berney

On July 1, 2019, the Government of Alberta announced that the revised Regulations and amendments to the Condominium Property Act that were scheduled to come into force that day have been placed on hold until January 1, 2020. In a recent statement, Nate Glubish, Minister of Service of Alberta, stated that the delay was necessary in order to allow the Government to meet with key stakeholders over "concerns that the proposed changes would add administrative burdens on boards and managers". You can view the announcement here: "Condominium Regulations Paused for Red Tape".

There are no guarantees that changes to the proposed new Regulations and amendments will be made in the interim, but on the whole, this is a welcome announcement, and a signal that the current provincial government is taking industry feedback seriously. Concern is widespread that several of the new Regulations will cause more problems than they potentially solve. Below is just a small sampling of the changes that are generating the most concern:

For starters, there are substantial changes to the document delivery requirements prior to Annual General Meetings (AGMs). In all likelihood, complying with these new obligations will be expensive and time consuming for boards and property managers. The idea behind the change was to provide unit owners with the opportunity to add items to the AGM agenda. In my view, however, it will only saddle condominium corporations with an even heavier administrative burden than they already bear, all to fix a so-called problem that most people weren't aware existed. I certainly wasn't.

The new maximum fees chargeable for providing documents upon request (per section 44 of the Act) are set unreasonably low, and in many cases will probably not cover the cost of production. Those additional costs incurred by property managers will ultimately be passed on to the corporation and borne by all the unit owners.

As yet, there is no guidance on how to register the soon-to-be required Standard Insurable Unit Description with Land Titles, and no clarification on how this requirement should be applied to bare land condominium units at all. Many condominium corporations are getting nervous about this as January 1, 2020 edges closer. In the meantime, though, creating the standard unit description may be easier than you think. Most insurers that provide coverage for condominiums in Alberta are already offering fixed-rate packages to review units and draft an appropriate "standard" unit description. I advise contacting your insurance provider to request a quote.

There will also be a new absolute liability standard for insured losses originating in condo units, meaning that corporations will not have to prove negligence on the part of a unit owner/tenant before seeking to recoup the amount of an insurance deductible. Unfortunately, the ability of condominium corporations to "charge back" the deductible to the unit where the loss originated is still unclear. The revised legislation is ambiguous as to whether the deductible can be added to a unit's assessment for condo fees, or if condo corporations must still go to court to obtain judgment against the unit owner to collect the amount owing. As this determination will affect priority of such charges vis-a-vis mortgagees, it could potentially lead to more protracted and expensive litigation if not clarified.

The ability of a condominium corporation to levy fines for a bylaw violation has always been somewhat of a toothless remedy, as payment by the offending owner or tenant is voluntary. These amounts are not added to the unit's assessment for common fees, and there is currently no way to enforce them aside from going to court. There is no improvement under the new Regulations. With a new, maximum aggregate fine cap below $3,000 in the case of a residential unit, condominium corporations are very unlikely to attempt collection of fines, as the legal costs required to do so will almost always be higher.

Now, condominium corporations may also be prohibited from levying an immediate fine, and will instead be required to send a preliminary notice of a proposed fine, providing no less than three (3) days for the owner/tenant to correct the violation. There is also an entire checklist of requirements that must be included in these notices, which makes fining problem owners and tenants more of an administrative burden to corporations, with little to no guarantee of results.

Finally, though by no means the end of the list, there is still confusion as to what amendments can be made to a corporation's bylaws in the one-year grace period following the date section 34.1 of the Act comes into force. Many corporations may be seeking to incorporate some of these regulatory changes into their bylaws. However, if their bylaws were previously silent as to a particular change, there may not be a conflict, such that the corporation might be unable to take advantage of passing the amendment by way of an ordinary resolution. This ambiguity has yet to be resolved, and will undoubtedly lead to litigation when such bylaw amendments are subjected to legal challenges. I encourage condominium corporations to seek legal advice to determine what amendments to the bylaws may be required, if any.

The foregoing issues are merely the tip of the iceberg. We remain optimistic that the Alberta Government will find a way to address these concerns and cut away more of the red tape before the new Regulations and amendments to the Condominium Property Act are brought into force.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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