Review of the Ontario New Home Warranties Plan Act and the Tarion Warranty Corporation
I’m proud to have made important contributions to the dispute resolution, adjudication and condominium specific issues of His Honour, Justice Cunningham’s report.
At the time the Construction Lien Act was introduced some 33 years ago, roughly one in ten dwellings built in major metropolitan areas in Canada were condominium units. Between 2001 and 2011, roughly one third of the dwellings built were condominium units.
To many stakeholders in the industry today, liening the common elements of condominiums is an overly burdensome and administratively time consuming process. Equally, for lien claimants with small claims, the cost to lien is disproportionate to the amount claimed.
In its report to the Ministry of the Attorney General – Striking the Balance: Expert Review of Ontario’s Construction Lien Act – released this past September, the Review recommended that common elements in condominium buildings have a single PIN that is subject to a lien, and that the interests of all owners be subject to this lien. According to the Review-
This solution would bring the cost of liening in line with the cost to lien other projects as a single lien would be registered. This process would benefit owners compared to the current regime provided that notice is given by way of a prescribed form to each owner.
Unit owners should be able to post security proportionate to their share of the lien to have the lien vacated as against their interest in the common elements. This would bring the legislation in line with other provinces and with the jurisprudence on the issue.
A Bit of History
The Condominium Act, 1998 does not allow for common elements to be divided or separated from the units as owners are collectively tenants in common to the common elements. This is unchanged from the previous Condominium Act.
The old Condominium Act, RSO 1990 C.26 was replaced with the new Act just as the land titles records, including condominium records, were becoming automated. Prior to automation, the paper abstracting system had a separate page opened for common element registrations. The use of a separate parcel page for common element registrations was primarily a labour saving exercise that avoided the need to abstract by hand all the common element registrations on every page (unit) of the condominium.
The introduction of automated abstracting allowed the land registration system to maintain condominium records with a true representation of the fact that units and common elements are indivisible.
The regulation for automated records under the new Condominium Act, 1998 required that an instrument that affects the common elements shall be registered against each condominium unit.
The over 10,000 condominiums in the land registration system are now all automated.
For a separate PIN to be created for the common elements of the over 10,000 condominiums in the land registration system, consideration, apparently, will need to be given to at least the following issues –
• the need to examine the records for every unit of every condominium corporation; separating those entries that affect only the common elements; and deleting them from the unit PIN and entering them onto the common elements PIN
• the significant IT programming changes to the Teraview software that currently administers the Province’s electronic land registration system
• amendments required to the Condominium Act and regulations to establish a process to enforce liens made against the common elements PIN (to allow, for example, the sale of the condo property or part of the property, representing a significant change to the current condominium ownership regime)
Whether the Ministry can and/or will adopt the Review’s recommendation and move to reintroduce the common elements PIN for condominiums as part of its legislative reform, remains to be seen. Certain, however, are the many discussions that are likely to follow on the issue.
On September 26th, following a 14-month process, which included legal research, 30 consultation meetings with over 60 industry stakeholders (including the OBA’s Construction & Infrastructure Law Section), and an Advisory Group process, the Ministry of the Attorney General released Bruce Reynolds and Sharon Vogel’s expert report – Striking the Balance: Expert Review of the Ontario’s Construction Lien Act. The report is some 300 pages and aims to maintain and modernize the lien/holdback remedy; introduce a made-in-Ontario promptness of payment regime; and introduce targeted adjudication to enhance the efficiency of dispute resolution throughout the Ontario Construction Industry.
The link below contains the 12-page summary of the 100 recommendations made by the Review.