Legislative Changes To Condominium Law

On December 2014, the Alberta Legislature passed the Condominium Property Amendment Act (the “Amendment”). The Amendment significantly changes the Condominium Property Act (the “Act”) and the Condominium Property Regulation (the “Regulation”) in three chief ways, namely, it: (i) has implications for condominium developers, buyers and sellers; (ii) changes the condominium board; and (iii) establishes a condominium dispute resolution tribunal the (the “Tribunal”). The Condominium Property Act changes came into effect on January 1^st, 2018 and April 1^st, 2018. Keep reading to find out how these Condominium Property Act changes impact you. The condominium real estate lawyers at Kahane Law Office are happy to help if you have concerns about these changes.

Impact on Condominium Developers, Buyers and Sellers

Developers, buyers and sellers are all impacted by the Condominium Property Act changes. Above all, it is important to make sure you are familiar with your rights and obligations. The following are some key changes:

Ensure Purchase Agreements Are Current

For years, the Act has required that all purchase agreements for new condominium units or proposed condominium units must include very specific language detailing that the purchaser has the right to rescind the contract within a certain time frame.[1] The Condominium Property Act changes alter the language required in the disclaimer: as of April 1^st, 2018, a purchase agreement entered into by a developer must now include specific details about unit apportionment and cost estimates. Thus, if your purchase agreement fails to reflect this, you may lose the ability to enforce it.

Law Firms Must Hold Deposits

Another one of the significant Condominium Property Act changes deals with deposits. Developers are no longer allowed to hold deposits. Rather, developers must transferred deposits to a prescribed trustee’s trust account within three (3) days of the developer receiving it.[2] A prescribed trustee is defined as an individual lawyer in good standing with the Law Society of Alberta or a permit holder under the Legal Profession Act.

Date Of Occupancy

Condominium developers must provide condominium buyers with a range of dates or a fixed date by which occupancy of the unit occurs.[3] If the buyer is unable to occupy the unit within 30 days of the last date provided in the range of dates or by the fixed date, a buyer has the right to rescind the purchase agreement and receive a full refund of their deposit.[4] The occupancy date may, however, be extended due to delays that are out of the developer’s control such as fire, flood or other emergencies, which do not give rise to a right of recession or liability.

Condominium Fees

Previously, developers who owned condominium units in a building were able to exempt themselves from paying condominium fees (known as “occupancy fees”) under the Act. However, such developers, under the Condominium Property Act changes, must now contribute their share of common expenses equal to the amount other unit owners are paying. Further, if charging condominium fees, they must be fully disclosed in writing to buyers at the time of the purchase agreement signing.[5]

Disclosure Requirements to the Buyer

The Regulation has now imposed greater disclosure requirements on developers of new condominiums. Now, the developer must provide additional documents including, but not limited to, the projected:

• expenses on specific items such as maintenance, utilities, repairs and insurance;
• annual budget; and
• payments into the reserve fund.[6]

Should the proposed projected expenses fall short of the actual expenses of the condominium corporation by more than 15% in the first year, developers may be liable.[7] Therefore, it is imperative that developers accurately prepare their proposed budget.

Further, before agreeing to sell a unit, developers must now provide various documents to the buyer. For instance, these include:

• a list of amounts owed by the condominium corporation to third parties;
• a description of fees the developer will charge the buyer; and
• a copy of the warranty insurance contract issued under the New Home Buyer Protection Act.[8]

Notably, the Act clarifies that buyers now have a right to cancel an agreement from the later of the date that all required disclosure documents are received or within 10 days of signing the purchase agreement.[9]

Notification of Material Changes

Should there be a material change to the condominium unit as defined by section 12 of the Act, a developer must deliver written notice to the buyer before he or she takes possession.[10] In the event that the developer fails to provide notice before 60 days from the date the buyer becomes aware or reasonably ought to become aware of the material change, the buyer may sue the developer in court for contract recession (if a certificate of title in the name of the buyer has not been issued yet) and damages.[11]

Violations by Developers

Lastly, the Act provides that an inspector may now investigate violations under the Act in relation to a complaint regarding the developer’s contravention of the Act.[12] If the developer is proven to contravene the Act, an order may be issued and the developer may be fined not more than $100,000.[13]

Condominium Property Act Changes Impacting Condominium Boards

The following Condominium Property Act changes apply to condominium boards. It is important for all boards to be aware of these changes.

Disclosure To The Board

The developer must elect an interim board of directors within 30 days of registering the condominium plan.[14] Interim board members have a duty to act diligently in the best interests of the corporation. For example, the developer must provide the board with documentation pertaining to the condominium including:

• all agreements that the condominium corporation is a party to;
• building assessment reports;
• all guaranties and warranties;
• any reserve fund reports;
• all permits and certificates; and
• plans disclosing the location of underground service lines.[15]

Furthermore, for condominium conversions, the developers must provide various deliverables to a buyer before agreeing to sell a unit, including a summary of deficiencies in the building assessment report, a copy of the reserve fund study and report, and disclosure on how any previous building use.[16]

Termination Of Agreements

The Condominium Property Act changes amend how boards deal with developer agreements. A condominium corporation may, without penalty, terminate an agreement entered into by the developer or the board on behalf of the condominium corporation, such as property management agreements, within 1 year of executing the purchase agreement.[17] There are, however, various exceptions to this rule, including agreements regarding the provision of electricity and telecommunication services and agreements entered into in compliance with bylaws, including easements, exclusive possession agreements and restrictive covenants.[18]

Annual General Meetings

The first annual general meeting (“AGM”) must occur within 12 months of the condominium plan registration.[19] Further, there must be written notice of an AGM within 2 weeks prior to the meeting.[20] Specifically, the Act clarifies that special meetings may be held if the board deems it necessary or at the request of unit owners representing at least 15% of total unit factors of all units,[21] provided that 14 days’ notice is provided.[22]

Reserve Fund Study

Within 2 years of the condominium plan being registered, the condominium corporation must conduct a reserve fund study, report, and plan[23] — unless all of the units are owned by the same owner or owners and the units are rented to tenants.[24]

Establishment Of A Condominium Dispute Resolution Tribunal

Lastly, the Act establishes a new tribunal addressing disputed matters related to the Act. The tribunal may, among other things, grant restitution, require specific documents to be produced, dismiss a dispute, or award damages.[25] Moreover, tribunal officers have the ability to compel witnesses to provide evidence and produce records.[26]

Legal Help With Navigating Legislative Amendments

Whether you are a condominium buyer, a developer or a condominium board member, the recent Condominium Property Act changes impact your rights and obligations. Developers should prepare a checklist of the amendments and closely monitor condominium projects to ensure compliance with their new legal obligations. Further,  purchase agreements and pre-purchase documents ought to be updated. For legal advice regarding condominiums or real estate in general, contact Kahane Law Office’s real estate group. call today. 403-225-8810 locally in Calgary, Alberta, or email us directly here.

[1] Condominium Property Act, RSA 2000, c C-22, as amended by SA 2014, c 10 s 17.1 [Act] at s 12.2.

[2] Condominium Property Regulation, AR 168/2000, as amended by AR 181/2017 [Regulation] at s 20.3.

[3] Ibid at s 20.08(1).

[4] Ibid at s 20.09.

[5] Regulation at s 20.02(2).

[6] Ibid at s 20.01(1).

[7] Ibid at s 20.04(1).

[8] Ibid at s 20.01(1).

[9] Act at s 13.

[10] Ibid at s 13.1(1).

[11] Regulation at s 20.05(2).

[12] Act at s 78.01.

[13] Ibid at s 78.3.

[14] Ibid at s 10.1(1).

[15] Ibid at s 16.1.

[16] Ibid at s 21.1.

[17] Ibid at s 17.1.

[18] Regulation at s 20.4.

[19] Act at s 30(1).

[20] Ibid s 30(3).

[21] Ibid at s 30.1(2).

[22] Ibid at s 30.1(1).

[23] Regulation at s 24.

[24] Ibid at s 25.

[25] Act at s 69.5(1).

[26] Ibid.