• Nova Scotia Condominium Act Amendments: Major Improvements in Consumer Protection - Bill No. 38
  • September 22, 2011 | Author: Elizabeth M. Haldane
  • Law Firm: Stewart McKelvey - Halifax Office
  • With the passage of Bill No.38, c.10, S.N.S. 2009, the Condominium Act of Nova Scotia has undergone an overhaul which includes some fairly significant changes for the protection of the unit owners both as purchasers of newly constructed condominium units and as members of an established condominium corporation. The changes came into effect on September 1, 2011 though the Act itself was passed in 2009. The delay was caused by the need for new regulations.

    The new amendments try to close loopholes which may have allowed some developer declarants ("declarants") to take advantage of purchasers, who then found themselves facing problems and financial responsibilities they never expected. Some of the more significant changes are as follows:

    • Declarants will no longer be able to force purchasers to take possession of their units on the original closing date even though the condominium is not yet created. Possession and occupation are optional. Moreover, the declarant will only be able to charge an occupancy fee ( i.e. not common area fees, real estate taxes or other expenses) which is disclosed in the Agreement of Purchase and Sale both as a percentage of the purchase price and in dollars and cents. The amount of the occupancy fee is limited to a certain percentage of the purchase price and, under the regulations, will decrease every six months until the unit is sold. [The perception that declarants take advantage of purchasers and make them carry costs of the project will be removed and declarants will be encouraged to get the condominium created as soon as possible.]

    • The onus on the declarant to create a realistic budget for the first year of operation of the condominium corporation has been increased. The proposed budget for the first year of operation of the condominium must be made before any Agreements of Purchase and Sale are finalized and must be included in the Agreements. When the first closings take place the solicitor for the declarant must hold 10% of the amount of the budget in trust for the benefit of the corporation. The corporation may make a claim against that amount if the foreseeable expenses incurred by the corporation in the first 12 months of operation exceed the budget by more than 10%. [Declarants will not be tempted to down play the costs of running the corporation as a marketing ploy and purchasers should no longer be surprised by a huge increase in common area fees or special assessment within one year of purchasing a unit.]

    • If the condominium is to be developed in stages, referred to as "phases", declarants will have to covenant in favour of the condominium corporation that subsequent phases will follow the purpose stated in the Master Declaration and Description filed at the time of the first phase. [Purchasers will not find themselves part of a condominium corporation the greater part of which is substantially different from what they thought they were buying into.]

    • Declarants will no longer be able to bind the new condominium corporation to a long-term contract with a management company related to the declarant. Contracts entered into before the new board is elected can be terminated by the board upon 60 days notice. [Condominiums will no longer be stuck with incompetent or uninterested management companies.]

    • Declarants will no longer be able to bind the corporation to buy more than one unit in the condominium corporation. Whether additional units are required by the condominium will be a decision for the newly elected board. It should be noted that in cases where existing Agreements of Purchase and Sale provide for contribution to the purchase of more than one unit by the condominium corporation, those contracts will be upheld and the new corporation will have to buy the number of units specified. [In future developments members will no longer find themselves having to pay for multiple units at prices determined by the declarant with no independent input.]

    • Declarants now have a duty to complete the common elements, provide for holdbacks with respect to incomplete common elements and provide details of amenities not yet complete and the date by which they will be completed. [Purchasers should have more confidence that the common areas will be completed and should know in advance exactly what the declarant will be providing.]

    • Reserve fund studies are now required for all existing buildings being converted into condominiums, regardless of the number of units involved. The intention is to let would-be purchasers see what major repairs or replacements will be needed within the first ten years of the condominium's existence and what the contemplated costs will be. If there are deficiencies in renovations being completed to enable the old building to be converted, the declarant must pay the value of those deficiencies into the reserve fund before the Declaration will be registered. [Purchasers will have more opportunity to assess the state of repair of the old building they are taking over.]

    As indicated, changes have also been made to assist with the ongoing administration of the condominium complex. The most important of these relates to the complaint process. One issue raised by members of existing condominiums was the fact that there was no cost effective way of dealing with minor infractions by unit owners/occupiers or standing boards and therefore the unit owners/occupiers and boards continued to "get away with" the infractions to the frustration and annoyance of those having to live with them. To try to resolve this, the amendments provide for resolution of disputes by "condominium dispute officers" who may be residential tenancy officers appointed under the Residential Tenancies Act or the Registrar of Condominiums. The new regulations set out the process by which complaints may be heard, adjudicated and appealed (ss.82A - 82G of the regulations). Condominium boards will also have the ability to make an application to the Director of Residential Tenancies to force a tenant to comply with the condominium rules and regulations or have his tenancy terminated.

    Other changes intended to facilitate the administration of the condominium are:

    • The documentation which the declarant has to provide to the condominium corporation after the majority of units have sold has been greatly increased so that the condominium corporation will have far more basic information about the construction and creation of the condominium corporation in its permanent records.

    • Declarants must now pay common area fees for the units they own commencing on the date of registration of the condominium corporation.

    • The purchase and sale of personal property of small value by the board will no longer require approval of the membership.

    • Transactions involving real property will be allowed with the consent of owners of 80% or more of the common elements rather than unanimous consent only.

    • Condominiums with fewer than ten units will have reserve funds, which after five years (to give time to build them) must equal in value the total amount assigned annually to owners for common expenses.

    • Monies in reserve funds can be used only for the purposes for which reserve funds have to be set up.

    This brief summary of some of the major changes brought by Bill No.38 and the new regulations show that the Nova Scotia Legislature is still coming to grips with condominium living and the protection of the condominium owner. While these changes may not address all of the issues which have faced members of condominium corporations in the past, they take a major step in the right direction.