Condominium Development 101

1. Condominium Development 101 Tammy Evans 416-593-2986 tevans@blaney.com Marc Kemerer 416-446-3329 marc.kemerer@devrylaw.com AdilDarr 416-229-3802 adil.darr@tarion.com September 14, 2016 BILD Member Presentation

2. Over 56% of all new construction in Ontario Over 10,000 existing registered condominiums across Ontario Creating over 700,000 condominium units

3. Legislative Regime Governing Condominium Development 1. Condominium Act, 1998 • Protecting Condominium Owners Act, 2015(in force by Royal Assent Dec. 3, 2015, but Schedules 1 and 2 not yet proclaimed) • Condominium Management Services Act, 2015 2. Planning Act 3. Ontario New Home Warranties Plan Act 4. Land Titles Act/Registry Act 5. Construction Lien Act

4. 1. Condominium Act, 1998/Reform Legislation • Purpose of the Act/Reform • increased consumer protection • sets up minimum standards for condominium development • accommodates different forms of condominium development • mandates certain requirements through the life span of a condominium - from first sale through construction completion and operation

5. mandated disclosure of key details that impact decision to purchase • provides clarity for purchasers, ease of reference in standardized format of disclosure • balancing act: consumer protection within fairly open market, not intended to unduly interfere in the marketplace, but to address areas of concern

6. Structure of the Act • Part II - mandated contents for written and plan description of project - physical and operational design, services, restrictions and permissions (s.7 and s.8) to create a condo • Part IV – condominium corporation setup authority • Part V – Mandatory disclosure requirement for sale/lease of units • what documentation need to go to market? • 10 day cooling off – right of rescission for purchaser - 10 (calendar) days from later of receipt of (a) disclosure statement and (b) fully executed agreement of purchase and sale (s.73)

7. Budget statement for first year of operation (s.72(6)) • material change – s.74 – “a change or series of changes that a reasonable purchaser on an objective basis would have regarded sufficiently important to his decision to purchase” – ie. would not have purchased • revised disclosure or “notice” to be delivered within a reasonable time or clock starts when purchaser became aware • obligation to complete the project and turn it over to unit owners (s.78)

8. Part VI – operation, collection/use of common expenses, reserve fund, repair and maintenance, changes, insurance • Part IX - enforcement/self help • mandatory mediation and arbitration for certain disputes (s.132) • court application to appoint inspector (s.130) or administrator (s.131) • compliance order (s.134) • oppression remedy (s.135) • administrative fine/penalty (s.137) max $100,000 corporate/$25,000 individual • Note: Reform amendments coming for dispute resolution process

9. Hierarchy of Regulation of Condominium Developments • The Act, Reform legislation and regulations and all other applicable statutory requirements (and the courts) • registered declaration and condominium plans (description) • registered condominium bylaws • any registered agreements (as authorized by bylaw or in the declaration, s.98 Agreements) • condominium Rules

10. Compliance and Enforcement • duty of care - Board of Directors and officers held to statutory duty of care in exercising duty to manage affairs of the condominium (s.37) • compliance order – any condominium corporation/owner/ mortgagee/occupant has authority to enforce compliance through the courts (or presumably Condo Authority, when in place and operational) with the Act, declaration, bylaws, rules, shared facilities agreement (provided mandatory mediation and arbitrator is exhausted first, where applicable) (s.134) • Act prevails – cannot contract out of the Act (s. 176)

11. “Condominium Documents” or “Disclosure Book” • Index • Table of Contents (to Disclosure Statement) • Disclosure Statement • 1st year Budget and Schedule of Monthly Common Expenses • Proposed (or registered) Declaration • Proposed (or registered) Bylaws • Proposed (or actual) Rules • Proposed (or actual) Insurance Trust Agreement (if any) • Proposed (or actual) Condominium Management Agreement • Proposed (or registered) Reciprocal Agreement • Proposed Agreement and Undertaking (if any) • Proposed building footprint/site plan/floor plates (recommended)

12. Documentation that legally creates the condominium • Declaration • Written description of the project • Contents mandated by s.7 of the Act and O. Reg. 48/01, s.5 • Mandated schedules • A - legal description of the lands and easements necessary for operation/access/support • B - mortgagees’ consent to registration • C – description of unit boundaries • D - each unit percentage of common interest in the whole • E - common expenses breakdown • F – description of exclusive use areas • G – confirmation of completion of minimum requirements for construction completion (architect and/or engineer sign)(see also O.Reg 48/01, s.5(8) and s. 6) • H, I, J, K, L- as necessary for alternative condo forms

13. Description (aka: the condominium plans) • contents mandated by the Act (s.8) and Reg 48/01, s.9 • describes by drawing boundaries of units and extent of common elements of the condominium property • What to ensure is included from developer’s perspective: • consistency with planning approvals – eg. connections to public road, access points, zoning/site plan compliance, parking and locker requirements, bicycle parking, easements, etc. • extent and relationship of boundaries to neighbour property/unit (particularly important for mixed use projects) • updated from architectural changes (working drawings) along the way (always keep surveyor up to date with architectural changes)

14. What do I need to go to market? • an experienced primary project team! • architect • surveyor • condominium manager • condominium lawyer • marketing/sales professionals • construction (lead general contractor/construction manager) • site specific consultant: eg. heritage/environmental/traffic • master form Agreement of Purchase and Sale (incentives/other schedules) • Disclosure Book/Condominium Documents • registration of Vendor and Builder and project enrolled with Tarion (conversion projects to come in future)

15. Steps to Registration • Lands in Land Titles Absolute Plus and construction substantially completed • development applications (site plan, s.37, development agreement) in place and Draft Plan of Condominium Approval (DPA) issued, environmental, groundwater discharge issue addressed (Toronto) • clearance of site plan/development agreement/DPA conditions • grant/creation of any servicing or other easements required • final measure by surveyor • preparation of “as built” drawings • occupancy permits issued • LRO preapproval of condominium plans/declaration (separate process) • architect/engineer sign off Schedule “G” to declaration • submission to LRO for registration

16. Alternative Forms of Condominium • Non-Residential /Mixed Use /Stacked/Hybrid Uses • Common Element Condominium (Part X) • (includes freehold parcels of tied land (POTL)) • Phased Condominiums (Part XI) • Vacant Land Condominiums (Part XII) • Leasehold Condominium (Part XIII) • Condominium Conversions • protection of tenancy rights (s.4(2) and s.4(3)) • watch for local policies and restrictions • coming soon under certain Tarion warranties

17. SAMPLE: Vacant Land Condo

18. SAMPLE: Common Element Condo

19. Strata Plans What are they and when must these be used? • used to define the extent of a particular component (both horizontally and vertically) and easements • three dimensional plans • illustrates both horizontal and vertical layers • needed where carving up space both vertically and horizontally (e.g. stacked mixed use with shared building servicing areas) and to illustrate and describe shared use areas

20. assists in describing by drawing the extent of the ownership/easement part on the plan • best to define via physical/structural – eg: face of wall; centreline component of floor • operational considerations: • servicing agent doesn’t care when the legal part ends • control vs. use • shared facilities • cost allocation impact • Reform changes to come

21. SAMPLE: CONDO STRATA PLAN

24. Important Obligations to Note • Agreement of purchase and sale is not binding if disclosure does not comply with Act’s requirements • obligation to notify purchasers of material change • rescission right arises for material change – whether notice provided or not • declarant on the hook for first year budget deficit – make budget reasonable • developer obliged to proceed diligently to registration and closing • Tarion addendum and Statement of Critical Dates mandatory and to be updated post roof completion to firm occupancy date form (watch use of early termination conditions) • watch Tarion notice requirements – insufficient notice triggers compensation to purchaser – eg. strike delay notices

25. Condominium Reform • Two new statutes: 1. ProtectingCondominium Owners Act, 2015 (PCOA) (Schedule 1) • omnibus-type bill • in force by Royal Assent Dec. 3, 2015 • Schedules 1 and 2 not yet in force (requires proclamation) • amendments to Condominium Act, 1998 and various other statutes • establishes Condominium Authority to oversee education, dispute resolution, condominium registry • governs disputes primarily between condo boards and owners

26. 2. Schedule 2 to PCOA – Condominium Management Services Act, 2015 (CMSA) • not yet in force – requires proclamation • establishes licencing authority (Condominium Management Licencing Authority) to administer CMSA • licencing and regulation of property managers and property management providers • both Condominium Authority and Licencing Authority will be provincial administrative authorities – not for profit, self funded (after initial startup) independent from Province, but oversight by Auditor General

27. Robin Dafoe recently named as interim executive leader of both Condominium and LicencingAuthorities • Status of Legislature (regulatory drafting) • Status of governance structure and appointments

28. Planning Act • Planning Context • Policy/legislative framework • Planning instruments and new condominiums • Planning instruments and condo conversions • Conclusions on planning instruments

29. Context • differentiate condominiums from other developments by their specific tenure • still developments shaped by land use planning considerations from the outset • approach the development as would any other development, ensuring compliance with the hierarchy of planning instruments: provincial statutes/policies followed by local official plans, zoning standards and site plan requirements • make sure all applications are complete

30. municipality will be looking to obtain benefits from the development (parkland dedications, road widenings, s. 37 benefits) and servicing improvements necessary for the development • carefully review conditions of draft plan approval and other development approvals • conversions – are there official plan policies in effect that regulate/restrict conversions? • key = ensure that all municipal demands/requirements are reasonable (related to the development) and within the jurisdiction of the municipality

31. Policy/Legislative Framework • the creation of a condominium involves two types: new construction or conversion of an existing building • different standards in terms of which planning instruments may apply • to understand the planning requirements behind condominium creationneed to review together the Planning Act and the Condominium Act, 1998

32. Provincial Interest • s. 2: decisions need to have regard for matters of provincial interest set out in Planning Act (conservation of resources, full range of housing, protection of public health and safety, etc.) • s. 3: decisions need to be consistent with the Provincial Policy Statement policies

33. Provincial Policy Statement 2014 (PPS) • policy 1.4, Housing, is the main policy that applies with respect to the creation of residential condominiums • requires the provision of a range of housing types and particularly the provision of affordable housing • is your development consistent with this goal? is it consistent with other policies i.e. intensification (1.1.13), the use of existing infrastructure (1.6)

34. Official Plan/Zoning Conformity • s. 9(3) Condominium Act, 1998: a description cannot be registered without the approval of the approval authority • condominium proposal must meet current official plan policies and zoning performance standards • basis for review no different than any other development application

35. Draft Plan of Condominium • s.50 of Planning Act establishes a general prohibition on subdivision of land except by consent or through an exemption • s.9 of Condominium Act, 1998, states that s.50 of the Planning Act does not apply to dealings with whole units (and their common interests) in condominiums

36. draft condominium plans are subject to sections 51, 51.1 and 52 plan of subdivision provisions (9(2) of the Condominium Act, 1998) • s.51(17) provision of draft plans • s.51(24) criteria: regard must be had to conformity with official plan and effect on matters of provincial interest

37. s.51(25) provides the approval authority with the ability to impose conditions on the approval of a plan of condominium • conditions are to be “reasonable”, having regard to the nature of the development • specific conditions include parkland and highway/right-of way dedications

38. s. 41 sets out the conditions that can be requested through site plan control • additional layer of regulation often required through draft plan approval • s. 41(4) required to provide drawing/plans • s. 41(7) conditions of approval: loading, parks, grading, landscaping, maintenance etc.

39. Planning Instruments and New Condominiums • Timing of compliance with zoning • municipality will require compliance with zoning prior to final approval • degree of risk in proceeding from the start with a condominium application will depend on support for proposal • recommended to seek necessary zoning approvals first prior to filing an application for condominium approval • does not preclude preparing the plan of condominium application or going to market

40. Timing of compliance with site plan • the same scenario applies to the site plan as to zoning by-law compliance • typically required to fulfill site plan conditions as part of the draft plan approval • compliance with the site plan itself will have to occur prior to registration as the building will have been built before registration of the condominium occurs

41. Section 37 Benefits • Municipality may require the provision of “facilities, services of matters” in exchange for approving increases in height and density • Have to have an official plan policy in effect relating to such authorization • Large, tall condominium buildings a perfect target for such “let’s make a deal” planning • very political and can involve large sums

42. OMB (generally): should have a real and demonstrable connection between the public benefits and the planning approvals • Look at what the impact is and the resulting needs, streetscape improvements, local pool and park upgrades: 45 Charles St E, Toronto • Ensure that the “ask” is related to the development and reasonable (unless politics is more practical)

43. New approaches to condominium development: parking • 426 University Avenue, City of Toronto: developer proposed no parking for a condominium building with 315 units located on a major arterial route well served by transit • staff recommended refusal but Council approved project with nine parking spaces

44. Larger units – OPA • Toronto Official Plan Amendment to Encourage Development of Units for Households with Children • City staff recommended OPA to: • include the term “dwelling units suitable for households with children” in official plan policies requiring the provision of a full range of housing; and • introduce a new area specific policy to require that any new downtown developments containing 100 or more dwelling units construct 10% of those units as dwelling units containing three or more bedrooms (may contain less than three bedrooms if constructed in such a manner that they can be converted to three or more bedrooms)

45. Proposed OPA met with considerable opposition from the development sector on the basis that: • there is no market demand for such units, and • they are not affordable for average families with children • While OPA has not been adopted, the policy objective is being realized through the approvals process as part of the negotiations process – not actively resisted by developers

46. 4. TTC Metropass • Program required developers to provide TTCMetropass to first occupants for one year in designated growth areas • In face of overwhelming objection by the development industry (BILD), City Council rescinded the program • did not meet objective of promoting transit and was arguably illegal

47. Municipal Draft Plan Approval Requirements • Standard conditions vs. site specific conditions • Typical standard conditions: • based on type of condominium (standard, phased, common • element, commercial, mixed use, conversion) • fulfillment of site plan/development agreement requirements • Road dedications complete • clearance from utilities, Canada Post • clearance from school boards (as applicable)

48. Site specific conditions (flows from planning review): • based on demand on and proximity to public roads, conservation areas, site servicing, transit, schools, traffic • environmental assessments (Phase One and Phase Two ESA, Record of Site Condition) • Heritage requirements • restrictions, purchaser warning statements

49. Planning Instruments and Condo Conversions • Case Law • OMB: to be granted weight, a conversion policy must be part of the official plan policies • Critical to municipalities is protection of rental units – tied to CMHC vacancy rate • Courts: look at the purpose and wording of the official plan policies on conversion - a municipality is entitled to include the adequate supply of rental housing in such policies • Are there policies on meeting current zoning standards - OMB dismissed a condominium conversion proposal in Windsor on the basis that the proposed parking was inadequate for the conversion per the Official Plan policies

50. Compliance with updated zoning regulations • given that there is no change in use, but only a change in tenure, arguably the development will be grandfathered in terms of the zoning standards • will likely depend on the individual application: are any changes proposed to the development that trigger the requirement for current standards • do the condominium conversion policies require such compliance (Burlington Official Plan policy 2.3.2(f)(ii))?