Highlights of the new Manitoba Condominium Act

Changes in Condominium Laws

Introduction
Manitoba’s new Condominium Act and regulations came into force on February 1, 2015.

The new act includes major changes in the development, buying and selling, ownership and operation of condominiums. The changes will apply to all condominium developments in the province - large and small, new and existing.

All condominium corporations and their boards, unit owners, developers, property managers, and real estate agents will need to adjust to these new laws.

Declaration, by-laws and rules
The declaration, by-laws and rules of a condominium corporation must comply with the new act and regulations. However, some of the changes apply to an individual condominium corporation and its unit owners only if the corporation amends its own declaration, by-laws or rules to include the change. (For example, the ability to fine unit owners, included in the new act, must be authorized by an individual condominium corporation’s by-laws.)

Sometimes the act sets out minimum requirements. For example, the new act states that the quorum for dealing with business at a general meeting of a condominium corporation (which has four units or more) is 33 per cent, or any larger percentage required by a condominium corporation’s declaration.

Highlights of major changes

(NOTE: If there is a difference between what is written here and the act and regulations, the act and regulations will be taken as correct.)

Duty of directors

Under the new act:
Directors of boards, including the declarant's board, have a duty to act honestly and in good faith with a view to the best interests of the condominium corporation. They must apply the care, diligence and skill that a reasonable, prudent (sensible, cautious) person should apply in similar situations.

Under the old act:
There is nothing similar in the old act.
Reserve fund studies
Under the new act:
Every condominium corporation must have a reserve fund study completed and then updated every five years. Reserve fund studies give boards, unit owners and buyers of units information about how much money the reserve fund should contain to pay for major repairs and replacements to the common elements (ex: roof, heating system).

Who can do the reserve fund studies?
The regulations allow smaller condominium corporations (with no more than nine units, no more than two storey’s, no elevator and no underground parking facilities) to have a reserve fund study done by someone knowledgeable on the corporation’s components, who may be associated with the condominium corporation. However, the larger corporations must bring in qualified professionals, with no connection to their corporations, to conduct reserve fund studies.

When must the studies be done?
Condominium corporations created before the new act comes into force:
- must have a reserve fund study done within three years after the act comes into force, unless the following two conditions are met:
  - the corporation has had a study done in the two years before the act comes into force
    and
  - the board believes its current study substantially meets the requirements in sections 19 to 23 of the Condominium Regulation.
Even if the two conditions are met, these corporations still need to update the reserve fund study by the end of the fifth year covered by the study.

New condominium corporations created on the date, or after, the new act comes into force:
- must have a reserve fund study done within three years after the declaration and plan are registered.
What happens in the case of a condominium conversion or a delayed sale?
The declarant or owner-developer, must have a reserve fund study done and, if required, updated before any units are sold when there is:
- a condominium conversion (ex. registering an apartment block or warehouse as a condominium property), or
- a delayed sale of units (ex. apartment block previously registered as a condominium but used strictly for rentals before any units are sold).
Contributions, reports and sales

When deciding the total annual contribution for the reserve fund, the directors (who have a duty to act with a view to the best interests of the corporation), must consider the reserve fund balance that is recommended in the latest reserve fund study or update.

At least once a year, the board must report to the unit owners on the amount in the reserve fund and review the latest reserve fund study or update with the unit owners.

When a condominium unit is sold, the buyer must be told what the actual balance in the reserve fund is, as well as the balance that was recommended by the reserve fund study.

Under the old act:
All condominium corporations had to have reserve funds, but reserve fund studies were not required. The only requirement was that, if a reserve fund study had been done, the seller had to give a copy of the study to the buyer.
Fines

Under the new act:
Condominium corporations can pass by-laws allowing their boards to fine unit owners for breaches of the corporation’s by-laws or rules by the unit owner, a tenant or other occupant of the unit, or a person allowed by any of these individuals to be on the property. The regulations allow a maximum fine of $100 for a contravention. A fine for an ongoing contravention (ex. a satellite dish installed on a balcony in violation of a by-law) can be imposed no more than once a week, and no more than 12 times a year. Fines can be appealed to the Residential Tenancies Branch.

Under the old act:
There is nothing similar in the old act.
Right to rent / maximum amount of levy for leasing/renting
Under the new act:
A condominium corporation cannot stop owners from renting their residential or commercial units to tenants. However, they may collect a levy (up to $1,500) from owners who wish to do so. This levy can be used by the condominium corporation only to pay for repairs to, or extraordinary (more than average) cleaning of, the common elements – resulting from the tenancy or lease. The balance must be returned to the unit owner at the end of the tenancy or lease.

A condominium corporation that has previously charged a unit owner a levy of more than $1,500 must refund any unused amount, within 90 days after the Condominium Regulation comes into force.

Under the old act:
There was no limit on the amount of the levy a condominium corporation could charge an owner who wanted to rent or lease a unit. Although the act did not give condominium corporations a right to forbid rentals, high leasing levies could be used as a method of discouraging rentals.
Records and record-keeping
Under the new act:
A condominium corporation must keep complete and accurate records of corporation business. Section 131 of the act and Schedule C of the regulations list which documents must be kept and for how long. The corporation must keep a paper form of the records or be able to produce them in a readable format electronically (on computer). The corporation must also ensure the records are kept in a secure location.

Under the old act:
There is nothing similar in the old act.
Disclosure on sale of unit
Under the new act:
Buyers of condominium units are entitled to more extensive disclosure about the condominium development and the unit.
Cancellation rights – cooling-off period
Under the new act:
People thinking about buying a condominium unit have more time to review the complex (detailed) information the seller must give them. The new cooling-off period ends seven days after the purchase agreement is entered into or the date the buyer receives the required information - whichever date is later. The buyer can cancel the agreement to purchase for any reason during this time.

Under the old act:
The cooling-off period was 48 hours.
Cancellation rights – material changes
Under the new act:
Sellers have a duty to tell buyers about any material changes to the information in the disclosure documents. A buyer who finds out about a material change – before taking possession of the unit – can cancel the purchase. Buyers can sue if they take possession and find a material change that wasn't disclosed.

Under the old act:
There is nothing similar in the old act.
Content of a declaration
Under the new act:
There are changes and additional requirements in Part 2 of the act about the content and registration of a declaration.
Declarant’s board and meetings of unit owners
Under the new act:
The declarant appoints the first board of directors for the condominium corporation. This board manages the property until the turn-over meeting, which is held when the declarant no longer owns a majority of the units. The declarant’s board must hold the first general meeting of unit owners within one year after the first transfer of ownership of a unit.

At the meeting, the unit owners (except the declarant) have the right to elect two directors to the declarant’s board. This gives the unit owners a voice in how the development is managed before the turn-over meeting.

Within six months after the declarant no longer owns a majority of the units, the declarant’s board must hold a turn-over meeting. Its purpose is to replace the declarant’s board with a new board, elected by all unit owners. At this meeting, the declarant’s board turns over records, documents and items, such as keys, to the new board.

Under the old act:
The old act did not give unit owners a right to elect directors to the declarant’s board. It also did not require a general meeting of unit owners before the turn-over meeting.
Cancelling agreements entered into by the Declarant’s Board
Under the new act:
The board of directors elected by the unit owners will be able to cancel several types of agreements entered into by the declarant’s board. These include property management agreements and agreements to provide continuing goods and services.

Under the old act:
Agreements could not be cancelled under the old act.
General Meetings
Under the new act:
Information on general meetings can be found in Part 6 of the act. New provisions include:
- a way to handle the difficulties in getting a quorum together to deal with business at a general meeting
- the ability of unit owners to request a special general meeting
- the use of modern methods for participating in meetings, such as teleconferencing
Under the old act:
Requirements for general meetings were not covered in detail in the old act. It dealt mainly with the notice unit owners must receive for upcoming meetings and quorum requirements. Other requirements for general meetings were set by the individual condominium corporations.
Voting and giving and withholding consent
Under the new act:
Unless a greater percentage of voters is required by the act or a condominium corporation’s declaration, a question at a general meeting is decided by a majority of the voting rights in the corporation that are voted by unit owners who are present in person, or by proxy, at the meeting.

All but minor amendments to a declaration and plan require the written consent of unit owners holding at least 80 per cent of the total voting rights in the condominium corporation.

Although by-laws are made, amended (changed) or repealed by the board, they do not take effect until they are:
- confirmed by a vote of at least 75 per cent of the voting rights held by unit owners (who are present in person or by proxy at a general meeting)
  and
- registered at the Land Titles Office
By-laws must be reasonable and must not conflict with the act or the declaration.

Rules are also made, amended or repealed by the board. From the day unit owners receive notice of a rule, amendment or repeal, they have 30 days to request a meeting to vote on it. If a meeting is not requested, the rule takes effect 31 days after the unit owners received the notice.

Rules must be reasonable and must not conflict with the act, declaration or by-laws. Unlike by-laws, rules do not have to be registered.

Under the old act:
Voting and voting rights were not addressed in as much detail.
Auditor

Under the new act:
Unit owners must appoint an auditor each year – beginning with the first general meeting – to report to them on the condominium corporation’s financial statements.

A condominium corporation with no more than nine units can choose not to conduct an audit, if all owners consent each year.

Under the old act:
Condominium corporations were not required to appoint an auditor.

Statement of financial projections

Under the new act:
Declarants who sell one or more units (or proposed units) must prepare a statement of financial projections (estimates) covering a 12-month period. The period must start with the first month all unit owners are required to contribute to the common expenses.

If the financial projection turns out to have been too low, the developer has to pay the amount of the shortfall to the condominium corporation.

Under the old act:
Declarants were not required to provide statements of financial projections.

Priority of condominium lien

Under the new act:
Currently, condominium corporations have a lien (legal claim on the property as security for a debt) against the unit of an owner who fails to pay his/her contribution to the common expenses. The new act will give greater priority to the condominium corporation’s lien, including interest, legal costs and collection costs. The condominium lien is subject to Crown claims, municipal taxes and interests prescribed by the regulations.

Under the old act:
Because declarations could alter the priority of the condominium lien, it was possible for mortgages to rank ahead of condominium liens.

Restriction on developers' right to give consent

Under the new act:
When the consent of unit owners is needed to make important decisions before the turn-over meeting (when the declarant still owns a majority of the units or while the declarant and/or owner-developer hold a majority of the voting rights), the declarant and/or owner-developer have no right to take part in the decision. This applies only to phasing amendments (developing a project in stages), proposals to amalgamate (merge) with another condominium corporation, and some proposals to withdraw the entire property or part of the common elements from the provisions of the act.

Under the old act:
This restriction applies only to phasing amendments.

Description of standard unit

Under the new act:
Declarations registered after the new act is in force must include a description of a standard unit (for each type of unit). This description is used to determine responsibility for repairing improvements to units after they have been damaged, and for insuring the improvements.

The board of a condominium corporation that exists before the new act comes into force can describe standard units in a by-law.