Re-Write The Condo Act?

Condos | September 1, 2011

For as long as I’ve been sharing my thoughts on real estate in Toronto on this blog, I’ve been saying that condominium development in this city needs an overhaul.

NDP MPP Rosario Marchese was written up in The Toronto Star this week after vowing to reform the Condo Act…


Robyn Doolittle
The Toronto Star

Tom Smeraldo and Emilio Ojeda walked into their new Cabbagetown-area condo, took one look at their “view” (a brick wall), “balcony” (more of a ledge), and “hardwood floor” (actually laminate) and phoned their lawyer.

“We were so disappointed. We just wanted out of the deal,” said Smeraldo.

They couldn’t. Not unless they wanted to lose tens of thousands in deposits. Instead, the couple set out on a three-year battle with the builder over what they say are broken promises and lingering deficiencies.

Theirs is a cautionary tale, one you’ve likely heard before and will hear again as the GTA increasingly becomes a community of condo dwellers. As of December, there were about 264,000 condo units in the region.

Despite the considerable size and affluence associated with the demographic, it’s a vulnerable segment of the population, says NDP MPP Rosario Marchese.

With the Trinity-Spadina representative leading the charge, the NDP has vowed to tackle condominium act reform if elected this fall.

The proposed changes include clearer, “good faith” language in the purchase paperwork, as well as the creation of a judicial board to handle disputes between condo owners, boards and developers.

“Right now there’s nothing quick and nothing cheap about that process at all,” Marchese said. “If a renter has a problem with the owner of that building they’re able to go to renter’s tribunal, pay a $25 fee and defend themselves. If you’ve got a problem as a condo owner, where do you go? A lawyer. That’s the problem.”

This tribunal would be separate from Tarion, which regulates builders of new homes, enforcing construction standards.

For Smeraldo and Ojeda, a dispute resolution process would have been welcome. Smeraldo says a sales person specifically told them their second-floor unit would clear the brick building next door. The builder got away with chopping their balcony because it was listed as a “common element,” which could be changed without notice.

“We were completely lied to,” said Smeraldo. “But we didn’t want to do a lawsuit on our own. . . . I think strengthening the condo act is the key here. It’s a falsehood. It’s supposed to be consumer protection but it isn’t.”

Toronto’s development boom has lead to a “condo underworld,” said Marchese, where buyers are unable to take on rich developers. Many owners are also reluctant to go public with their issues, for fear of harming resale values.

So while buyers in jurisdictions such as Quebec — where brokers can be sued for mismeasuring a unit by as little as 10 square feet — and British Columbia — where a superintendent of real estate monitors developer disclosure with new builds and handles complaints if that information is inaccurate or incomplete — enjoy numerous protections, Marchese said Ontario condo owners are left with inadequate protection.

Marchese has been championing the issue for five years.

His most recent attempt — Bill 79, The Condominium Owners Protection Act — failed this spring, when a Liberal-dominated committee essentially killed it by not sending it out for public consultation.

Marchese believes the Liberals may have felt pressure from the development industry. Conservative MPP Bill Murdoch, who represents Bruce-Grey-Owen Sound and sat on the committee, said it came down to Liberal priorities.

“They’re humans. And they’re the government. And they don’t want anybody else to get any kudos,” said Murdoch.

Senior policy advisor Elaine Flis with Minister of Consumer Services said the Liberals support updating the out of date act.

Ontario’s condominium act has not been updated since 1998. At that time, a number of protections were added, said Stephen Dupuis, president of the Building Industry and Land Development Association (BILD).

Buyers were given a 10-day window to back out of a sale without explanation. Protections were put in place in case a builder goes bankrupt. Builders were legislatively required to take all reasonable steps to finish on time or buyers could be compensated.

“It’s easy to ask for something, but is it truly needed and who would pay for it?” said Dupuis. “One of the reasons the condo agreements are so ‘complicated’ is all the disclosure provisions and frankly, there needs to be some onus on the buyers to do their homework.”

The renter’s tribunal currently gets about $10 million from fees and $15 million from the province, said Marchese, adding a condo tribunal should work in a similar manner.

Harry Herskowitz, a senior real estate lawyer with DelZotto, Zorzi who primarily represents developers, said in theory, a tribunal adjudicated by a qualified individual, such as a retired judge, could be beneficial to all parties.

But overall Marchese’s legislation is flawed, he said. The condo act already requires good faith language. Builders, as long as they’re up front about it, should be able to have some flexibility.

“What Marchese is trying to do is create a level playing field which in principle is a very noble thing to do. The problem is . . . it allows for no gray area,” Herskowitz said. “Why shouldn’t the builder have the flexibility to say I might do this?”

The fact is, he said, most problems could be avoided if purchasers hired a lawyer to go through the agreement beforehand. Many aren’t willing to pay the $1,500 to do this, he said.

In October, Marchese will face off against a high-profile Liberal candidate, former mayoral hopeful Sarah Thomson. Since 45 per cent of his downtown Toronto constituents live in condos, this is an issue Marchese no doubt hopes will score him some political points.

It’s enough to get Liberty Village condo owner Todd Hofley interested. For him, the ability to have fast and cheap access to a judicial body is a tempting political promise.

“Whether it’s on the side of an owner, developer or the board, it just really creates a level playing field whereas right now there isn’t one,” he said.



How many blog posts have I written about the pathetic state of the condominium development industry?  How many times have I talked about crooked builders, vague purchase agreements, and disappointed consumers?

I’ve often lamented that the only way things will change is if a major politician gets a bee in his or her bonnet, and it looks like Rosario Marchese is hanging his hat on this issue.

At first, I was skeptical; thinking that perhaps Marchese was just chasing headlines like so many other politicians.

I wrote about the issue with Lanterra Developments last week and the glass that’s falling from the sky at some of their condo projects, and how Kristyn Wong-Tam got her name in every major paper after saying that something had to be done.

But I rhetorically asked if Wong-Tam would see this through to the end, or whether or not she was content to get her name in the papers.

She also went on the airwaves on Thursday and publicly called out Toronto mayor Rob Ford for not submitting a bid for the 2020 Olympics.  Personally, I think the Olympics are a catastrophic waste of money and can leave a city financially strapped, no better evidenced by Vancouver, but I digress…

I feel as if many politicians will jump on hot topics to get headlines or bring up hot-button issues simply to get people talking.

It’s no different from politicians showing up for ribbon-cutting ceremonies and photo-ops outside venues they’ll never set foot inside again.

But after reading about Rosario Marchese for a half-hour, I found that he’s been a consumer-advocate for quite some time!  His “Condominium Owners Protection Act” bill would have changed the way developers do business in Toronto; or at least I hope they’d begin to take more responsibility and stop trying to screw over consumers.

It should come as no surprise that DelZotto Zorzi, a real estate law firm who represents many if not most of the downtown Toronto condominium developers, has come to the defence of builders!  They ask, “Why shouldn’t the builder be allowed to say ‘I might do this?'”  But the issue is that the developer leaves the door open to change this, this, this this, this, and everything else in the condominium.  Leave it to a lawyer to word things so they should so innocent and modest!

I’ve been barking up this tree for the better part of five years, and I’ve made it the foundation of my business.  I don’t sell pre-construction, and I’ll debate Realtor that goes against me.

It’s nice to know that some of our city’s politicians FINALLY feel the same way, and perhaps the winds of change are blowing…

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  1. George

    at 9:33 am

    I agree with all your comments, but I do think the buying public could police the situation a lot better than they already do. If the sellers in the marketplace are constantly burning buyers by failing on promises, then the buyers need to react by lowering demand for new units. That would put downward pressure on prices and force sellers to seek more credibility. Until the sellers have an incentive to follow through on their promises, they won’t.

    1. Richard Eng

      at 9:50 pm

      Excuse me, but this is a terribly ignorant statement. Yes, the buying public *could*, or *should*, create a better marketplace…in theory. But there is no way to manage how the public behaves, at least, not when it comes to real estate. The demand for homes continues to be strong and unabated. How are you going to convince people *not* to buy?? That’s inane.

  2. lui

    at 12:02 pm

    Im finish with pre construction purchases,even though I did well the amount of BS from builders,unknown closing cost,pre occupancy delays,finishes that didnt even look like the samples …no more.To top it off not knowing what neighbors you got is the icing on the cake,one building unit that I use to own had literally had 5 pot smokers on one floor and everyday the halls was filled with the pot smell and management did very little to stop them but leave letters at their doors.I rather buy a constructed unit,see what the actual project looks like,and hopefully meet some of the neighbors before buying.With price per sqft almost the same as pre construction it makes very sense to buy the unknown…

    1. Richard Eng

      at 9:36 pm

      Um, you do realize that neighbours can sell and move out, and new neighbours can buy and move in, right? You have no control over who your neighbours will be. It is always a matter of the luck of the draw. C’est la vie.

  3. WEB

    at 7:27 pm

    “What Marchese is trying to do is create a level playing field which in principle is a very noble thing to do. The problem is . . . it allows for no gray area,” Herskowitz said. “Why shouldn’t the builder have the flexibility to say I might do this?”

    If the builder has the flexibility to say, “I might do this” then so should the buyer! So…if the builder has the flexibility to say change the ceiling height from 10 feet to 8 feet then the buyer should have the flexibility to say, “alright, I’ll pay you $350,000 for this condo instead of $400,000.”

  4. michael

    at 5:31 pm

    actually, kristen wong-tam’s (very well-written) open-letter to rob ford was not her calling him out about not submitting an olympic bid; it was her calling him out about not having been a part of the decision-making process. As well, it was about him (and his non-mayor brother) making several unilateral decisions that should infact be put forth to a vote by the democratically elected city counsellors. here is the letter, in case you want a second-read:

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