Changes to the Standard Unit
In this blog entry, we discuss one of the most important sets of changes Bill 106 brings to the Condominium Act, 1998 (the "Act") – changes to the standard unit definition.
Under the legislation at this time, there are two purposes of a standard unit definition:
- to define the scope of the insurance obligations with respect to the units; and
- to define the scope of repair (after damage) obligations with respect to the units.
A condominium does not insure any components of the units that, according to the standard unit definition for the condominium, are improvements; and, further, the party responsible for repair of a unit after damage is only responsible for repairing the unit up to the standard unit definition. (See our Condopædia article here, and our About Condo memorandum, here, for more detailed discussions about this.)
One of these applications of the definition is disappearing once the relevant provisions of Bill 106 come into force, amongst other significant changes.
Where to Find Your Standard Unit Definition Today
Currently, the Act does not provide a standard unit definition. Instead, there are two mechanisms whereby a condominium corporation may have one.
The first method is the provision of a definition by the declarant (developer) of the condominium. Within 30 days following its turnover meeting, the declarant must deliver to the board of directors of a condominium, a schedule setting out what constitutes the standard unit for each class of unit in the condominium.
Technically, almost every condominium corporation created since May 5, 2001, should have such a schedule; however, in reality, most condominium corporations either don't know they have one, or the declarant simply did not provide one. Therefore, the second method is the one more commonly relied on, which is the establishment of a standard unit definition by by-law.
Many standard (including phased) condominiums registered within the past 15 years have a standard unit by-law that was prepared by the declarant and registered together with the condominium’s original by-laws (such a declarant would, therefore, likely not bother to also provide a schedule after turnover). Most other condominiums have enacted a standard unit by-law sometime after registration under the direction of the unit owners and an owner-elected board.
Some condominiums, however, still, even now, do not have a standard unit definition. The courts have determined that in these cases the standard unit is defined as the whole of the unit, the boundaries of which are set out in the corporation’s declaration. Obviously, this is not an ideal scenario for the corporation. It means the corporation is obligated to maintain insurance for the entire unit. The costs for the corporation are therefore potentially much higher than they otherwise would be.
Where to Find the New Standard Unit Definition
(or, rather, where not to find it yet )
Once the relevant provisions of Bill 106 are in force, condominiums that have not previously passed a by-law to create their own standard unit definitions, will now have one imposed on them.
Bill 106 removes the requirement for a declarant to provide a standard unit definition by schedule after turnover, and instead restricts the standard unit (for each class of unit in a condominium) to be
- the standard unit as described in a by-law passed by the corporation; or,
- the standard unit as prescribed in the regulations, if the corporation has not passed a by-law.
Therefore, if your corporation doesn't have a standard unit by-law there will soon be no need to look to the declarant's schedule (and in fact the requirement for the declarant to provide such a document will be repealed when the amendments are in force); and the court's ruling that the entire unit will be standard, may no longer apply.
Of course, we have to say may, since we can't be certain of the details until we see the regulations. As the regulations have not yet been drafted, we don’t know how the standard unit will be defined, only that it will be. The exact nature of the default standard unit definition remains, for now, a mystery. (See our previous blog entry on the topic of the regulations to come, here.)
A New Definition of Improvements
The amendments to the Act brought forward by Bill 106 also include a revised definition for what constitutes an “improvement”.
Currently, an improvement to a unit is whatever is not defined as standard. Once the amendments under Bill 106 are in force, an improvement will be defined as (a) any part of a unit, where the part does not constitute a standard unit or part of a standard unit, or, (b) any repair or modification to a standard unit that is done using materials that are higher in quality, as determined in accordance with current construction standards.
It is possible, based on this new definition, that, going forward, standard unit definitions may need to include some details about the make and materials included in standard unit components, something which the current legislation does not require. Further, there would likely need to be a record kept of when repairs or modifications are made that trigger a redefinition of a standard unit component as an improvement. Unit owners and corporations might also have to be diligent in informing their insurers, or at least be aware themselves, when components change from one category to the other, as this might alter the coverage required for the unit, and would at least, in most cases, change the party responsible to have such insurance coverage in place for that component.
Impact on Maintenance and Repair Provisions
As noted at the start of this entry, currently, the standard unit definition establishes the responsibility for repairing the unit after damage as well as insuring it. Only the standard components of the unit are subject to that obligation.
However, among the most significant changes to be made to the Act under Bill 106 (which will be discussed in more detail in a future blog entry) are amendments to its maintenance and repair provisions of the Act, which substantially alter the application of the standard unit definition.
Basically, Bill 106 eliminates the term “repair after damage” as it is currently used under the Act. Instead, it speaks solely of repair and maintenance obligations. In so doing, Bill 106 also eliminates the provisions of the Act that restrict the scope of the repair obligation with respect to units to just the standard unit.
The new provisions of the Act deal only with “maintenance” and “repair” obligations, and, despite the fact that the new subsection 56(1)(h) of the Act, revised by Bill 106, states that a purpose of the standard unit definition is in part to determine “the responsibility for repairing or maintaining improvements made to units,” nowhere is the standard unit definition mentioned in the provisions specifically describing repair and maintenance obligations.
Possibly, more light will be shed on this in the regulations (which we will let you know as soon as we find out ourselves), however, for now it appears as if the standard unit definition will, in fact, be irrelevant to determining the scope of repair obligations, leaving it solely relevant in regard to insurance duties under the Act.