Condominium Regulation by Municipalities

This post was written prior to our January 2017 merger, under our previous firm name, Aikins, MacAulay & Thorvaldson LLP.

Condominium ownership in Manitoba has existed for 45 years, virtually unregulated.

Although bare land condos require planning and municipal approval (like an ordinary sub-division of land), converting an existing multi-family building such as an apartment building into a condominium complex requires no government pre-approval. The building owner hires a land surveyor, an architect and a lawyer. Documents and survey plans are filed at the Land Title Office. The condo corporation is created at the land titles office. Titles issue to “air space” or condo units within the building. Those titles can then be owned, transfer and mortgaged like any other parcel of land.

Each condo unit gets its own tax assessment and roll number for municipal and school taxation, and each owner owns, in common with other unit owners, a percentage of co-ownership in the common property outside the allocated “air spaces.”

The regulation and governance of condos is by private governance at the board of directors’ level of each condo corporation. The board is governed by its own by-laws, and guided by the rules set out in The Condominium Act of Manitoba. That conversion of apartment housing into condo ownership has been entirely up to the building owner.

That may now change.

The Province is repealing its current Condominium Act on February 1, 2015 and replacing it with a new act. Although some of the provisions of the new act are already in play, once it is fully enacted on February 1 condominium developers and the owners of condominium units will see some significant changes in how condominiums are created, governed and sold.

Most of the changes will not affect local government. However, with the anticipated implementation of the new Act, the Province has amended the Municipal Act to allow municipalities to pass by-laws to selectively prohibit the conversion of apartment style buildings into condominium corporations.

It’s a bit of bold move when you consider that the Province is the main level of government responsible for rental housing needs. The Province is also the leader in consumer protection. It controls immigration, housing and rent regulation, as well as statistician rental housing needs data. Yet it is now downloading the responsibility to local government (giving you the hammer) to prevent the conversion of rental apartment buildings into condo units.

Do you want that responsibility? Or do you have the resources and wherewith along with all of you other local government responsibility to be the effective decision makers of rental housing protection when you aren’t typically that business? Do you want the responsibility of reasonably and effectively analyse rental housing needs in the community to ensure there remains an  adequate supply of rental housing when a developer want to convert an apartment building to a condo complex?

Local government does not have to enact such a by-law. If it elects to, however, it must enact a condo conversion by-law with specific criteria. The enabling section in the Municipal Act reads:

232(1) A council may pass by-laws for municipal purposes respecting …. (c.2) ….the conversion of rental units into units under The Condominium Act.

233.2(1) A by-law under clause 232(1)(c.2) (condominium conversions) may require a person who proposes to engage in a condominium conversion in respect of land that contains, or has contained within the prescribed time period, one or more rental units to obtain the approval of the municipality before submitting a declaration in respect of that land to the appropriate land titles office.

233.2(3) A by-law under clause 232(1)(c.2) must

(a) authorize the body, which must be a council committee composed entirely of members of council, to consider and decide applications for the approval of proposed condominium conversions; and

(b) establish the form and content of certificates of approval that must be issued by the municipality when such applications are approved.

233.2(4) A by-law under clause 232(1)(c.2) may

(a) provide that approvals of proposed condominium conversions are time-limited, and establish such a time limit;

(b) establish criteria, in addition to the criteria under clause (5)(a), that are to be considered when deciding if a proposed condominium conversion is to be approved; and

(c) prescribe a time period within which the land must have contained one or more rental units in order for the proposed condominium conversion to be subject to the approval of the municipality.

233.2(5) The council committee may approve a proposed condominium conversion if it is satisfied that the conversion; (a) will not (i) significantly reduce the availability of rental units in the area, or (ii) create significant hardship for any of the occupants of the land that is the subject of the proposed condominium conversion; and (b) will comply with any other criteria established by by-law.

From these recent amendments you will see that if a council chooses to accept the Province’s invitation to regulate condo conversions, the by-law must establish a committee composed of council members to consider and decide on applications for the approval of the proposed condominium conversion, and when considering those applications must determine that the approval will not significantly reduce the availability of rental units in the area or created a significant hardship for any of the occupants of the apartment building being converted.

If a council is considering such a by-law, it is recommended to seek legal advice on the required wording for such a by-law in order to comply with The Municipal Act.

This article was originally published in Municipal Leader, Fall 2014.

Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.

Robert L. Tyler is a partner with the law firm Aikins, MacAulay & Thorvaldson LLP and practices in the area of real estate law.