New rules for condo purchases rolled out
First set of Alberta regulations to bring more certainty, protection for buyers
New rules will provide better protection for people buying new and converted condominiums in Alberta, with assurances around occupancy dates, clarity around condo fees and safeguards for deposits.
Service Alberta Minister Stephanie McLean made the announcement Oct. 12 at Partners Development Group’s Arrive at Evanston townhome development in Calgary’s northwest.
The Condominium Property Amendment Act was passed by the Alberta legislature in December 2014. The government has since been developing regulations to bring more than 50 amendments into force. Last week’s announcement centred on the first phase of rules affecting condominium boards and corporations, some of which come into force Jan. 1, while others will begin April 1.
The new rules bring more certainty for buyers of condos, which now make up about a quarter of the new homes sold every year in the province.
“Developers must give you a final move date, and if they can’t meet it, you have the option to renegotiate or cancel your contract and get your deposit back,” McLean said, outlining one of the new rules.
Service Alberta fields about 1,200 pieces of correspondence a year from the public, with about 500 complaints in the mix, lead- ing to a clear idea of what the hot button issues are, she said.
“We have heard some heartbreaking stories of people losing their deposits as a developer declares bankruptcy and not being able to get their money back or get what they wanted to buy,” she said.
Deposits will now have more protection — they will be held with a lawyer while the condo is being built.
“So no matter what happens with the developer, your deposit is safe,” McLean said.
Developers will have to provide accurate projections of what monthly condo fees will be, helping to prevent sticker shock once the owner takes possession of the home.
“If (the developer’s) estimate is off by more than 15 per cent, they must cover the difference for the first year,” McLean says.
Beefing up the government’s ability to investigate violations of rules and assess penalties is also part of the new rules.
“We know that many condo developers were using these best practices already but by making these rules standard, we raise the bar across the industry so that Alberta becomes a place that you can invest in with confidence,” McLean says.
Jade Mahon of Partners Development Group said that better protection for consumers benefits everyone.
“We know these new regulations will enhance consumer confidence and their security in making such a large investment in their home, and therefore increasing home ownership in the marketplace,” she said at the announcement. “When we have strong regulatory framework, consumers and businesses prosper together.”
The government is looking for more consultation in the coming weeks around the second phase of regulations — the rules around how condo boards govern themselves, including insurance requirements, voting procedures and reserve fund plans. About one in five Albertans live in a condominium, and there are about 400,000 condos in the province.
Open houses and consultations were held in the province’s five largest condo markets this summer — Calgary, Edmonton, Red Deer, Lethbridge and Fort McMurray. More than 1,100 people attended, suggesting ways to improve rules around day-to-day operations, including meetings and votes, qualifications for property managers. Public feedback on options for this set of regulations will take place until Nov. 10 — see the online survey at condo.alberta.ca.
Finally, the government will establish the jurisdiction and structure of a condominium dispute tribunal to bring a lower-cost alternative to going to court to resolve a problem. The tribunal will serve condo boards, owners, occupants and other interested parties.
Updated legislation is long overdue, said Terry Gibson of Condo Owners Forum Society of Alberta, especially considering homes often represent a large part of individuals’ wealth.
“We believe we need improved governance and management because current condo governance is not consistent with that that we have with our other investments, like RRSPs and pensions,” he said at the announcement.
He points to three areas condo owners need to focus on — the creation of a better dispute resolution mechanism, encouraging owners to participate in the management of their condo and becoming effective members of their communities.