CONDO LAW
Hyman: Understanding impact of the HST isn't easy
February 13, 2010
Gerry Hyman
SPECIAL TO THE STAR
Q: As a newly elected board member, I wonder if you could describe how the harmonized sales tax will affect unit owners? Our property manager advises that common expenses and reserve fund contributions will be affected.
A: There will certainly be an impact upon unit owners, although understanding that impact is not easy. A great many condominium expenditures not presently subject to the 8 per cent provincial sales tax (PST) will incur the 8 per cent component of the HST. Some of that increase may be offset because suppliers will no longer pay the PST on the materials they purchase and may pass some of the savings to consumers. Nonetheless that portion of a contractor's invoice that relates to services rather than materials will include the 8 per cent.
Costs for a condominium corporation's service contracts that were not previously subject to PST will increase. Reserve fund studies and updates will reflect the increased cost of future major repairs and replacements. Common expense contributions of unit owners will reflect budget and reserve fund contribution increases.
Representatives of the Ontario Government Relations Committee of the Canadian Condominium Institute and Association of Condominium Managers, Ontario appeared before the Finance and Economic Affairs Standing Committee at Queen's Park in December. The presentation stressed the negative impact of the HST on Ontario condominium owners.
Q: I am a newly elected director. Three of the five members of our board have voted that I am not entitled to all of the information that I have requested. Am I wrong (in believing) that there should be no limits on a director's entitlement in order for the director to apply due diligence to the corporation's affairs?
A: The board manages the condominium corporation and as a result is in control of the corporation records. The question is whether each director is entitled, as the reader suggests, to examine any record of the corporation. Every unit owner is entitled to examine and to receive copies of all corporation records with the exception of records relating to employees, other than employment contracts or relating to actual or pending litigation or insurance claims, or relating to other owners or other units.
I am of the opinion that a director should have access to records that are not available to other owners but only if the records are relevant to the management of the condominium. A director, for personal or his own business reasons, should not have access to records not available to other owners.
Q: How often must reserve fund studies be carried out? Does it vary for different size condos?
A: A reserve fund study must be carried out within one year after the registration of the declaration. The study must be updated at intervals of not more than three years, alternating updates that require site inspections with updates that do not. These time requirements are the same for all condominiums, regardless of size.
Thanks to a reader for pointing out in response to a recent column that the Canada Elections Act provides that a condominium corporation may not prohibit a unit owner from displaying election advertising posters in the owner's unit.
Send your questions to gerry@gerryhyman.com or fax to his attention at 416-925-8492. Letter volume prevents individual replies.
Lawyer Gerry Hyman is an expert in condominium law and appears regularly in New in Homes & Condos.
Toronto Star