Condominiums

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Professionals

Working in the Condominium Industry in New Brunswick

The popularity of Condominium living in New Brunswick is growing in leaps and bounds. Since 2004, the number of Condominium units in the province has increased by 54 per cent.

To better reflect this growing market, the government has updated and modernized the Condominium Property Act after significant consultation with all stakeholders in the industry. The new Act will take effect on January 1, 2010.

Whether you’re an accountant, real estate agent, lawyer, developer, surveyor or construction worker, if you’re working in the Condominium industry in New Brunswick, this new Act will affect you. Check out the Changes at a Glance for a brief overview, or browse through the sections below for more information about the new Act:

Resources

Condominium Property Act  CHAPTER C-16.05
Canada Mortgage and Housing Corporation (CMHC)
The Canadian Condominium Institute (CCI)

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The Condominium Property Act

The Condominium Property Act sets out the rules for operating and managing Condominiums in New Brunswick. The current Act from 1969 will be replaced by a more modern Act on January 1, 2010. The new Act contains a framework created to better protect consumers during the approval, purchase and sale process for Condominiums.

The new Condominium Property Act will make Condominium development fairer, safer and more in line with other Canadian jurisdictions. Increased transparency throughout the purchase and sale process will balance the responsibilities of developers with the rights of consumers. The Act is also designed to provide the essential tools for a Condominium Corporation to successfully administer a Condominium.

Check out these FAQs on the Condominium Property Act for more information.

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Condominiums and their Ownership

Contrary to popular belief, a Condominium is a type of ownership, not a type of building. Condominiums can be any type of housing, such as apartment-style units, townhouses, cottages or even commercial space.

With a Condominium unit, owners individually own their own unit while sharing ownership of the common area with the other unit owners. Sometimes, parts of the common property like balconies, parking spaces and storage lockers are dedicated to the exclusive use of particular owners. The exclusive use is a right and not ownership.

For more information, check out these FAQs on Condominiums and their Ownership.

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Condominiums and their Governance

A Condominium complex is a small, dynamic community of people living in very close quarters. To ensure the smooth running of the complex and the happiness of the residents, the community must work together to govern the complex appropriately and the residents must live within the rules set out in the by-laws.

Every Condominium development has a Condominium Corporation, a legal entity set up to manage the Condominium’s property and business affairs. Condominium Corporations are exempt from the Companies Act and Business Corporation Act.  The declaration is its charter document and is regulated by its by-laws.

Every owner in the Condominium complex is a member of its Corporation. Unit owners have the right and obligation to vote on matters presented at any general meeting, as well as changes to common property, regulations and by-laws.

Elected members make up the Board of Directors, which acts on behalf of the Corporation. The Board must consist of at least 3 people for 4+ units or at least 2 people for 2-3 units. In the case of Condominium developments, the Declarant is responsible for appointing temporary Directors in proportion to the number of units he or she owns. However, when the number of owners increases to 60% or more, they can choose to elect all the Directors.

The Declarant (the developer) must provide the Corporation with all necessary documents for its operation when he or she ceases to own a majority of the units. The Corporation is responsible for keeping all corporate records, including the declaration, description (plans), by-laws and any other documents deemed useful for the Condominium’s operation. The Corporation must also keep financial statements for the current year, as well as the previous six years.  

Take a look at these FAQs on Condominiums and their Governance for more information.

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Condominium Fees and Reserve Funds

Numerous costs and expenses are associated with running a Condominium complex, as well as maintaining and repairing the common property. These costs are covered by two mandatory funds:

Operating Fund – The day-to-day costs, such as insurance premiums, snow removal, gardening, property management fees, maintenance and repair, are covered by Condominium fees, a monthly fee that each Condominium owner must pay to cover their share of the common expenses. Fees are generally set based on an estimated annual operating budget for the complex.

Reserve Fund – Major repairs and replacements, such as getting a new roof or painting the exterior of the building, are covered by the reserve fund, which is typically funded by a portion of each owner’s Condominium fee. In Condominium complexes with more than 10 units, the contribution amount is determined through a reserve fund study.

A reserve fund study seeks to anticipate any major repairs or replacements needed in the next 30 years, and estimates a budget appropriate to cover those costs. Condominiums with more than 10 units must have a study done every 10 years, and update it every 3 years.

Corporations with more than 10 units existing before January 1, 2010, will have 5 years to complete the study.  New developments as of January 1, 2010, will need to have the study completed by the Declarant as a condition for final approval of the project.

Self-sufficiency a priority
The Corporation may not take out a mortgage for maintenance, repairs or replacements of the common property– it must be self-sufficient. The reserve fund must maintain the minimum amount recommended in the reserve fund study. If there is a shortfall, owners may be asked to pay an additional fee called a special assessment.

For more specifics, please see the FAQs on Condominium Fees, Reserve Funds and Reserve Fund Studies.

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Developing a Condominium

With the popularity of Condominiums increasing in New Brunswick, there is no doubt that the province will continue to see new development. You may have a few questions about the Act will affect your development. Check out these topics for answers:

  • Declaration and Description
  • Approval and Registration
  • Phased Development
  • Condominium Classifications
  • Rights and Responsibilities of a Developer

Declaration and Description

The declaration is a legal document that creates Condominium units to be bought and sold under provincial law. The declaration is the charter document of the Corporation; it transfers the land from the Declarant and details the ownership rights of owners with regards to their units and the common areas. It also outlines the division of ownership, including the percentages of ownership of the common areas and the resulting shares of common expenses.

The description consists of a plan of survey, construction plans and details of the unit boundaries. As part of the approval process for new Condominium development, the declarant must submit these two documents to the Director of Condominiums. 

Approval and Registration

To get the final approval on a Condominium development, the developer must submit to the Director of Condominiums the following:

  • a declaration
  • a description
  • a certificate of registered ownership from the Land Titles office
  • the by-laws for the Condominium Corporation
  • a copy of the building permit
  • a letter stating that no building permit is needed and no zoning requirements need to be met (in some cases only depending on the location)
  • a copy of the reserve fund study  (FAQ 14)for more than 10 units for new or converted buildings
  • a building inspection report for converted buildings of less than 11 units
  • fees payable to SNB will apply for the approval process ranging from $1300 to a maximum of $20,500
  • the regular associated fees for registering documents in the New Brunswick Land Titles system
  • any other information that the Director deems important.

Once approved, the Director will do the following:

  • assign a name to the Corporation
  • endorse a certificate of approval for registration on each document
  • deliver the endorsed documents to the Registrar of Land Titles.

The Registrar of Land Titles will register the declaration, description and other documents under the Land Titles Act.

Phased Development

For all phased development projects, a phased development disclosure statement must be registered as part of the declaration and description. The disclosure statement should include:

  • a statement that this will be a phased development
  • a statement that the Declarant is not required to create subsequent phases
  • an estimated timeline for each phase
  • a description of and the number of units created during each phase
  • a description of the proposed physical appearance during each phase
  • the proportions of the common interests and expenses after each phase
  • a list of the facilities and services the owners will share
  • a conceptual design of the development

The developer cannot change the proposed project without agreement from 60% of the owners.

Condominium Classifications

Condominium properties are now classified as follows:

  • Commercial – contains a building that is intended to be divided into units for commercial use, or has more than one single detached building that is intended for commercial use
  • Residential – contains a building that is intended to be divided into units to be used for residential premises, or has more than one single detached building that is intended to be used for residential premises
  • Bare-land – consists of a Condominium in which the units are defined in relation to the land rather than in relation to a structure. A bare-land Condominium shares all the other features of a conventional Condominium except for the definition of the boundaries.
  • Mixed-use – contains more than one of the classes of Condominium property described in this section
  • Phased-development – Condominium property in relation to which the Declarant may over time create additional units or common elements by amending the registered declaration and description.

Rights and Responsibilities of a Developer

The developer has a duty to deal fairly with the purchaser when entering into, performing, and enforcing the purchase agreement. Before buying, the developer must provide the purchaser with a copy of:

  • The agreement of purchase and sale document
  • The proposed declaration and proposed by-laws
  • Any management agreement or proposed management agreement
  • The Condominium plan or proposed Condominium plan
  • Reserve fund study or a building inspection report if the development is a conversion
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Buying and Selling a Condominium

When buying a Condominium, it’s important to start by doing some research. The buyer should find out how the complex is run and financed. In the case of a previously-owned unit, they can talk to other owners, the manager or a member of the Board of Directors. They should carefully review the declaration, by-laws, reserve fund study, financial statements, current budget, meeting minutes and proof of insurance.

When selling a Condominium, it’s also important to start with some research. The seller should do a market comparison to see what comparable units are selling for. It is a good idea to gather all the important documents and have them on hand for reference.

Learn about the implications of buying or selling a new Condominium, a conversion or a previously-owned Condominium:

  • New Condominiums
  • Conversions
  • Agreement of Purchase and Sale
  • Previously-Owned Condominiums
  • Estoppel Certificate

Find out more with these FAQs on Buying and Selling Condominiums.

New Condominiums

When buying or selling a new Condominium, it’s important that everyone is aware of what work still needs to be done on the Condominium development and what the expected completion date is. The developer or their real estate agent should provide the buyer with copies of:

  • The agreement of purchase and sale
  • The proposed declaration and proposed by-laws
  • A plan showing the developments and the units

In the case of a phased development project, carefully read about the proposed development.

Sometimes, Condominiums are developed in phases or over time. If this is the case for the Condominium you’re interested in, be sure to review the phased development disclosure statement in the declaration.

Conversions

A conversion is when a previously existing building, like an apartment building, is converted into a Condominium. Buying or selling a conversion in the early stages of development is similar to buying a new Condominium, except that the exterior of the building already exists and repairs might be needed at an earlier stage. This will require a critical decision on how to build the reserve fund.

As with new Condominiums, everyone should be aware of what work still needs to be done on the Condominium development and what the expected completion date is. The developer should provide the buyer with copies of:

  • The agreement of purchase and sale
  • Reserve fund information if the development is a conversion
  • The proposed declaration and proposed by-laws
  • Included in the agreement of purchase and sale should be a copy of a reserve fund study (if 11 units or more) or building inspection report (if 10 units or less).

The transfer of the title ownership may not take place until after occupancy.

Agreement of Purchase and Sale

For the purchase or sale of a new Condominium or conversion, an agreement of purchase and sale is the contract used to outline the details. If the Declarant is the seller, the agreement must contain the provisions outlined in the regulations. It is recommended that both the buyer and seller consult with a lawyer before signing this agreement.

The buyer can cancel an agreement of purchase and sale with the seller by giving the seller written notice. The notice must be given within 10 days of receiving the signed agreement.

Previously-Owned Condominiums

When buying or selling a previously-owned Condominium, the buyer should obtain the following documents before making an offer:

  • The agreement of purchase and sale document
  • The proposed declaration and proposed by-laws
  • Any management agreement or proposed management agreement
  • The Condominium plan or proposed Condominium plan
  • Reserve fund study or a building inspection report if the development is a conversion.
  • An Estoppel Certificate

The seller, real estate agent, Condominium Corporation or lawyer can help the buyer track this paperwork down. It is recommended that the buyer consult with a lawyer on these documents.

Estoppel Certificate

An estoppel certificate is a signed statement from the Condominium Corporation that certifies that the documentation and or information they have provided the buyer with for the purchase of a unit in their complex is accurate.

Among other things, the estoppel certificate tells you:

  • The current Condominium fee for the unit and when it gets paid
  • If there are any Condominium fees that remain unpaid by the current owner

The Corporation may charge a fee for the certificate.

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Running a Condominium

Running a Condominium is no small undertaking. Many people may be involved, including the owners and professionals such as accountants, lawyers, Condominium managers and Condominium employees. The Condominium Property Act, along with the by-laws and regulations, provides a common framework for everyone to work by.

Learn more about some of the key areas in running a Condominium:

  • Rules, Regulations and By-Laws
  • Financial Statements
  • Tax and Insurance
  • Resolving Disputes

Rules, Regulations and By-Laws

Every Condominium is governed by its own unique rules, regulations and by-laws. There may be rules regarding the number of occupants per unit, pets, noise, parking and when certain amenities may be used. In most cases, owners can rent their Condominiums, but check the by-laws to be sure.

Many Condominiums have strict rules about altering the unit space or appearance. Additionally, you may need to get permission from the Board before you can do things like change exterior fixtures, install a satellite dish, set up a clothesline or put an air-conditioning unit in your window.

By-laws may be changed to better suit the Condominium community with a 60% minimum vote in favour of the change by the owners.

The Corporation may have to pay a fine of $1,000-$10,000 to the Director of Condominiums if it fails to provide financial statements, reserve fund studies or proof of insurance within the allotted time.

Financial Statements

All Condominium Corporations must produce financial statements yearly and file them with the Director of Condominiums. For those Corporations with more than 10 units, a professional appointed by the Corporation must review the statements and prepare a report before filing.

The regulations outline what qualifications the professional must have to complete this task. He or she may not be a unit owner, director, employee or manager of the Corporation or a partner to one. He or she also may not have an interest in any contract having to do with the Corporation.

Tax and Insurance

The Condominium Corporation is not responsible for any taxes. The unit owners must pay municipal taxes on their Condominium unit and their share of the common areas. The current taxes should be noted in the purchase documents.

The Corporation must insure its liability to repair the units and common elements after damage resulting from fire and any other risks outlined in the declaration or by-laws. The Corporation must submit proof of insurance to the Director of Condominiums each year.

The insurance purchased by the Condominium Corporation does not cover the owners’ possessions, their betterment or their liability if there is an accident in their unit. If specifically stated in the Declaration or by-laws, it is mandatory for the unit owner to carry this insurance.

Resolving Disputes

In an environment where people live very close to one another and group decision-making is necessary, there can be, from time to time, disputes that arise between owners, the developer, the Corporation, an employee of the Corporation or a Director.

If a dispute arises, the parties involved should speak directly to one another to try to resolve the problem. If the conflict involves the by-laws, the Act, the regulations or the Corporation, a written complaint can be filed with the Board of Directors. Mediation and/or arbitration can be used as an alternative to court action if the dispute remains unresolved. The party will need to apply to the Director to appoint an arbitrator.

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