Rental Condominiums and Compliance with the Condominium Management Services Act
The CMRAO has observed a concerning trend where properties registered as condominiums are operating as rental properties and not complying with the Condominium Management Services Act, 2015 (CMSA). These condominiums are operating under the assumption that they are not subject to the CMSA because the units are all owned by a single owner. Regardless of the ownership structure, any person who provides management services to a condominium must be licensed with the CMRAO or fall within an exemption.
What is a Condominium Corporation?
A condominium corporation is a legal entity created under the Condominium Act, 1998 (Condo Act). A typical ownership structure in a condominium is one where a condominium unit is purchased by an individual or a business and that individual/business then owns their unit and shares ownership of the common elements (e.g., the lobby, elevators, and amenities) with other unit owners. The unit owners share an interest in the corporation and elect a Board of Directors to oversee the business affairs of the condominium.
There are other ownership structures in a condominium corporation. In some instances, the declarant of the condominium corporation may retain ownership of all the units or may sell the units to a single owner. Also, there are properties that were built and operated as apartment buildings, but were converted to condominiums at a later date with a single owner for all of the units. In these scenarios, a single owner maintains ownership of the condominium units and leases them to the public, operating the condominium like a rental property.
While the Residential and Tenancies Act, 2006 governs the relationship between the landlord (owner of the units) and the tenant for residential properties, the Condo Act governs the condominium corporation and its operations. Regardless of the fact that the units are wholly owned by a single owner and leased to the public, all properties that are registered as condominium corporations must operate in accordance with the Condo Act. Any management services that are offered to or performed on behalf of the condominium corporation are also subject to the CMSA.
Compliance with the CMSA
Any person who provides management services to a condominium, regardless of the ownership structure, must be licensed with the CMRAO or fall within an exemption under the CMSA. Managing and maintaining the common elements of a condominium corporation constitute providing condominium management services, as defined by the CMSA. It is illegal for a person to provide condominium management services unless they are licensed or meet one of the exemptions set out under section 2 of Ontario Regulation 123/17.
Some condominium corporations decide not to hire a licensed condominium manager. Instead, the corporation – usually the board of directors – performs the work associated with the day-to-day operations. The exemption for self-managed condominiums applies only if the board member or officer is not being compensated for providing condominium management services. If they are compensated for providing condominium management services, the CMSA requires that they have a licence from the CMRAO.
Failure to comply with the CMSA constitutes an offence, which can result in a fine of up to $50,000, or imprisonment for a term of up to two years for an individual, or a fine of up to $250,000 if the person or entity is not an individual.
Where to go for additional information
For more information about licensing, please see the CMRAO’s Guide, Do I Need a Licence? Interpreting the Definition of “Providing Condominium Management Services, and the CMRAO Licensing Overview resource, which outlines the CMRAO’s licensing requirements.