This presentation was prepared for FMC's Fall Real Estate Seminar by Jules Mikelberg and Michael Toshakovski. It looks at an update to the Greater Toronto Area Condo Projects, the Status of Condominium Act Review Process, Changes to City of Toronto Draft Condo Approval Process and a Tarion update.

1. Greater Toronto Area Condominium Update
Presented by:
Jules Mikelberg
jules.mikelberg@fmc‐law.com
and
Michael Toshakovski
michael.toshakovski@fmc‐law.com

2. 1. GTA Condo Update
2. Status of Condominium Act Review Process
3. Changes to City of Toronto Draft Condo
Approval Process
4. Tarion Update
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3. GTA Condo Update
• Has the bubble burst? Or is it business as usual?
• Toronto – an island of tranquility in a turbulent sea
• 4,800 Unit sales in April – June 2012
• 13,000 new condo sales 2012 to date
• Prediction of 2,000 to 7,000 over last quarter – 15,000
to 20,000 units
• Similar to 2010, sustainable market
• Cannot sustain all time high of 28,000 in 2011
• 185,000 GTA units in approval process (99,000 in City)
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4. GTA Condo Update …continued
• 1.3% increase in price, 7.4% (2011)
• Median price of $300,000 vs. $500,000 for single
family houses
• 340 active projects of 87,000 units of which 18,000
unsold
• 20 to 30% end users
• 450 to 900 sq. ft. units
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5. GTA Condo Update …continued
• Media hype of the summer vs. recent bank forecasts
• RBC Report – Canadian housing market in good shape
• TD Report – tighter mortgage rules effective July 2012
may reduce prices by average of 3% in second half of
2012 and early 2013 and possible decrease of 10%
over next 3 years
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6. Recent headline – Average New Condo Prices
Falling Drastically
•Average prices down 6.4% from 2009 – 2011
•Price per square foot up from $300’s to $550
•Size of units down from 920 sq. ft. to 795 sq. ft.
•However, “Summer of Incentives”
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7. Fundamentals Still in Place
• Historic low interest rates (1% BOC since Sept. 2010)
• 100,000 new immigrants into Toronto annually
• GTA forecasted to increase population from 6.3M to
8M by 2031
• Places to grow/greenbelt – vertical intensification
• New “suburban downtowns” – Vaughan (Jane & 7),
Markham, Mississauga, Richmond Hill
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8. Fundamentals Still in Place …continued
• Lack of purpose built rental buildings
• Different investor from early 1990’s (renting vs. flipping)
• Condos now 65% of new housing market, differential between
single family housing and Condo’s are growing
• 40,000 to 45,000 new home sales reasonably consistent – more
condo’s
• Smaller condos more affordable
• Smaller buildings – easier to finance
• Lack of construction financing (self‐regulating the market)
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9. Condominium Act Review
•Current Act – S.O. 1998 proclaimed in 2001
•1,300,000 Ontarians live in 6,700
condominiums containing more than 500,000
units
•June 2012 – Ministry of Consumer Services
announced review through public consultation
with stakeholders
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10. Issues
•Consumer protection for buyers
•Condominium finances and reserve fund
management
•Condominium board governance
•Expertise/accreditation of condominium
managers
•Dispute resolution (condo boards/owners)
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11. Stage 1
• Lottery of 10,000 condo residents to respond by October 5 to sit on panel
• Provide advice on improvements to Act by early 2013
Stage 2
• Experts to review and expand on Stage 1 findings and recommend
amendments
• Report expected for public comment by end of summer 2013
Stage 3
• Residents panel to review expert’s recommendations and create action plan
• Stakeholders to review action plan by Fall 2013
• Action plan to be reviewed by Ministry
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12. Service Delivery Improvements to Condo Approvals
(City of Toronto)
• Site Plan and Condo process no longer linked
• Site Plan condition in draft plan approval deleted
• Developers must still satisfy site plan, section 37 and
other conditions but earlier in process i.e. occupancies
• City staff will no longer inspect Solid Waste Facilities
• City will accept certification of Sold Waste Facilities
(similar to site servicing, storm water management)
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13. 2012 Tarion Update
1. Changes to Tarion Addendum for
Condominium Projects
2. Performance Based Pricing and Reduced
Enrolment Fees
3. Changes to the “Major Structural Defect”
Definition
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14. Changes to Tarion Addendum for
Condominium Projects
1. Addition of Schedule “B”
• All adjustments to purchase price that are to be paid by the purchaser must
be disclosed in Schedule “B”
• Part 1: “Stipulated Amounts/Adjustments”
• Part 2: “All Other Adjustments – to be determined in accordance with the
purchase agreement”
2. Easier to change Critical Dates by mutual consent
The new Addendum is mandatory for all condominium
projects where the first arm’s length Agreement of
Purchase and Sale is signed on or after October 1, 2012
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15. Performance Based Pricing (“PBP”) and
Reduced Enrolment Fees
• Current Regime: Tarion enrolment fees are calculated based
on the sale price of home
• Proposed PBP Regime: Builders are rated on a 100 point scale
and will have their enrolment fees reduced or increased based
on their rating. Tarion projects that PBP will be fully
implemented by Q3 of 2015.
• In the meantime, enrolment fees have been decreased by
$150.00 per home for homes enrolled on or after July 1, 2012
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16. Changes to the “Major Structural Defect”
(“MSD”) Definition
1. Vendor/Builder accountability for MSD is extended
throughout the full seven year warranty period
2. Expanded definition of MSD
• Application to Houses: where Agreement of Purchase and
Sale has been signed on or after July 1, 2012
• Application to Condos: where first arm’s length Agreement
of Purchase and Sale was signed on or after July 1, 2012
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17. Greater Toronto Area Condominium
Update
Jules Mikelberg
Michael Toshakovski

18. The preceding presentation contains examples of the kinds of
issues companies dealing with real estate could face.
If you are faced with one of these issues, please retain
professional assistance as each situation is unique.