Filing Returns with the Condominium Authority of Ontario

By Merovitz Potechin on Thursday June 27, 2019.

Condominium corporations in Ontario are required to file specific returns with the Condominium Authority of Ontario (CAO). While this may seem like a simple practice, the consequences of not filing the proper returns on time can impact not only condominium boards and property managers, but also potential buyers of condo units in Ontario.

What happens if a condo corporation does not file their returns?

Besides a late filing fee of $200 for each overdue return, the most serious consequence of not filing returns is that “a condominium corporation that has outstanding returns is unable to maintain a proceeding before the Condominium Authority Tribunal (CAT) or any other court in Ontario without leave under section 23.1 of the Act”.

What this means is that condo corporations that have not filed their returns, or who owe money to the CAO, will then possibly be unable to pursue important business in front of the courts in Ontario or before the CAO, such as pursuing litigation against condo unit owners or amending a Declaration.

In short, while filing a return may seem like a basic task of paperwork, failing to do so on time can result in serious consequences for condominium corporations and further delay in their ability to complete some of their basic functions.

Litigation and condo corporations

It is worth stressing that condo corporations that are planning on, or are in the process of, litigation can run into problems if their return filings are not made on time. As mentioned above, due to Section 23.1(1) of the Condominium Act, 1998, there is a restriction on the ability of a condo corporation to sue in Ontario court if they have unpaid fees or filings. As such, it is essential that condo corporations take the filings of their returns seriously and pay attention to O. Reg. 377/17 where the 4 different types of returns (Initial return, Turn-over return, Annual return, Transitional return) are described along with their deadlines.

Loss of director authority

Another potential consequence of late or outstanding returns is the loss of director authority. For directors appointed, elected or re-elected on or after November 1, 2017, they are required to complete the mandatory training within 6 months. Evidence of completion of the condo director training must then be properly submitted in accordance with Section 11.8 of Ontario Regulation 48/01.

Again, while this may seem like simply a bureaucratic step, and there are provisions for the director in question to serve on the condo board again once they do complete the training after the deadline has passed, the loss of director authority has immediate consequences since they cannot pass resolutions for amending Declarations or perform their duties until the training is complete.

Condo buyers in Ontario and status certificates

Condo buyers in Ontario should also appreciate that failure of a Condominium or its directors to comply with the requirements of the Condominium Act may impact the validity of data contained in a status certificate – as a result of non-compliance with the filing requirements of the CAO. Since condo corporations issue these certificates, and these certificates are essential for potential buyers to know important information about the building and its units prior to purchase (such as information pertaining to the directors of the corporation and whether the condo corporation is engaged in litigation) late filings of important returns may impact potential condo unit sales.  For example, a condo corporation that fails to maintain its minimum annual filings with the CAO, may be perceived by Buyers (and lawyers reviewing status certificates) as being poorly managed and this may naturally impact a Buyer’s desire to purchase a unit.

If you are a property manager, director or unit owner in a condo corporation in Ontario and have any questions about filing returns, issues due to outstanding returns, or the purchase and sale of a condo, please contact the Real Estate Lawyers at Merovitz Potechin LLP.