Don’t Wait Too Long – Tarion, Bulletin 19R and New Condominiums

Post by: Craig Robson We received a call recently from a prospective client who was interested in developing a condominium project.  The conversation went something like this: Caller: - “We are looking at doing a 6 storey apartment condominium.” Lawyer – “What stage are you at?” Caller – “4^th floor is being worked on now.” Lawyer –“Are you looking to sell the units or rent them?” Caller  “Rent.” Lawyer – “Good.” Our response was based on the fact that if the caller was intending to sell new residential units out of the project, the project would be subject to the Ontario New Home Warranties Plan Act (“ONHWPA”) jurisdiction.  The entity responsible for administering the ONHWPA is the Tarion Warranty Corporation (“Tarion”). If the caller was planning on selling new residential units, the project would then likely be subject to Bulletin19R “Condominium Projects: Design and Field Review Reporting” (“19R”).  19R came into effect on July 1, 2010 (replacing a similar long standing bulletin). 19R applies to vendors and builders of proposed condominiums that have both Part 9 and Part 3 Ontario Building Code (“OBC”) construction requirements and proposed condominiums that have only Part 3 OBC construction requirements. For most of us who are not schooled in interpreting the OBC it is not always clear when 19R will apply.  Its applicability can sometimes be a surprise.  The basic assumption by some is that it only applies to “high rises”.  The true test of applicability is what part or parts of the OBC apply. The question of what part(s) of the OBC apply to a proposed residential project should be put to the project engineer or architect at the outset of any such project if there is any thought of selling units.  This question should be posed well before any construction gets underway if there is any chance of the project being subject to ONHWPA.  Tarion asks the question in its application form but we have seen those applications prepared from time to time without careful consideration (called guessing) of what part of the OBC applies. For the caller referred to above, she would have had a major issue if her intention was to sell residential units out of the project. Her first issue would be that she should have enrolled the project in ONHWPA before construction started.  That in itself is an exercise of some length. The bigger problem is with respect to 19R.  19R requires a lot of paperwork, submissions and professional reviews starting before and during all aspects of construction.  The caller in the above example may have simply been unable to comply with 19R because her project was too far along in the construction process to be able to comply with 19R’s preconstruction and submission requirements that are required before and in the early stages of construction. 19R adds a lot of red tape and cost to a project but cannot be ignored with respect to projects to which it applies.  Not being able to comply with 19R requirements may preclude a project from being brought into ONHWPA registration/enrolment.  If a project does not have this registration/enrolment, the builder is not allowed to sell the new previously unoccupied residential units in the project. The Take Away

1.  If there is any chance that there will be sales of new residential units in a new project, contact Tarion immediately and at the very least find out what the process is to comply with their requirements.
2. If sales of new residential units are intended:

• get the process underway with Tarion well in advance of construction commencement.  It can take a while; and
• determine with certainty whether 19R applies well before any construction starts.  If 19R applies, make sure all relevant members of your project team know what is required of them – and then make sure they do it.  A qualified member of your project team should be charged with coordinating all of the 19R requirements.