Amalgamation is simply the process of combining of two or more existing condominiums to create a new condominium.Sometimes it is two condominiums, other times it is ten or more.
Amalgamation can be used in almost any circumstance (assuming the legal requirements are satisfied), but it is often used for older “phased” condominiums. The current version of the Condominium Act, 1998 (the “Act”) permits a condominium to be created over a period of time with 1 or more phases being completed after the initial registration. Prior to the Act there was no way to phase condominiums. Instead, “phased” communities were actually constructed as separate condominiums with shared facilities. For an outsider the community seems like one condominium, not several.
Unfortunately, these communities often have higher monthly fees than newer phased condominiums because of the extra time and expense involved in managing them. Sometimes each condominium has only 8 or 10 units. For these small condominiums amalgamation can lead to lower common expenses. Instead of 4 audits each year, 1 is done. Instead of 4 reserve fund studies every 3 years, 1 is required. And so on.
Amalgamation is authorized by section 120 of the Act and the regulations.
The amalgamation process can be daunting for even the most experienced property manager so it is a good idea to discuss it with the condominiums’ lawyer before starting the process. You should also consider the following questions:
- Are the condominiums a type other than standard (i.e. common elements, vacant land, or leasehold condominiums)?
- Are any of them phased? If yes, are more phases to be registered in the future or have less than 10 years passed since the initial registration?
If you answered yes to any of the above questions amalgamation is not available.
Even if amalgamation is available it may not be wise to pursue it. Do you have the support of the boards of each condominium? What about the owners of each condominium? Without the support of the board and owners there is no point in pursuing amalgamation.
Assuming the boards have had preliminary discussions with each other and their respective owners, the process generally involves the following steps:
|Each condominium must complete a comprehensive reserve fund study, or update with site inspection.||Within the 1 year prior to the boards’ sending the notice of amalgamation to owners.|
|The lawyer prepares an interim agreement that describes the expected conduct of each condominium, timelines and other matters.||Prior to sending the notice of meeting to the owners.|
|The lawyer and surveyor complete a new declaration, description, by-laws and rules.||Prior to sending the notice of meeting to the owners.|
|The lawyer and manager prepare amalgamating status certificates for each condominium.||Prior to sending the notice of meeting to the owners.|
|The auditor prepare the last annual financial statement for each condominium.||Prior to sending the notice of meeting to the owners.|
|The manager and lawyer prepare a notice of meeting and send it to the owners, with copies of the proposed documents for the new condominium; a special status certificate; auditor’s report; reserve fund study; interim agreement; an estimate of the costs for each condominium; and a statement of any key differences in the proposed documents from the original documents.|
|The owners’ meeting is held and the amalgamation is presented to the owners. A vote is not taken at the meeting.|
|The owners of at least 90% of the units provide their consent forms.||Within 90 days of the meeting.|
|The municipality approves the amalgamation, or exempts it from the approval process.||Formal approval will not normally be given until you have the approval of the owners.|
|The documents must be submitted to the Land Registry Office for approval.||After the owners have consented.|
|The documents are signed by the signing officers of each condominium and submitted to the Land Registry Office for registration.||After the documents are approved (or exempted) by the municipality and the Land Registry Office.|
|The documents are registered and the amalgamated condominium is created.|
|The directors of the amalgamating condominiums become the directors of the new condominium and must appoint an auditor.||Immediately after amalgamation.|
|An owners’ meeting is held and a new board of directors elected.||Within 60 days of the amalgamation.|
Amalgamation has its benefits, but the process is costly, time-intensive, and frustrating at times. The process should not be started unless the board is fairly confident that it can obtain the consent of the owners. I recommend discussing it with the owners at an AGM or ask for feedback in the monthly newsletter.