SPIS Entire Agreement Clauses

The Ontario Court of Appeal, in Soboczynski v Beauchamp, 2015 ONCA 282, analyzed when a Seller Property Information Statement (“SPIS”) can be relied on and its status as a representation as well as the impact of the “entire agreement clause” in an APS.

Facts

In 2007, the Beauchamps (“Sellers”) sold their house to the Soboczynskis (“Buyers”) without a realtor.

In 2005, Sellers decided to upgrade the basement by replacing some panelling and installed new carpet throughout.

On November 21, 2007, the Buyers signed an Agreement of Purchase and Sale (“APS”). The APS contained two conditions: 1) satisfactory home inspection & 2) satisfactory financing. Furthermore, the APS contained a clause that read:

[The APS] including any Schedule attached hereto, shall constitute the entire Agreement between Buyer and Seller. There is no representation, warranty, collateral agreement or condition, which affects [the APS] other than as expressed herein. (the “entire agreement clause”)

The next day, on November 22, 2007, the Buyers gave an SPIS to the Sellers to fill out after already picking up the signed APS. The Sellers filled out the SPIS. The SPIS concluded with the following statement:

Any important changes to this information known to the sellers will be disclosed by the sellers prior to closing.

On November 28, 2007, the Buyers waived both conditions.

The closing date was set for January 18, 2008. On January 9, 2008, the basement flooded and water entered the basement through window wells. The Sellers elected to spend $1,648.59 repairing damage but did not tell the Buyers about the incident. The Sellers reasoned this was an isolated incident and not an “important change”.

The sale closed on January 19, 2008. On February 6, 2008, after closing, the basement flooded again. The Buyers hired an expert to ensure the basement would not flood again and determined that to correct the flooding issues in the basement it would cost $22,598.17.

Eventually, the Buyers found out about the January 9, 2008 flood and commenced an action against the Sellers for damages based on fraudulent or negligent representations.

The trial judge found that the entire agreement clause acted as a bar to the action. The Buyers appealed.

Entire Agreement Clauses in Action

The Court of Appeal judge ruled the SPIS signed after the APS did not apply to the APS by virtue of the entire agreement clause. This is summed up nicely where Justice Epstein states at paragraph 41:

In my view, the answer to the question is that, in the circumstances of this case, any consequences flowing from representations made in the SPIS were outside the reach of the entire agreement clause. The entire agreement clause in the APS operates retrospectively, not prospectively. In other words, the application of the clause is restricted to limit representations, warranties, collateral agreements, and conditions made prior to or during the negotiations leading up to the signing of the APS. When the appellants made representations in the SPIS, a document completed after the APS had been signed by all parties, the entire agreement clause was spent.

The judge, at paragraph 59, likened the entire agreement clause to saying: “these are the terms of our agreement and nothing that was said beforehand is relevant. You have no basis for relying on anything other than the terms of the agreement. The agreement stands on its own.” Therefore, the purpose of entire agreement clause is to evoke certainty and clarity in contractual dealings. The entire agreement clause defines a hard line to define where the contract and the prior dealings end. Anything not specifically included or referenced in the agreement, even if in writing, will not form part of the APS.

Negligent Representations Aside from the Agreement of Purchase and Sale

In this specific situation, the post-APS conduct of the parties, showed that they intended for the SPIS to be a representation separate from the APS because both parties took the SPIS seriously and by filling out the SPIS (when they technically had no obligation to). Because of this contact, the Sellers created a separate agreement with the SPIS containing representations.  Therefore, if the Buyers could prove the elements of negligent misrepresentation on the SPIS document itself, they could claim damages.   The tort of negligent misrepresentation has five main elements:

(1) a duty of care based upon a special relationship between the plaintiff and defendant;

(2) an untrue, inaccurate or misleading statement by the defendant;

(3) negligence on the part of the defendant in making the statement;

(4) reasonable reliance by the plaintiff on the statement; and

(5) damage suffered by the plaintiff as a result.

Hedley Byrne & Co. v. Heller & Partners Ltd.,[1964] A.C. 465 (U.K. H.L.)

This argument failed primarily because the Buyers failed to prove the element of “reasonable reliance” on the representation. The damage arose from the purchase of the property. The Buyers had already decided to purchase the property prior to the signing of the SPIS- they did not rely on the information in the SPIS to make their decision, it was already made. Therefore, they could not claim that the representations in the SPIS agreement caused them damage because the decision to buy the house was unrelated to the representations made in the SPIS.

Interestingly, even though the claim for negligent misrepresentation did not succeed because of the lack of reliance, it likely would not have been successful in any event because the trial judge stated that it was “doubtful” that the damage from the January 8, 2008 flood was an “important change”. The Court of Appeal agreed with this position.

Takeaways from the Case

It is always best to deal with a qualified real estate representative to assist you in navigating a real estate transaction.

If you are a purchaser, always ensure that you have an SPIS signed prior to making an offer, or at the very latest prior to waiving your inspection condition. If an SPIS is not completed, but the seller has agreed to provide one, it may be worthwhile to add a condition in your APS providing you the ability review and approve the SPIS before the deal is binding.

Always reference the SPIS as a part of the APS, in writing. A simple statement adding the SPIS as a schedule or stating that the SPIS forms part of the agreement should suffice.

The purpose of entire agreement clauses are meant to substantiate everything up to the actual signing of the APS. Anything not included within the agreement (or specifically referred to in the agreement) or obtained after signing cannot be relied upon.

An SPIS can be used to claim negligent misrepresentation separate from the APS depending on the circumstances of the transaction, but the elements of negligent misrepresentation all must still be found to succeed on the claim.

Condominium Common Elements

Condominium Common Elements: Additions, Alterations and Improvements

Ontario condominium corporations are now left in uncertainty over their power to restrict changes made to common elements of individual units. The purpose of section 98 of the Condominium Act, 1998 is to prohibit unit owners from making changes to the common elements of their condos unless they receive permission from the Board of Directors. Condominium corporations have no obligation to give consent to unit owners to make changes to the common elements. Section 98 states that “an owner may make an addition, alteration or improvement to the common elements” if the Board provides approval. This provision should, in theory, give the Board complete control over changes made to the common elements of condominium units. The uncertainty derives from the question of what constitutes an addition, alteration or improvement. The ambiguity in the answer shifts the balance of decision making power slightly away from the Board and closer to the individual unit owners.

Changes Defined

On November 9, 2009, when faced with the question of whether or not a hot tub qualifies as an addition, alteration or improvement, the Ontario Court of Appeal affirmed definitions to these three terms in the case of Wentworth Condominium Corp. No. 198 v. McMahon.  Condominium unit owner, McMahon, placed a hot tub on his common element yard appurtenant to his unit without permission or approval from the Board. The Board made an application seeking removal of the hot tub on the basis that it was a change to the common elements. The Superior Court determined, after considering section 98, that the hot tub was not an addition, alteration or improvement to the common elements. To clarify this point, the Court stated that an “addition” is something that is joined or connected to a structure, an “alteration” is something that changes the structure, and an “improvement” is the betterment of the property or enhancement of the value of the property.  Since the hot tub is not connected to the property and it does not directly change the structure of the property it cannot be deemed an addition or alteration, respectively.

Furthermore, the hot tub does not improve the property or enhance its value as it can easily be removed by McMahon if he so chooses. Therefore, according to the Superior Court, the hot tub did not qualify as something that requires approval by the Board and McMahon was able to keep the hot tub. The Court of Appeal affirmed this decision and further stated that the definitions “provide a valuable starting point” for decisions relating to section 98 of the Act.

Application of McMahon

If the McMahon reasoning is the starting point for these types of cases, all future changes to condominiums should follow precedent.  The case of Metropolitan Toronto Condominium Corp. No. 985 v. Vanduzer was decided a mere three months after McMahonm on February 9, 2010 with a different result. This case had a similar fact pattern whereby the unit owner, Vanduzer, had a gazebo erected on her common element terrace appurtenant to her unit against the permission of the Board. Vanduzer argued that since the gazebo was not attached to the terrace, it should not be considered an addition to the common elements, which by the definitions affirmed in McMahon would be an accurate statement. Instead, the Court concluded that the gazebo was an addition and ordered Vanduzer to remove the gazebo from the common elements of her unit. Why was Vanduzer’s gazebo considered an addition to the common elements while McMahon’s hot tub was not?

Distinguishing McMahon and Vanduzer

The hot tub in McMahon was a free-standing six feet wide, seven feet long self contained unit. It was not attached to the common elements in any structural way. Its only connection to the unit is the cord that provided it with electricity. Vanduzer’s gazebo, on the other hand, although not actually attached to the unit was considered an addition. The difference was in the installation. Vanduzer had the gazebo installed incorrectly. The manufacturer’s intended installation of the gazebo clearly stated that, for structural reasons, it must be attached to the ground. The Court concluded that if Vanduzer had correctly installed the gazebo, it would have fallen under the definition of an addition and would therefore be considered a change which would require Board approval.
Other Considerations

The Court also considered that the condominium corporation has a statutory duty, under section 26 of the Act, to manage the common elements of the building. With this duty comes liability for the safety and protection of other unit owners and guests. The hot tub, installed correctly, posed no danger to other people; while the incorrectly installed gazebo, arguably, could pose a threat to other residents.

Lessons Learned

There are some lessons to be taken from these two cases. By definition, an individual condominium unit holder has no right to make changes to the common elements of their unit. They have, however, gained more flexibility in what is a restricted change. McMahon may have opened a loophole for unit holders to rely on to evade the restrictions stated in section 98 of the Act. As long as the change does not fall within the definitions of addition, alteration or improvement, the unit owner is able to do as he or she pleases. Additions such as barbeques, picnic tables, or even small inflatable pools should be permitted. Some may argue that Vanduzer closed this loophole; but, the Court in Vanduzer actually used the definitions in the way they were intended. The gazebo should have been attached to the ground. If it were, it would have been an addition. Incorrect installation of an object will not fool the Court into allowing prohibited changes. The power of the condominium corporation to restrict changes to common elements may have been slightly narrowed, but the power of the courts to ensure proper application of the law is as strong as ever.

Condo Pet Bylaws

Is Your Pet Too Big? Pet Bylaws in Condominiums

The Supreme Court of British Columbia has ruled that breaching a Condominium’s Pet Bylaw can result in a permanent injunction enjoining and restraining a pet-owner from bringing his or her pet back into the common property.  The ruling comes from the March 27, 2012 decision in Strata Plan LMS 2629 v. Blondin, where the Pet-owners breached the Pet Bylaw by keeping a dog that exceeded the height restriction of the Pet Bylaw in their strata unit.  The Court also addressed the issue of applicable fines against the tenants resulting from their Bylaw breach.

Facts

The Respondents are owners of a Strata unit located in Langley, British Columbia. Before adopting their dog, the Respondents approached one of the members of the Strata Council, Gar Anderson, then the Vice President, and asked for approval to have a dog in their unit.  Mr. Anderson signed a handwritten note approving a dog in their unit, however, the note made no reference to the size of the dog to be adopted.

He understood the note to simply be a prerequisite for adoption from the adoption agency.  The Strata council received complaints about the dog exceeding the height restriction of the Pet Bylaw. The Council wrote to the Respondents bringing the matter to their attention and providing them with an opportunity to respond to the complaint. The Respondents presented their case in front of the Council and it was decided that a resolution would be put forward determining whether to amend the Pet Bylaw by removing the height and weight restriction.  The resolution was defeated.

The Council considered all the requests from the Respondents on the oversized dog issue but decided to uphold and enforce the Pet Bylaw.  The Respondents were advised that failure to remove the dog would result in a fine of $200 per week.

Arguments

The Strata Corporation argued that the Respondents had an oversized dog in their strata unit without a prior exemption and were therefore in violation of the Pet Bylaw.  The Respondents argued that they obtained written approval by Mr. Anderson which constituted an exemption under the Bylaw 4(10) and were thus not in breach of the Pet Bylaw.  They Respondents also argued that  Mr. Anderson  had an indirect interest in the issue because it was he who signed the note and therefore should not have been able to participate in the Council decision finding them in breach of the Bylaw.

Decision

The court ruled that that the Respondents did not obtain a proper exemption from the Strata Council authorizing them to have a dog that exceeded the height restriction of the Pet Bylaw.  No formal request was made by the Respondents to the Strata Council as a whole.  Furthermore, the permission note signed by Mr. Anderson did not mention anything about a request for an exemption from the height restriction of the Pet Bylaw.  Additionally, Mr. Anderson on his own could not authorize an exemption from the pet height restriction.  It was a matter that needed to be addressed by the Strata Council as a whole.

The court struck down the argument that Mr. Anderson had an indirect interest in the issue and therefore should not have been able to participate in the Council decision finding the Respondents in breach of the Pet Bylaw.  The court stated that he did in fact have a marginal interest in the matter as to whether he had signed the note and granted an exemption but this was largely irrelevant as he could not, on his own, grant such an exemption.

The Court enforced the Council’s implementation of fines for breach of the Pet Bylaw.  The dog was kept in the Strata Unit for a total of 35 weeks and with weekly fines of $200 per week,  the total fine levied amounted to $7,000.

The Court also issued a permanent injunction enjoining and restraining  the respondents from bringing the dog back into the common property.

Similar restriction in Ontario

The Ontario Court of Appeal decision in York Condominium Corp. No. 382 v. Dvorchik upheld the condominium’s rule restricting the size of pets to 25 pounds.  Compliance with such a rule requires the removal of any pet from the condominium that weighs more than 25 pounds.

Implications for Realtors

KRAWCHUK v SCHERBAK – IMPLICATIONS FOR REALTORS

The Ontario Court of Appeal has recently made it clear that a salesperson will be held liable for not fulfilling duties to their clients that are set out in the Real Estate Council of Ontario’s Code of Ethics (the “Code”).  This case serves as a reminder to real estate salespersons to be very careful when assisting sellers with the Seller Property Information Sheet (“SPIS”) and when acting as a dual agent.

FACTS

The sellers took the time to fill out a seller property information sheet, but did not do it accurately.  In response to the question “Are you aware of any structural problems?”, they had replied, “NW corner settled” and “No further problems in 17 years”.

In response to the question “Are you aware of any problems with the plumbing system?”, they had replied “No”.  In reality, they knew that the foundation of the house was seriously compromised and that there were ongoing plumbing problems.

The house is built on a peat bog and had experienced significant settling.  It was clear to the naked eye that it had settled. The floors were sloped and the lines of bricks showed a sloping to a corner. There was significant evidence of foundation cracking and repairs.

In relation to the plumbing, there was a pit in the basement covered over with a steel plate. The sewage from the house flowed into the pit and then drained into the municipal sewage system.

To further complicate matters, both the purchaser and the vendors used the same real estate sales representative for the transaction.  The sales representative “encouraged” the purchaser to sign a “clean” offer so that her offer would be the one accepted. Accordingly, the conditions (financing and inspection) were removed. She offered $110,100 for the house and the offer was accepted.

Immediately after moving in, the purchaser found a buildup of sand in the crawl space.  A few days later there was more. Investigation disclosed the house had to be lifted off the foundation.  The foundation had to be removed, along with significant subsoil, and replaced with engineered fill. New footings, foundation and a basement floor were poured and the housed placed onto the new foundation. Removing and replacing the house caused significant cracking and repairs were required as a result.  Cost of the repair was $190,000.00.

It was evident the seller had tried to hide some of the issues because when the buyer viewed the house, there was significant chalk graffiti on the exterior concrete wall where the cracking had occurred and been repaired, making it harder to notice.  The vendors had also put an air freshener on the underside of the steel plate in the basement to mask the sewage smell.

DECISION

The Trial Court found the vendors liable for negligent misrepresentation and awarded the plaintiff purchaser damages of $110,742.32 but did not find any liability for the salesperson.  On appeal, it was found that the salesperson and the agency were 50% responsible along with the vendor.

The Court held that the sales representative was negligent to the purchaser for failing to recommend they have a qualified inspector provide an opinion about material issues affecting the house, as well as for failing to explain the risks of not making the offer conditional on a home inspection.  It was also found that the salesperson was negligent for not properly assisting the seller with the vendor disclosure form.

In addition to the damages, the Court of Appeal awarded the purchaser $27,780 in legal costs and interest.

COURTS REASONING FOR FINDING THE SALESPERSON LIABLE

The Court’s reasoning included the fact that the sales representative had plenty of reasons to question the authenticity of the vendors’ assurances in the SPIS which stated the settlement problems were resolved.  The salesperson knew that the house had a history of settlement problems and accordingly it was underpriced.  In addition, the salesperson’s visual inspection of the property disclosed settlement problems.

The Court of Appeal stated that “The due diligence requirements of a real estate agent mandated by the Code, while not dispositive, are of considerable importance in informing what is expected of real estate agents in terms of verifying information about a property listed for sale”.  The Court also hi-lighted previous cases which indicate that a sales representative’s duty to his or her client includes a duty to investigate material information about the property.

The Court made it clear that given the obvious defects in this house, the salesperson had to either further verify the assurances themselves, or recommend, in the strongest terms, that the purchaser get an independent inspection either before submitting an offer or by making the offer conditional on a satisfactory inspection.  The failure to do either was an ‘egregious lapse’.

WHAT DOES THIS DECISION MEAN FOR A REAL ESTATE SALES RESPRESENTATIVE?

This case serves as a reminder that sales representatives always have a duty to provide a certain level of guidance when a client is filling out or receiving a disclosure statement.  If acting as a seller’s agent and assisting in the completion of the SPIS, the representative has to exercise reasonable care and skill in ensuring its accuracy.  In this Court of Appeal case, the salesperson failed to meet the standard of care.  There were obvious defects in the house and the sales representative obviously knew the vendor disclosure form was not accurate.  They should have questioned the vendors further and appropriately counseled them with respect to the implications of the representations on the SPIS.

The Court of Appeal continually discussed the Code and a salesperson’s obligations to abide by it.  The Code provides guidelines that should always be followed, but above all else, use common sense!  If the seller is obviously trying to commit fraud, as in this case, do not turn a blind eye or you could find yourself in some serious trouble.  Sales representatives should always be proactive and inform the vendors about the implications of misrepresenting information in the vendor disclosure form and help counsel clients when they are filling out the form.

Another issue not discussed in this case is whether a sales representative can just tell the seller they are not giving any advice on how to fill out the SPIS?  In past cases, salespersons have argued that they had nothing to do with the SPIS and they just left it up to the seller to complete.  Although the courts have not provided a well defined test or standard of care to be followed, the trend in the case law tends to suggest this defence may not always work for a sales representative.  It would be prudent of all representatives to go further and provide assistance when the SPIS is being filled out.

The standard of care is always going to be more onerous when acting in a dual relationship.  Any decisions made by a salesperson are going to be scrutinized more carefully if they are acting for both the vendor and the purchaser.  In this situation, you should be extra careful and either take measures to verify the information provided by the vendors or strongly recommend to purchasers that they undertake an inspection of the property and make the closing conditional upon passing the inspection.

As one would expect, the Court in this case also focused on the fact that this sales representative encouraged the purchaser to waive the inspection condition.  Be very careful if ever discouraging parties to a transaction from seeking outside professional advice.  You should always encourage parties to seek professional advice when appropriate.  With the market this year, many buyers in Thunder Bay have been frustrated while house hunting, and are putting in offers without any conditions.  The majority of the time, everything will work out fine, and they will be able to get financing and insurance, but you still need to be very careful when suggesting the purchaser make an offer without conditions.  At the very least, if they are adamant about making an offer without conditions, let them know the potential consequences of breaching the agreement.

On a final note, I have quickly learned as a young lawyer that I have to approach most files with the concept of CYA.  I document everything I do and you should do the same as a salesperson.  As an example, if you tell a client they should get an inspection, then I strongly suggest that you have evidence of that in case things ever go south.  Say you prepare an offer with several conditions in it and then the buyer says they are going to cross them out and initial the offer.  After you have verbally told them your recommendations, follow up with an email confirming your conversation that you recommended an inspection, that you mentioned the consequences of not having one, and notwithstanding this, they have decided to go ahead without the clause.  Although this seems like extra work, this can save you a big hassle down the road.

Condo Property Assessments

REVIEW/APPEAL

Introduction

This presentation deals with the assessment and taxation of residential condominium units in Ontario. The following areas will be covered in the presentation.

  1. Basic property tax system in Ontario;
  2. A request for review of MPAC assessments of condominium units;
  3. Appeal to the Assessment Review Board;
  4. Condominium Corporation objections to assessments under The Assessment Act on behalf of condominium owners.

Overview of the Ontario Assessment Act

The provincial government passes legislation, sets assessment policies and determines the education tax rates. Then the Municipal Property Assessment Corporation (“MPAC”) decides what the current value of the condominium unit is, the assessment value and the classification for the condominium unit. The City then determines its revenue requirements and establishes a municipal tax rate, and then proceeds to collect property taxes from the condominium unit as municipal taxes. Finally, the Assessment Review Board is an independent body or tribunal that reviews by way of an appeal from property owners their assessed value for the condominium unit.

At the present time, condominiums in Ontario have an assessed value as of 2008 and this value will be used until 2012.

The assessment for a condominium unit and the realty taxes for the condominium unit are different things. MPAC provides an assessment roll to the City each year that includes the assessed value of the condominium unit. The City then takes over and applies its mill rate to the assessment for each property in order to arrive at the amount of tax that will be charged to that condominium unit in that year. The assessed value is multiplied by the mill rate to arrive at the taxes payable.

Mill rates are determined by a budgetary process of the City that is completed each year. The City receives the assessed values from the Ministry of Revenue and determines what factors or mill rates will be necessary to produce tax revenues that will meet the revenue needs of the City for its services and school boards. The City then fixes its mill rates accordingly.

Each city has different mill rates depending on the type of property and the school support designation. The usual difference in mill rates is based on the type of property involved. For commercial/industrial properties that are occupied, there is a commercial mill rate that is used. For residential properties there is a residential mill rate that is applied.

The condominium unit owner can simply contact MPAC to verify the details about their property and to find out about the current value assessment. The owner can also ask about similar properties and how they are valued. If the condominium unit owner is still not satisfied with the responses and the way that the assessed value was determined, then there are certain procedures to be followed to have the assessed value reconsidered.

Request for Reconsideration

The condominium unit owner can file a request for reconsideration (RFR) with MPAC. This is a very informal process, inexpensive and relatively fast. There is no charge for filing an RFR. Since I’ve assumed that the condominium unit is a residential unit, the unit owner must file an RFP with MPAC before being able to file an appeal to the Assessment Review Board (ARB). An RFR must be filed no later than March 31st in the tax year for which the assessment applies.

An RFR must be in writing. It can either be by way of a letter or on the form that has been prepared already in blank by MPAC. The RFR form is available on the MPAC website. Attached as an exhibit to this presentation is a copy of the blank RFR form of MPAC as of the date of this seminar. The basis for the requested review of the assessed value must be set out and the relevant factors such as other properties that are comparable, any sales information, differences in the attributes of the unit that MPAC has used to come to an assessed value, etc. For example, the following are some common reasons why a condominium unit owner might file an RFR.

  • The assessed value of the unit appears to be different from similar condominium units in the vicinity.
  • The condominium unit has been incorrectly classified.
  • MPAC’s records are incorrect, ie. the size of the unit, the number of bathrooms, etc.
  • The condominium unit was purchased close to the valuation date at a significantly different amount than the assessed value.

On receiving the RFR, MPAC will provide information about how the condominium unit was assessed. MPAC will review the concerns that have been raised by the condo unit owner and may contact you for additional information. That information could include making a visit to the condominium unit to see whether or not there have been any changes since MPAC’s last visit, and this could increase the assessed value if substantial changes have been made that are not reflected in the assessed value. After all of this has been done, MPAC provides a written response by September 30th of that tax year and this may be extended on consent to November 30th. Also attached to this presentation is a condominium data collection template that is used by MPAC to collect information concerning the value of condominium units.

Assessment Review Board Appeal

The owner of a condominium unit may file an appeal with the Assessment Review Board (ARB”). The ARB is independent. It is a tribual established by the Province of Ontario through the Ministry of the Attorney General. The ARB hears appeals from people who believe that their properties are incorrectly assessed or classified.

There are specific forms that have to be used and fees for filing an appeal with the ARB. The ARB has a set of rules that it has established for hearing appeals from the assessed value of properties. Specific forms and time lines are set out in the rules. A condominium unit owner would have to appear at the ARB hearing to support their appeal. MPAC will also appear at the hearing, and the City could appear as well, although it usually does not.

The deadline for filing an appeal with the ARB is March 31st of the tax year. In other words, even though you may have filed an RFR with MPAC, if you haven’t got a decision yet then you have to file an appeal to the ARB to protect your position and be able to appeal to the ARB.

The hearing process is like a trial. There is a single member of the ARB that hears the evidence and initially MPAC has the onus to prove the accuracy of the assessed value. Usually MPAC will put forward comparable properties as evidence and shares this information with the condominium unit owner in advance. A notice of decision is sent out by the ARB to the condominium unit owner, MPAC and the City. MPAC then updates its records and if there is a change in the classification or current value, then the City will adjust the property taxes at that point. It is possible to request the ARB to review its decision, although this is not done very often. A decision of the ARB may be appealed to the Divisional Court, but only on questions of law. A lawyer should be retained if you are going to take that route.

Condominium Corporation Assessment Reviews on Behalf of Condominium Unit Owners

The Condominum Act, 1998 (the “Condo Act”) allows a condominium corporation to object, on behalf of all the condominium unit owners, to a tax assessment affecting the units. This law is to try and remove the procedural problems that might be encountered by a condominium corporation when all of the condominium units are affected by a MPAC assessed value and there would be no other method of representing all of the condominium unit owners on the review. The other benefit is that this will enable to condominium corporation to finance the assessment review and appeal through the common expenses of the condominium unit owners.

The Condo Act provides in Section 56(1)(f) as follows:

“56. (1) The board may, by resolution, make, amend or repeal by-laws, not contrary to this Act or to the declaration, …….
(f) to authorize the corporation to object to assessments under the Assessment Act on behalf of owners if it gives notice of the objections to the owners, and to authorize the defraying of costs of objections out of the common expenses; ….

Assessment appeal

(4) If the board has made a by-law under clause (1) (f), the corporation shall have the capacity and authority to appeal under section 40 of the Assessment Act on behalf of owners but shall not be liable for an alteration in the assessment of a unit or for any other matter relating to the appeal, except for the costs of the appeal. 2008, c. 7, Sched. A, s. 18.

Same

(5) Despite a by-law made under clause (1) (f), on written notice to the board and to the Assessment Review Board given before the hearing of an appeal under section 40 of the Assessment Act, an owner may withdraw an appeal that the corporation has made on the owner’s behalf. 2008, c. 7, Sched. A, s. 18.

Registration

(9) For each by-law of a corporation, an officer of the corporation shall certify a copy of the by-law as a true copy and the corporation shall register the copy in,
(a) the land titles division of the land registry office within the boundaries of which division the land described in the description is situated, if the land registry office has a land titles division; or
(b) the registry division of the land registry office within the boundaries of which division the land described in the description is situated, if the land registry office does not have a land titles division. 1998, c. 19, s. 56 (9).

When by-law effective

(10) A by-law is not effective until,
(a) the owners of a majority of the units of the corporation vote in favour of confirming it, with or without amendment; and
(b) a copy of it is registered in accordance with subsection (9). 1998, c. 19, s. 56 (10).”

If a condominium board of directors wants to appeal assessments on behalf of owners of condo units, it has to pass a resolution of the board making a specific by-law to authorize the condominium corporation to object to the assessments under the Assessment Act. This objection is on behalf of the owners of the condominium units and it is necessary that the board give notice of the objections to the unit owners. The purpose of the by-law is to authorize the payment of costs of objections out of the common expenses of the condominium corporation that it collects from the the unit owners.

For a by-law passed by the board of directors relating to objections for assessments under the Assessment Act (“Assessment By-Laws”), the by-law must meet certain requirements before it is effective. The by-law is not effective until the owners of a majority of the units of the condominium corporation vote in favour of confirming it, with or without amendment, and a copy of the by-law has to be registered in accordance with the Condo Act.

The Assessment By-Law must be registered in the Land Titles Office. A certified copy of the by-law is registered. The purpose of the by-law being registered is so that any purchasers of the condominium units will have notice of that by-law being in effect. As well, since the by-law is not effective unless a majority of the owners of the units vote in favour of it, then the current owners of the units will have notice of the by-law being passed.

Once the Assessment By-Law is passed, then the condominium corporation has the capacity and authority to appeal under Section 40 of the Assessment Act on behalf of the individual unit owners. The condominium corporation is specifically exempted from any liability for an alteration in the assessement of a condominium unit or for any other matter relating to the appeal, except for the costs of the appeal. In other words, if the appeal results in a higher assessed value, or if the appeal is unsuccessful and no appeal can be launched by an individual unit owner for that same taxation year, then no claim is available against the condominium corporation by the individual unit owners. The condominium corporation is responsible for the costs of the appeal. In other words, the ARB can award costs of the hearing against the condominium corporation, and those costs would then be added to the common expenses of the condominium corporation and would therefore be paid for by the individual unit owners. As well, the legal and other costs of the condominium corporation in appealing the assessment would also be added to the common expenses.

The specific Assessment By-Law would simply say that the costs of objections are added to the common expenses. Since the declaration of the condominium corporation sets out what percentage of the common expenses each unit holder is responsible for, each unit owner pays its share of these costs of an appeal.

The Condo Act provides that a unit owner, on written notice to the board of directors, and to the ARB, may withdraw an appeal that the corporation has made on the owner’s behalf. This written notice must be given before the hearing of the appeal. Even though a unit owner may withdraw an appeal that has been made on the owner’s behalf, that does not mean that the unit owner who has withdrawn will not be responsible for its percentage share of the costs of the appeal. In fact, the opposite is true. As set out above, the Assessment By-Law would normally provide that the costs of the appeal are added to the common expenses, and once that is done then all of the condominium unit owners would be responsible for their share of those costs as part of the common expenses. Since the declaration sets out what the percentage contribution of each unit owner is to the common expenses, it is arguable that the only way to exclude costs of the appeal from all of the common expenses would be to amend the declaration, which requires the approval of almost all of the condominium unit owners.

The Condo Act sections that allow a condominium corporation to pass an Assessment By-Law are still relatively new. There have not yet been any cases providing more clarity on the extent of the application and limits, if any, on this kind of a by-law. There are also not any ARB decisions that I am aware of relating to an appeal by a condominium corporation of an assessment on behalf of the unit owners. As cases are heard, the limitations and requirements for the process of a condominium corporation appealing property assessments on behalf of its unit owners will evolve. It will also be of interest to see the circumstances, if any, under which the ARB and judges will protect or require corporations to pay costs associated with the appeal process.

In summary, there are certain things that should be realized when a condominium corporation is in the process of passing an Assessment By-Law, and some of those things are as follows.

  • The directors have to pass a specific by-law authorizing the condominium corporation to make such appeals.
  • The by-laws has to be approved by a majority of the unit owners to be effective.
  • Once a by-law is passed, then the costs of the appeal will apply to all unit owners even if some owners have withdrawn from the appeal process.
  • There are risks to the owners of the units when the appeal is made, and this can include a costs award against the condominium corporation which will be added to the common expenses.
  • Another risk to the unit owners is that if the property’s value is found to be higher, then they are bound by the decision for at least that year.
  • The unit owner does not get to have an appeal of the assessed value without any cost, the costs of the appeal come out of the common expenses.

Conclusion

In conclusion, the owners of condominium units should be aware of the assessed value of their condominium units and how that impacts on their taxes. There are procedures available to the individual unit owners to have the assessed value reviewed, and if necessary appealed to the ARB. There are costs involved in proceeding to an ARB appeal, and if there are sufficient common interests to the various unit owners, then there may be a benefit to having those costs spread over all the unit owners.

The Condominium Act provides for a method of passing a by-law to allow the condominium corporation to object to assessments on behalf of the owners. Even if the by-law is passed, before the condominium corporation can proceed with the objection to assessment it has to give notice of the objection to the owners involved, and that objection could end up in additional common expenses being paid by the unit owners for the cost of the objection.

Condominium Privacy

COLLECTING, STORING AND USING PERSONAL INFORMATION IN A CONDOMINIUM

The Personal Information Protection and Electronic Documents Act, S.C. 2000, c.5 (“PIPEDA”), is a privacy legislation enacted by the federal government for purposes of protecting personal information collected, used or disclosed in certain circumstances.  It also governs the use of electronic means to communicate or record information or transactions.

PIPEDA applies to all private organizations regarding personal information that the organization collects, uses or discloses in the source of commercial activities.  There is uncertainty about whether a condominium corporation would be found to engage in commercial activities.  A “commercial activity” means any particular transaction, act or conduct or any regular course of conduct that is of a commercial character.

The main obligation under PIPEDA is not to disclose any personal information collected except for proper purposes of the organization and without the appropriate informed consent of the person whose information it is.

What is personal information?

Personal information is information about an “identifiable individual”.  There are two broad categories of personal information covered by PIPEDA:

a.    Information collected, used or disclosed by any organization in the course of commercial activities; and
b.    Employee information collected, used or disclosed in connection with the operation of a federal work, undertaking or business.

PIPEDA could conceivably apply to any information about an individual that a condominium might collect, subject to some exceptions:

  • Where consent is obtained from the individual to collect and use the information;
  • Where the information is available to the public;
  • The information is used in an emergency affecting the individual;
  • The person gives their consent either implied or directly; or
  • Where the information is permitted by other statutes to be released under specified circumstances.

What can be done with personal information?

For the most part, information collected such as names, addresses, and telephone numbers, would not require the consent of unit owners for general use as long as it is related to the operation of the condominium.  General use would include notices of owners meetings, notices of liens, and information in a Status Certificate.  In contrast, information such as unlisted telephone numbers, or banking information would require consent to be used.

To release personal information to another organization, the condominium must obtain consent of the owner except in a few circumstances, when the information is:

  • given to a lawyer representing the corporation;
  • used to collect a debt;
  • used to comply with a subpoena;
  • a part of disclosure given as a result of a legal investigation;
  • contained in a public directory; or
  • used after it is either 100 years since the record was created, or 20 years since the death of the individual.

Storing the Information

How a condominium stores this information is just as important as how it uses it.  There is no single proper procedure for safeguarding Personal Information, but the following should be considered:

  • storing information in locked cabinets;
  • segregating Personal Information from general business information;
  • proper computer security to prevent unauthorized access;
  • computer files should be backed up;
  • information must never be left where cleaning staff, or a passersby can see;
  • information should never be given over the phone until the identity of the caller has been identified;
  • all staff should be trained in respect of privacy policies;
  • each unit should be assigned its own file;
  • minutes of board meetings should be drafted so as to not include Personal Information (for example, financial difficulty of an owner);
  • a privacy policy should be developed;

This list is by no means exhaustive, but should be used as a starting point for complying with privacy laws.

Responding to Curious Owners

It is clear from section 55 of the Condominium Act, 1998, (the “Act”) that owners cannot:

  • review the content of other unit files unless authorized to do so in writing by the owner of that unit;
  • review files related to ongoing litigation or insurance claims; and
  • review employee records, other than the employment contract.

This means that corporations will have to be cautious when allowing individual unit owners to access records if there is a chance they may obtain Personal Information relating to other owners.

It is imperative that Personal Information of an owner is kept in their own unit file.  There should also be a separate file for each litigation or insurance claim.  Documents should be looked over before they are shown to an owner to make sure they don’t contain personal information of other owners.

A proper procedure would be to have the individual asking for records fill out a standard form including a statement as to why they are requesting the information.  The form should also make it clear that the owner agrees that the information:

  • will only be used for matters relating to the corporation;
  • will not be distributed to anyone outside of the corporation; and
  • will not be used for personal gain.

Privacy Policies and Privacy Officers

PIPEDA requires that a corporation:

a)    establish a written “Privacy Policy” that identifies:
I.    the kind and limits of information collected;
II.    how and for what purposes such information is used; and
b)    designate an individual as a “Privacy Officer” whose responsibility will be to ensure the corporation complies with PIPEDA and the internal Privacy Policy.

If PIPEDA does apply to Condominiums, a corporation’s Privacy Policy should be consistent and probably even more strict than section 55 of the Act, which limits the rights of unit owners to access personal information in the records of the corporation.

Liability

When PIPEDA applies to an organization, every person they have Personal Information about is entitled to request to see the privacy policy and to question the privacy officer.  If an individual claims that the information contains errors, the company is required to amend it.  If an individual is not satisfied with a corporations Policy or Privacy Officer, they may complain to the Privacy Commission of Canada (“PCC”).  Violations can lead to substantial fines, and the company name can also be published as one that has not complied with the legislation.

Does PIPEDA apply to Condominiums?

It is highly unlikely PIPEDA will be found to apply to residential condominium corporations.  Residential Condominiums that do not sell information, goods or services for profit, are not involved in commercial activities.  PIPEDA was enacted in 2000, and there is yet to be a court case involving a residential condominium corporation.

Although it appears that PIPEDA would not apply to a residential Condominium corporation, it is clear that it does apply to Condominium Management companies that collect, use and disclose personal information about residents during their ‘commercial activities’.  Condominium Management companies would be considered to be performing commercial activities when they are handling the financial affairs, or performing other jobs for the corporation.

PIPEDA case #2006-342 makes it clear that the legislation applies to a landlord, as they are engaged in a commercial activity.  Even though the landlord was subject to PIPEDA in this case, the privacy commissioner found that the ‘summary of lease or renewal form’ which discloses personal information of the tenant still had to be filled out by the landlord because it is required by law.

PIPEDA case #2006-343 followed the same logic and stated that a landlord could provide personal information about a tenant to an insurance company, as the insurance company’s purpose for obtaining this information was reasonable.

Although it does not appear that PIPEDA applies to residential condominium corporations it would be wise, for cautions sake, to enforce privacy policies in line with PIPEDA’s principles.  This would diminish any risk of contravening the relevant sections of the Condominium Act, and would ensure compliance with PIPEDA in the event this legislation was ever found to apply to your condominium corporation.

Basic Due Diligence Review

BASIC DUE DILIGENCE REVIEW (Short Form)

DESCRIPTION  COMMENTS

 

A.  General Information

    1. Articles of incorporation, amendments and by laws.
    2. Minutes of Meetings – Board of Directors, Committees, Shareholders
    3. Reports (exclude financial statements) provided to shareholders.
    4. Business plans

B.  Financial Information

    1. Financial statements of the Company (subsidiaries?)
    2. Budgets
    3. List of suppliers.
    4. List of customers

C.  Tax Issues

    1. Federal and provincial income tax returns.
    2. Past Federal and provincial audits.
    3. Sales and GST tax returns.

D.  Debt and Share Capital

    1. Authorized and issued shares, rights to acquire shares, i.e. options, convertible debt/shares
    2. Financing history for shares and debt
    3. Shareholders’ agreements
    4. Outstanding liabilities for money borrowed; capital leases?

E.  Assets

    1. List of land owned or leased  with (a) location and brief description and (b) mortgages
    2. List of important personal property owned or leased, and mortgages.
    3. Copies of deed(s), lease(s) and mortgage(s).

F.  Insurance

    1. Summary of existing insurance policies, i.e. premiums, coverage, deductibles, exclusions, etc.
    2. Copies of insurance policies.
    3. List of insurance claims with details.

G.  Products/Marketing

    • List of distributors for your product.
    • Market reviews, marketing plans and materials.
    • Details of competitors and their products.
    • Details re: warranties on your products.

H.  Intellectual Property

    1. List of patents, trademarks, copyrights, service marks owned or licensed.
    2. Copies of license agreements.
    3. List of  trade secrets, etc.
    4. Copies of all technology sharing, use and disclosure agreements.
    5. Confidentiality and non disclosure agreements:  employees and others
    6. List all internet domain names owned by the company.
    7. Obtain and list the licenses of software used by the company.
    8. List the uses that a company makes of its intellectual property.

I.  Agreements

    1. Agreements, any amendments and related correspondence/emails
    2. Debt, security, guarantee
    3. Distributors, retailers or marketing representatives for you.
    4. Supply or purchase contracts for your products.
    5. Contracts for your purchase of services and equipment.
    6. Sales contracts or service agreements with customers.
    7. Partnership, joint venture or other similar contracts or arrangements.
    8. Non compete, 1st right of refusal on assets.
    9. License agreements
    10. Mortgages and related documents.
    11. Other important agreements.
    12. Agreement approvals.  List when a consent or approval is needed to complete a sale, purchase or financing the transaction or that will be subject to change or acceleration as a result of the transaction.

J.  Law Suits

    1. Pending or threatened litigation with details and copies of proceedings.

K.  Approvals/Permits/Grants

    1. Government approval(s) needed/obtained for your products, with copies of present approvals.

L.  Employees

    1. Chart showing duties and reporting responsibilities.
    2. Record of employees with details, i.e. name, starting date, duties, compensation.
    3. Written employee contracts; summary of terms of oral agreements
    4. Agreements with consultants.
    5. Stock option/purchase details, bonus, profit sharing.
    6. Bonus, sales commission agreements.
    7. Copies of benefit plans.

M.  Environmental

    1. Hazardous materials of the Company and details, i.e. what, where, how.
    2. Environmental liabilities you are aware of now.
    3. Governmental reports, permits re hazardous waste, Government notices re:  environmental issues/violations/proceedings.
    4. Environmental reports or audits.
    5. Environmental claims against you.
    6. Insurance coverage, for environmental issues.

Re: Shareholders’ Agreement Checklist

1. PARTIES

  • Corporation a party?
  • If unanimous shareholder agreement, add directors?

2. SHARES

  • Obligation for further shares?
  • Options for additional shares?
  • Obligations for purchase or redemption of shares by corporation?
  • Restrictions on issuing additional shares?

3. FINANCING

  • Initial capital contribution?  Additional contributions?
  • Financing – methods(s) of financing and corporation’s activities?
  • Loans:  interest payable? Terms of repayment of shareholders’ loans?
  • Forced shareholder loans to the corporation? Penalties for failure to make loans?
  • Personal guarantees required?  Failure to provide?
  • Security for shareholder loans?

4. MANAGEMENT OF OPERATIONS

  • Board of directors – number, appointment, removal, who, time involved
  • Officers and employees – salary? Terms of employment? Employment agreement? Shares sold when employment ends?
  • Banking – bank? Signing officers? Limitations on borrowing?
  • Meetings of Directors and Shareholders – who can call meetings; notice, quorum and voting at meetings, whether specified nominees must be present to form a quorum; names of shareholders and number of each class held, who can call meetings, notice, quorum and voting at meetings; whether specified shareholders must be present to form a quorum?
  • Financial – accountants or auditors?  Financial year-end? Annual budget? Shareholders must approve budget? Accounting records and inspection?
  • Fundamental changes – 100% approval?  Majority? Directors? Shareholders? Declaration of dividends? Issuance of further shares? Material change in business; major contracts, contracts out of the ordinary course of business, contracts with shareholder, compensation to employees?
  • Dividends – in excess of the working capital?
  • “Key-Person Insurance” – funding? Tax issues?

5.  TRANSFER OF SHARES

  • Unanimous approval needed? Majority? Directors? Shareholders?
  • Right of first refusal?
  • Shotgun buy-sell?
  • Debt repaid on transfer of shares?
  • All shares must be offered?
  • Purchase by other shareholders:
    • Death of shareholder – purchase price (formula), funding (insurance) payment,outstanding loans paid off.
    • Bankruptcy of a shareholder?
    • Disability of a shareholder?
    • Shareholder ceasing to be an employee?
  • Allowed transfers:
    • to other shareholders?
    • on death?
    • to related persons?
  • Valuation:
    • formula?
    • Book value?
    • Earnings method?
    • Appraisal?
    • Shareholders periodic fixing value?
  • Payment
    • instalments and security?

6. RELATED PARTIES

  • No non-arm’s length transactions with related parties except at fair value?

7. NON-COMPETITION

  • Agreement not to compete or use trade secrets?

Troublesome Tenants in Condominiums

PRESENTED BY:  J. Douglas Shanks on January 19, 2008, at the Port Arthur Ukrainian Prosvita Society in Thunder Bay, Ontario to the Canadian Condominium Institute, Northwestern Ontario Chapter.

Doug Shanks practices law at the firm of Cheadles LLP in Thunder Bay, Ontario.


I N D E X

Introduction

  1. Getting to Know Your Tenant
  2. Statutory Rights and Obligations
  3. A Step-By-Step Guide to Dealing with a Problem Tenant
  4. Some Examples
  5. Remedy in Damages
  6. Self-Help Not Recommended
  7. Remember Occupier’s Liability
  8. Residential Tenancies Act and the Unit Owner

Summary

  • Selected Sections of the Condominium Act, 1998
  • Form 5, Summary of Lease or Renewal
  • Selected Sections of the Residential Tenancies Act, 2006
  • Carleton Condominium Corp. No. 555 v. Lagace,  [2004] O.J. No. 1480
  •  Niagara North Condominium Corp. No. 125 v. Waddington,  [2007] O.J. No. 936
  •  Allison v. Rank City Wall Canada Ltd. [1984] O.J. No. 3094, 45 O.R. (2d)

Tenants and the Condominium

INTRODUCTION

Condominium Corporations and their Board of Directors unfortunately often have to deal with tenants that are causing problems for the other occupiers of the condominium.  Unit holders in the condominium that have rented their condominium unit to a tenant also have to deal with troublesome tenants.  The following material deals with some of the issues that can arise when tenants, and their guest, are not abiding by the “rules of the road” of the condominium.

The Property Manager and Board of Directors of the Condominium Corporation end up dealing with the unit owner.  Since the unit owner is often not living in the building, then the Property Manager directly, and the Board of Directors more indirectly, end up having to deal with the tenant and guest of the tenant that are causing problems.

The unit owner has to deal with the tenant and the tenant’s guests, since the Condominium Corporation and the Property Manager will be notifying the unit owner of the problems.  The unit owner has to deal with his/her obligations under the Condominium Act to the Condominium Corporation and the other unit owners, while at the same time having to abide by his obligations under the Residential Tenancies Act.

Set out below are some of the issues that will arise when tenants and/or their guests are causing problems in a condominium unit.  The following material and the presentation are not meant to be legal advice for a specific situation, and cannot be relied upon for any purpose other than general advice.  For advice in specific situations, legal advice based on the facts of the situation should be obtained.

1. Getting to Know Your Tenants

If a unit owner leases the unit, the unit owner is required by s.83 of the Condominium Act  (the “Act”) to inform the condominium corporation.

Form 5 of the Condominium Act Regulations provides a template for the unit owner to inform the condominium corporation about the tenants.

Form 5 requires that the Condominium Corporation know the name of the tenant, phone number, fax number, commencement date of the lease, termination date, options to renew, rental payments, confirmation that the tenant has been provided with a copy of the declaration, by-laws and rules of the Condominium Corporation and that notice will be given when the lease terminates.

2. Statutory Rights and Obligations

Unit Owner’s Responsibility to Inform a Tenant of Condominium Declaration, By-laws and Rules

A unit owner is to take all reasonable steps to ensure the tenant is aware of and is abiding by the condominium declaration, by-laws and rules and the Condominium Act under s.119(2) of the Condominium Act.

Compliance with the Act, Declaration, By-Laws and Rules

The unit owner and an occupier of a unit must comply with the Act, the declaration, the by-laws and the rules of the Condominium Corporation (Section 119(2)).

The Condominium Corporation and an owner have the right to require the owner and the occupier of a unit to comply with the Act, the declaration, the by-laws and the rules (Section 119(3)).

An owner may make reasonable use of the common elements of the Condominium Corporation, subject once again to the Act, the declaration, the by-laws and the rules (Section 116).

No person is to permit a condition to exist or carry on an activity in a unit or in the common elements if the condition or the activity is likely to damage the property or cause injury to an individual (Section 117).

Powers of the Court: A Compliance Order

A condominium corporation or the owner of a unit may make an application to the court under s.134 of the Condominium Act for an order that the tenant comply with the provisions of the Act or the by-laws of the condominium.

The compliance order can have two parts:

(1) An order for the tenant to comply with the rules, etc. of the condominium; and

(2) An order for the tenant to pay for the damages done to the condominium.

The court generally cannot terminate a tenancy except under these two circumstances:

(1) If the tenant breaches an existing court order; or

(2) The tenant has failed to remit the common expenses after the owner has defaulted on the payment, and the tenant has received written notice from the condominium corporation about the default.

If the condominium corporation is successful in obtaining a compliance order and damages have been awarded, the damages must first be applied to the outstanding common expenses.  Should the award be insufficient to cover that amount, the condominium corporation can pursue the shortfall from the unit owner.

If a unit owner doesn’t pay the common expenses, then the Condominium Corporation has a lien against the owner’s unit for the unpaid amount.  A certificate of lien can be registered against the owner’s unit in the Land Registry Office after at least 10 days written notice to the owner.  The lien may be enforced in the same manner as a mortgage, meaning that the property could be sold under power of sale and the proceeds used to pay off the monies owing for common expenses (Section 85).

3. A Step-By-Step Guide to Dealing with a Problem Tenant

The condominium corporation should advise in writing the unit owner about the tenant’s breaches of the by-laws, etc.

  • The unit owner should be encouraged to work with the tenant to ensure the tenant’s compliance with by-laws, etc.
  • The condominium corporation should also advise in writing the tenant of the by-law, etc. breaches and encourage the tenant to comply with them.
  • Obtain the necessary evidence to prove the breaches of the tenant (see Step 2).

Step 2

If problem continues, consult the condominium corporation’s solicitors.  Documents exchanged between the condominium corporation, the tenant and the unit owner should also be forwarded to the solicitors.

These documents may include:

  • warning letters regarding the tenant’s breach of by-laws sent by the condominium corporation, and responses to these letter
  • complaint letters sent by neighbouring residents
  • invoices for the costs of repairs to common areas
  • pictures of damage to the common areas (before repairs)
  • if there are parking violations, the license plate number, make and model of the car(s) involved.

Step 3

  • The condominium corporation should issue a final warning to the owner and the tenant stating that further breaches of the by-laws will result in a court application for a compliance order.
  • The letter should also warn the unit owner that the condominium corporation will be seeking to recover the cost of the application from them.
  • The letter should also set out other relief that the condominium corporation is seeking.

Step 4

If the problem persists, the condominium corporation should provide written instructions to its solicitors to proceed with a court application

When bringing an application for a compliance order, there is a possibility that the court will award costs of the application against the condominium corporation if the court feels that the corporation has not given the tenant and the unit owner adequate warning about the consequences of non-compliance.

The number of warnings that a condominium corporation should give to the unit owner and the tenant for by-law violations will depend on the ongoing damage caused by the tenant.  If the tenant is causing serious damage, one warning may be enough.  If the tenant is merely causing a nuisance, the condominium corporation may have to issue several warnings before a court application can be brought.

Photos are necessary if there is damage to another unit or to the common elements.  The condominium corporation should take photos of the damage before repair.  Invoices of the repairs should be kept and forwarded to the condominium corporation’s solicitors.

4. Some Examples

Carleton Condominium Corp. No. 555 v. Lagacé [2004] O.J. no. 1480 (Ont. Sup. Ct.)

Facts: Shea and Spero rented their condominium unit to Lagacé.  Lagacé broke a number of by-laws, and caused annoyance to other residents.  A meeting was then held between Shea, Spero, the management company and Lagacé where the various complaints against Lagacé were reviewed.  Lagacé undertook to comply with the by-laws.  For a brief period after the meeting, Lagacé abided by the by-laws.  When Lagacé began breaking the by-laws again, the condominium corporation sought a compliance order.  Shortly after the order was granted, Lagacé abandoned the unit.

Question: Who was responsible for the costs of the condominium corporation’s application for a compliance order?

Ruling: The condominium corporation’s legal relationship was with the unit owner.  The unit owner had a legal relationship with the tenant.  Since the unit owner was the party between the condominium corporation and the tenant, the unit owner was responsible for the tenant’s behaviour.  The condominium corporation expected the unit owner to abide by the condominium’s by-laws, and in turn, the unit owner could require the same from the tenant.  Therefore, when a tenant breached the by-laws, the condominium corporation could demand compliance from the unit owner, who would turn to the tenant for the same.

If the unit owner was to be responsible for the tenant’s conduct, the unit owner must be informed of the tenant’s infractions.  There was a duty on the condominium corporation to inform the unit owner before the corporation could seek legal costs against the owner for an application to enforce the tenant’s compliance with the by-laws.

If a condominium corporation is seeking the costs of getting a compliance order for an unruly tenant from the unit owner, the unit owner must be given adequate notice.

Niagara North Condominium Corp. No. 125 v. Waddington [2007] O.J. No. 936 (Ont. C.A.)

Facts: The defendant, Waddington, was a tenant who owned two cats.  The plaintiff condominium corporation had a by-law that did not allow for pets in the building.  The unit owner landlord brought an application to remove Waddington’s pets, but failed.  The condominium corporation was not involved in that application but was aware of it.  The condominium corporation then brought a second application to enforce its by-laws to remove the pets.

Question: Could the condominium corporation enforce a bylaw when the unit owner failed to do so?

Ruling: The court refused to hear the application because

  • the condominium corporation was aware of the unit owner’s application to remove the cats;
  • the condo corporation did not seek to join that application;
  • this second application related to substantially the same issue as the unit owner’s first application.
  • You only have one kick at the can–the condo corporation cannot seek to enforce a by-law through a separate application if a unit owner failed to do so in an earlier application.

View Next Section

The Standard Unit By-Law

THE STANDARD UNIT BY-LAW-SAY WHAT?

THUNDER BAY INSURANCE ADJUSTERS ASSOCIATION

Thursday, January 15,2009
Italian Cultural Centre
132 Algoma Street South
Thunder Bay, Ontario

PRESENTED BY:

J. DOUGLAS SHANKS, CHEADLES LLP


I N D E X

Page Number
Introduction   1
Sample Standard Unit By-Law      2
Sample Declaration      6

THE STANDARD UNIT BY-LAW – SAY WHAT?

The Standard Unit by-law -what is it?

  • what does it do?

The Condominium Act, 1998 permits Condominium Corporations to have Standard Unit-by-laws. This is as of May 5, 2001.

The reason is to decide the responsibility for insuring and repairing improvements after damage. There is some confusion over what the Standard Unit by-law does for
Condominium Corporations. The by-law simply sets out what an “improvement” is by looking at the “Standard Unit”. This is important when damage occurs to the unit and
repairs are required. The issue then becomes who should repair what damage, who should pay for it and whose insurance is responsible.

IMPROVEMENTS

What is an improvement? It may be one of two things. This depends on when the Condominium Corporation was created. It is any alteration, change or upgrade to the
base unit as originally sold by the developer, or if there is a standard unit by-law, anything that is not listed in this by-law as part of the standard unit.

Why do we care what an improvement is? For Condominium Corporations registered after Mav 5, 2001, the Condom~niumA ct provides that improvements to a unit are not the Corporation’s obligation to insure and repair after damage.

For Condominium Corporations created before Mav 5, 2001, those improvements made to a unit, which were in place before the registration of the declaration and the
description, are the Corporation’s responsibility to insure and repair after damage (improvements made after registration are the unit owners’ responsibility), unless those Corporations put into place a Standard Unit by-law.

The Standard Unit by-law determines what constitutes a “standard unit”. A standard unit includes only those items which are listed in the by-law as forming part of the unit.
Anything which is not included in the list which may be such items as countertops, wallpaper or floor coverings will be treated as improvements. For example, if a fire or a
flood occurred, those items would not be covered by the Corporation’s insurance policy.

The unit owner should insure those things not included in the standard unit by-law. The responsibility for repair, regardless of who caused the damage would be the unit
owner’s.

SCHEDULE “A”

TUNDER BAY CONDOMINIUM CORPORATION NO. 18

BY-LAW NO. 5
STANDARD CONDOMINIUM UNIT DEFINITION

WHEREAS :

  1. The Condominium Act, 1998 (the “Act”) requires thatthe determination of what constitutes an improvement” to a condominium unit shall be determined by ‘~eference to a standard unit definition;
  2. The Corporation is responsible to insure the condominium units exclusive of the “improvements” to the units;
  3. Each owner is responsible to insure the improvements to his or her unit;
  4. Any component of a unit over and above the defined “standard unit” is considered to be an “improvement” to the unit.

 

NOW THEREFORE be it enacted as a By-Law of THUNDER BAY CONDOMINIUM CORPORATION NO. 18 (hereinafter referred to as the “Corporation”) as follows:

  1. It is understood that the following description of the standard “unit” does not include the common elements of the Corporatiqn. The standard unit shall be defined as all of those components of the unit contained within its boundaries, as defined in the Declaration and Description of the Corporation, including:
    • a) The ceilings completed to the drywall (any reference to drywall in this by-law shall mean drywall which is of such thickness as the Building Code may require, including taping, sand~ng, one coat of primer paint) ;
    • b) All floor assemblies constructed to the subfloor and stairway assemblies and landings and drywall, (including taping, sanding and one coat of primer) ;
    • c) All services with respect to the provision of water and sewage services, hydro and natural gas for the unit carried within those walls, bulkheads and ceilings ;
    • d) All services with respect to the delivery of heat, and ventilation, carried within those walls, bulkheads and ceilings;
    • e) All installations with respect to the provision of electricity, telephone cable and rough ins, cable television cable and rough ins, all requisite smoke detectors as required by applicable regulation hard wired into the electrical system, one standard dryer electrical outlet, an exhaust outlet and a washing machine drainage outlet;
    • f) Interior partitions and walls completed to the drywall (including taping, sanding, one coat of primer) ;
    • g) One built in oven electrical outlet and roughin;
    • h) Partitions and walls between units and common elements, including insulation and vapor barrier, completed to the drywall, (including taping, sanding, one coat of primer paint) all exterior windows and window frames and doors and door frames;
    • i) All structural components, mechanical systems, services and other items which shall be of the same or equivalent quality and/or constructed to Che standards as defined in the registered building drawings;
    • j) It is understood that there ar& several different models/designs of units within the corporation as set out in The Registered Building Drawings and in the event there is significant damage to the units reference shall be made to the original floor plan diagrams of the units;
    • k) Such other components of the units which the declaration of the condominium would have been required to construct by the then current regulations (as at the time of the damage or repair) in order to achieve registration of the condominium plan;
  2. Anything within the boundaries of a unit which is not described in the definitions of a standard unit set out above shall be considered an improvement to the unit. For greater certainty and without limiting the generality of the foregoing, the unit shall not include:
    • a) All floor coverings (including underpad) ;
    • b) Wall coverings, including, but not limited to, tile, marble, paneling, other woodtreatments, paint and wall paper, that are not included in the definition of the standard unit herein;
    • c) Window coverings, drapery hardware, or blinds ;
    • d) Appliances and exhaust fans;
    • e) Water heater;
    • f ) Lighting fixtures;
    • g) Kitchen, bathroom and laundry plumbing fixtures and controls;
    • h) Kitchen and bathroom cabinets and countertops;
    • i) Any addition, alteration, or improvement to the common elements made by an owner either before or after the date of proclamation of the Act and regardless of whether an agreement under section 98, of the Act has or has not been entered into between the Owner and the Corporation for such addition, alteration or improvement.
  3. For clarification, the consequence of such definition of “standard unit” is to cause all components of each and any and every building or structure that is not specifically stated to. be part of.the standard unit to be classified considered and defined as an nimprovement” thereby making the owner(s) of such unit completely responsible for all insurance and maintenance relating thereto and relieving the Corporation from being required to provide or maintain any insurance on account thereof.
  4. If any component of the standard unit must be “upgradedn or changed in order to comply with any applicable governmental or authority regulation or code while being repaired or replaced on aecoQnt of insurable damage or destruction the said upgrade or change shall be considered part of the standard unit despite not being clearly defined herein as being part of the standard unit.
  5. Nothing in this By-Law shall relieve an owner of any obligation to maintain, repair, and when necessary, replace any component of his or her unit as may be set out in the Act and the Corporation’s, Declaration, By-Laws and Rules;
  6. In the event that a fixture or construction feature is no longer available or there is a dispute as to what then may constitute a “Builder’s Standard” a comparison shall be had to similar products being offered by builders of new condominium construction at the time of damage of similar value to the unit sn which or to which the damage has occurred. If there is a disagreement as to what constitutes a “Builder’s Standard” , the issue shall be exclusively and conclusively determined by the insurance adjuster(s) acting reasonably, retained by and acting on behalf of the condominium’s insurer and the decision of such adjuster(s) shall be binding on the condominium and all its’ owners and mortgagees.

The foregoing By-Law is hereby passed by the Directors of the
Corporation pursuant to the Condominium Act 1998 as evidenced
by the respective signatures hereto of a majority of the Directors.

Date this 8th Day of October, 2008

DECLARATION

DECLARATION (hereinafter called the “Declaration”) is made and executed pursuant to the provisions of the Condominium Act, 1998, S.O. 1998, c.19 and the Regulations made thereunder (all of which are hereinam referred to as the “Act”), BY 433799 ONTAR10 WC.

WHEREAS the Declarant is the owner of the property (which includes the appurtenant interests) with absolute title under the Land Titles Act, which property is situate in the City of Thunder Bay, and is more particularly described in Schedule “A”, and in the description submitted herewith by the Declarant for regisbation in accordance with the Act;

AND WHEREAS the land contains a b e e (3) level building containing forty-eight (48) residential units;

AND W&KEAS the Decl-t intends that the said lands together with the said building thereon &all be govemed by the Act;

NOW THEREFORE THE DECLARANT DECLARES AS FOLLOWS:

 

ARTICLE 1 INTRODUCTORY

1.1 Definitions

All words used herein which are defined in the Act shall have ascribed to them the meanings set out in the Act, as amended from time to time.

a) “Residential Unit” shall mean those units designated as Units 1 to 16 on Level 1, Units 1 to 16 on Level 2 andunits 1 to 16 on Level 3;
b) “Owner shall mean “Owner” as defined in the Act for purposes of compliance with the Act, Declaration, By-laws and Rules and includes residents, occupants, tenants, employees, visitors and guests of an owner.

1.2 Statement of Intention

The Declarant intends that the lands and interests appurtenant to the land in the Description and described in Schedule “A” be governed by the Act, and any amendments thereto.

1.3 Standard Condominium

The registration of the Declaration and Description will create a Freehold Standard Condominium.

1.4 Consent of Encumbrances

The consent of every person having a registered mortgage against the land or interest apputenant tc the land described in Schedule “A” is contained in Schedule “B” attached hereto.

1.5 Boundaries of Units and Monumeut’s

The monuments controlling the extent of the units are the physical surfaces mentioned in the boundaries of units in Schedule “C” attached hereto.

1.6 Common Expenses

Each owner shall contribute to the common expenses in the proportions set forth in Schedule “D attached hereto. The total of the proportions shall equal one hundred per cent (100%).

1.7 Common Interest

Each owner shall have an undwided interest in the common elements as a tenant in common with all other owners in the proportions set forth opposite each unit number in Schedule “D” attached hereto. The total of the proporhons shall equal one hundred per cent (100%).

1.8 Address for Service and Mailing Address of the Corporation

The Corporation’s address for service and mailing address shall be: time to time by any owner, his family guests, servants, agents or occupants of his unit shall be bome by such owner and may be recovered by the corporation against such owner in the same manner as common expenses or by any other procedure the Corporation elects;

m) The Corporation or any insurer of the Property or any p& thereof, their respective agents, or any other person authorized by the Board of Directors, shall be entitled to enter any unit, or any past of the exclusiveuse common elements, at all reasonable times, and upon giving reasonable notice, to perfom the objects and duties of the Corporation, and without limitation, for the purpose of making inspections, adjusting losses, making repairs, correcting any condition which violates the provisions of any insurance policy or policies and remedying any condition which might result in damage to the Property, the common elements or any unit.

n) In the case of any emergency, an agent of the Corporation may enter any unit or the exclusive-use common elements at any tinie without notice, for the purpose of repairing the unit, common elements, or exclusive-use common elements, or for the purpose of correcting any condition which might I-esult in damage or loss to the property, the common elements or the units. The Corporation, or anyone authorized by it, may determine, acting reasonably, whether an emergency exists.

o) If an owner shall not be personally present to grant entry to his unit or the exclusive-use common elements, the Coqoration, or its agents, may enter upon such unit or exclusive-use common elements without rendering it, or them, liable to any claim or cause of action for damages by reason thereof, provided that they exercise reasonable care;

p) The Corporation may require that it be furnished with a key to each lock that prevents access to any part of a unit and its exclusive-use common elements. No owner shall change any lock or place any additional locks in his unit or on the common elements without immediately providing the Corporation with a key for each new or changed lock;

q) The rights or authori’ty hereby reserved to the Corporation, its agents or any insurer or its agents, do not impose any responsibility, or liability whatsoever
for the case or supervision of any unit its euclnsive-use common elements, except as specifically provided for in this Declaration, the Act or the Bylaws.

 

ARTICLE IV DUTIES OF THE CORPORATION

The Corporation shall have a duty to administer the Property in accordance with the following provisions:

4.1 Insurance

The Corporation shall maintain fAe insurance required by the Act in such amounts and upon such terms as the Board of Directors may determine from time to time.

4.2 Damage

Where damage should occur to a unit, and such damage was not caused by the Corporation or any of its servants, agents or employees, and by reason of such damage, proceeds of insurance for the purpose of effecting repairs to such unit, are paid by an insurance cou~pany pursuant to a policy of insurance maintained by the
Corporation, and a deductible amount is not paid or is withheld by such insurer, pursuant to the terms of such insurance policy then the unit owner shall be responsible for the amount of such deductible to effect such repairs.

4.3 Betterment and Improvements

Bettennent and improvements shall include but are not limited to: kitchen and bathroom cabinets, vanities, broadloom, floor covering, window coverings, lighting fixtares, fixtures, doors within the units, appliances and all other items considered part of the interior finishing of the nnits. It is the owner’s responsibility to insure all betterment and improvements and to repair and/or replace same if they are removed, injured or destroyed.

4.4 Indemnification by Owners

a) Each owner shall indemnify and save the Corporation harmless kom any loss, costs, damages, injury or liability which the CorporXion may suffer or incnr resulting *om or caused by any act or omission of such owner, causing damage to the common elements or to any unit, except for any loss, costs, damage, injury or liability insioed against by the Corporation. AU payments to be made pursuant to this section may be recovered as additional conhbutions toward the common expenses payable by such owner or by an action by ihe Corporation against such owner;

b) Each owner who buys a unit in this Property acknowledges that the Declaration, By-laws and Rules constitute a private contract by which he agrees to be bound,

c) If the Condominium Corporation institutes proceeding against an owner pwuant to the Act and is successful in said action, the Condominium Corporation shall he entitled to recover its costs on a solicitor and client basis, and all such costs shall bear interest at the rate of eighteen per cent (18%) per annnm until paid by the owner. %e Corporation may collect such costs in such instalments as the Board may decide upon, wluch iostalments may be added to the monthly contributions towards the common expenses of such owner, after receipt of written notice h n l the Corporation thereof, and shall be treated in all respects as common expenses, and recoverable as such.

 

ARTICLE V MAINTE.NANCE AND REPAIRS

5.1 Each own? & all maintain and keep clean:

a) his unit and all betterment and improvements thereto;
b) the interior surfaces of doors which provide the means of entry and exit from the unit;
c) the interior surfaces of all windows and screens in or adjacent to the uut;
d) the exterior surface of windows, doors and screens which are accessible kom the nnit;
e) theexclusiveuse common elements appurtenant to the owner’s unit.

5.2 Each owner shall repair affer damage:

a) his unit and all betterment and improvements thereto at his own expense;

b) windows, and screens, as well as doors which provide the means of entry and exit &om the unit using materials approved by and trades designated by the Corporation;

5.4 The Corporation shall repair after damage the exclusive-use common elements and the common elements.

SCHEDULT “C” UNIT DEFINITION

Each Condominium Unit, being Umts 1 to 16 inclusive on Level 1, Units I to 16 inclusive on Level 2 and Units 1 to 16 mclusive on Level 3 shall comp~iseth e area Within,the heavy lies shown on of the Description with respect to the unit n~unbersin dicated thereon.

The monuments controlling the extent of the units ax the physical surfaces and planes referred to below, and are illustrated on Part 1 of the Description, and all dimensions shall have reference to them.

Without limiting the generality of the foregoing, tbe boundaries of each unit are as follows:

BOUNDARIES OF THE CONDOMINIUM DWELLING

(being Units 1 to 16 inclusive on Level 1)
(being Units I to 16 inclusive on Level 2)
(bing Units 1 to 16 inclusive on Level 3)

a) Each Condominium Unit is bounded vertically by:

(i) The upper surface of the udinished concrete floor slab on which the unit rests;
(ii) The lowq surface of the &shed concrete ceiling slab on Levels 1 and 2; and,
(iii) The backside face of the uppermost layer of drywall on Level 3

b) Each Condominium Unit is bounded horizontaly by:

(i) The backside surface of drywall sheathing separatiag one unit from another such unit or from the common element;
(ii) The Intenor or unit side surface of all exterior doors, door frames, window frames and glass panes if any therein, the doors and windows being in a closed position;
(iii) In the vicinity of ducts, shuchd walls and pipe spaces, the unit boundaries are the backside surfaces of thedrywall sheathing enclosing said ducts and pipe spaces, both horizontally and vertically, where applicable.

With respect to all Units:
(i) In cases where any such surface or plane aforesaid is interrupted by apertures for
exhaust ducts, such surface or plane shall be extended across such apemes.

I hereby certify that the written description of the and boundaries of the Units contained herein accurately corresponds with the diagrams on Part 1, Sheet 1 of the Description.

Dated December 4/07
Ontario Land Surveyor

Reference should be made to the provisions of the Declaration itself, in order to determine the maintenance and repair responsibilities for any Umt, and whether specific physical components (such as any wires, pipes, cables, conduits, equipment fixtures, structural components and/or any other appurtenances) are included or excluded from the Unit regardless of whether same are located within or beyond the boundaries established for such Unit.

Condominium Status Certificates

IMPORTANCE OF STATUS CERTIFICATES

PRESENTOR:

J. DOUGLAS SHANKS

Director, Canadian Condominium Institute,
Northwestern Ontario Chapter


I N D E X

Canadian Condominium Institute (“CCI”)

What is a Condominium?

Creation, Administration, Declaration, By-Laws and Rules

Status Certificates

What if the Status Certificate is Wrong?

Ontario Real Estate Association (“OREA”) Condominium

Clauses

Cases Dealing with Status Certificates

Additional Condominium Clause

Disclosure Statements are not Status Certificates


Disclaimer

Any information contained herein is not legal advice and is strictly general information.  In the event of specific legal concerns or questions, specific legal advice should be obtained.


 

The Canadian Condominium Institute, (CCI)

The Canadian Condominium Instituteinstitut canadien des condominiums, (“CCI”) is an independent, non-profit organization formed in 1982, with chapters throughout Canada.   The Northwestern Ontario Chapter of CCI was established in Thunder Bay approximately six years ago.  This local chapter has a board of directors, presently comprised of a real state agent, property managers, a lawyer, an accountant and an insurance representative.  The board of directors meet regularly and the Chapter provides educational programs, news letters and is a resource base for condominiums in Northwestern Ontario.

The goal of CCI is to form partnerships with its members to create, encourage and promote a strong condominium community in the vibrant Canadian marketplace. It is the only national organization in Canada that deals exclusively with issues affecting all of the participants in the condominium community, including condominium homeowners, boards of directors, property managers, and other professionals. Chapters provide practical advice in respect of provincial condominium legislation, educational programs, newsletters, and lobby at all levels of government for condominium reform.

CCI does not represent any one profession or interest group. Rather, it represents all facets of the condominium community, encouraging all interest groups to work together to one common goal; healthy and happy condominium communities.

It is in the best interest of both successful and struggling condominiums as well as industry professionals and suppliers, to actively support CCI in its aim to improve condominiums throughout Canada.

For more information about CCI, including membership registration and a full list of local chapters please feel free to contact them at the website below.

WHAT IS A CONDOMINIUM

(a) The term “condominium” describes a method of owning land where individuals acquire dwellings, referred to as “units” that are located within a multiple unit housing development called a “condominium corporation”.

(b) All condominium corporations are divided into units and common elements (with the sole exception of Common Elements Condominium).  When the individual acquires their unit they also obtain an interest in the common areas, called the common elements, which they own together with all of the other unit owners.

(c) The percentage of ownership in the common elements that attaches to each unit is set out in the declaration of the condominium corporation.  The declaration is the document that is registered to create the condominium corporation as a legal entity.

The present law in Ontario governing condominiums is the Condominium Act, 1998, which came into force May 1, 2001.

CREATION, ADMINISTRATION, DECLARATION, BY-LAWS and RULES

(1)    CREATION

(a) Condominiums are a “creature of statute” meaning their existence is made possible by reason of specific legislation, namely the Condominium Act 1998, (the “Act”).

(b) Condominiums are created once they are “registered” pursuant to the provisions of the Act.

(c) Condominiums are not governed by the Ontario Business Corporations Act.

(d) To create a condominium a developer, (known as the “declarant”) must, after fulfilling all other municipal requirements, have what is known as the declaration and description registered in the local Land Titles office.

(e) Upon registration of these documents the Land Titles office assigns the condominium its legal title, for example “Wentworth Condominium Corporation Plan No. 123”.

(f) By-laws are subsequently registered to, among other things, determine how many directors there will be, their qualifications and how they govern the businesses and financial affairs of the condominium corporation.

(g) Once “registered” a condominium corporation has the same rights, generally, as any other business entity in that it can own or sell real property or other assets, sue or be sued and carry out any other “business” of the corporation subject to the limitations imposed on it under the Act.

(h) Anyone purchasing a condominium automatically becomes subject to the Act and the condominium corporation’s Declaration, By-laws and Rules, (whether they read them or not). This obligation cannot be avoided in any way.

(2)    ADMINISTRATION

(a) A condominium corporation is governed by an elected Board of Directors, typically, drawn from the unit owners.

(b) The directors are charged with the general responsibility of managing the property and assets of the corporation. They have many other duties which are set out in the Act and the corporation’s Declaration and By-laws, including, hiring staff, banking, investing corporate funds, collecting common expenses and enforcing the rules.

(c)   The business decisions of the Board are not generally subject to owner approval unless the Act specifically requires the owner’s involvement, such as when the condominium wishes to borrow money or make a substantial alteration or improvement to the common elements.

(d) The owner’s power lies in the exercise of the vote that is assigned to their unit. It is the owners who elect the Board and they can, in extreme circumstances, remove Board members prior to the end of their term of office.

(e) Each unit is assigned one vote only regardless of how many owners it may have. All votes have equal weight. There are no votes for storage units or parking units.

(f) All voting, with some exceptions, is determined by simple majority of the votes cast, subject to obtaining a quorum, (25% of the units present in person or by proxy).

(g) The Act takes priority over all aspects of condominium administration. The declaration for a condominium takes priority over it’s by-laws and rules. The by-laws take priority over the rules and cannot conflict with the Act or the declaration. They must also be “reasonable”. Rules must not conflict with the Act, the declaration or the by-laws and must also be reasonable (note: provisions in a declaration do not have to be “reasonable”).

(h) The operation of a condominium is funded through the payment of common expenses. The Board of Directors strikes an annual budget which it then presents for review to the owners at the Annual General Meeting, (note: the owners do not vote on whether to accept the budget – they are simply given the opportunity to ask questions about its contents).Once the budget is struck each unit is allocated its share in accordance with the common element percentage assigned to the unit in the declaration. That figure is then divided into 12 equal monthly payments, (the “common expense” payments or “maintenance fees’).

(i) These payments provide the condominium with the cash necessary to maintain the common elements, fund the reserve accounts, pay for property management and generally operate the Corporation. Some condominiums require post-dated cheques or pre-authorized payment plans for common expense payments.

(j) The amount of common expenses can vary greatly depending on the size and type of condominium and the amenities, if any, that it contains. Generally speaking the old adage, “you get what you pay for” is very applicable to condominium common expenses.

(k) Common expense payments may increase from year to year to keep pace with increased costs incurred by the Corporation for its operation.

(l) Failure to make common expense payments when due, will result in the unit being liened and possibly sold by the Corporation to enforce collection. In a condominium complex liens are given priority, if they are properly issued, over any encumbrance registered against title to the unit in question, including existing mortgages.

(m) A Reserve Fund is a trust fund established by condominium corporations to anticipate extraordinary costs for major repairs to the capital components of the condominium’s common elements.  Under the previous Act the statutory minimum contribution to the reserves was an amount equal to 10% of the operating budget. The new Act makes the minimum contribution the amount that the board of directors determines is appropriate based upon a Reserve Fund Study but until that decision is made the minimum amount contributed cannot be less than 10% of the operating budget. It is not unusual to see a 25% – 35% contribution to reserves.

(n) Contributions made by an owner to the Reserve Fund become the property of the condominium corporation. Owners do not receive a rebate of Reserve Fund contributions from the condominium in the event that they sell their unit. There is no credit for these contributions in the closing adjustments as, theoretically, the purchase price of the unit should reflect the “investment” that unit has made into the reserves.

(o) The new Act makes it mandatory for condominiums to obtain an independent Reserve Fund Study from a qualified engineering firm or other permitted provider, (see Reserve Fund Studies page 40). These studies analyze the state of repair of the different components that make up the common elements, their remaining lifespan and project, in today’s dollars, what the corporation will need to repair or replace each of the components over the next 30 years. These are extremely valuable tools for condominiums as they really cannot determine what an appropriate contribution to the reserve fund would be without one. Under the new Act all condominium corporations will be required to get a Reserve Fund Study by May 5th, 2004.

(p) A special assessment is a common expense that was not anticipated in the budget for the fiscal year in which it is levied. Despite stories to the contrary they are not common.  They are made when a condominium corporation is faced with a large and, usually, unexpected expenditure of funds, for example, a major repair to a common element area the cost of which exceeds, (or would seriously deplete) the condominium’s reserve fund.  Unit owners are obligated to pay their proportionate share of the special assessment as determined by the percentage of contribution to the common expenses allocated to the unit in the Declaration.

(q) The majority of condominiums in Ontario while governed by an elected Board of Directors, are also managed by a professional property management company.  The Manager’s role, among other things, is to oversee the day to day operation of the Corporation, see to the collection of common expenses, advise the Board of Directors, assist in the preparation of budgets, and attempt to enforce the Rules. The Property Manager usually issues status certificates on behalf of the condominium corporation.

(r) There are also a number of condominium corporations which are self-managed.  Essentially, this means that the Board of Directors themselves with, sometimes, the assistance of volunteers from within the community assume the same tasks that a professional Property Manager would.

(3) DECLARATION

(a) The Declaration is the document that creates the condominium corporation in a similar manner as Articles of Incorporation give life to a business corporation.  It will contain certain mandatory provisions as legislated by the Act such as: a specification of the boundaries of the units; the proportionate interest of each unit in the common elements; and the percentage used to calculate the monthly common expenses for each unit.

(b) The Declaration will also stipulate, if any, those areas of the common elements that are allocated to the “exclusive use” of a particular unit such as parking spaces, storage lockers, balconies or rear yards.  Exclusive use areas remain part of the common elements and their use is governed by the condominium.

(c) The Declaration may also contain provisions regulating the use and occupation of the units and common element areas, including the normal requirement that, in residential condominium developments, owners may not operate businesses out of their units.  It may also allocate the responsibility for the maintenance and repair of the common elements and units between the owners and the condominium corporation, (e.g. a unit’s internal H/AC system may be part of the “common elements” but the owner may be obligated to carry out routine maintenance on it).

(d) In some cases, the Declaration may impose other limits on the use of  units such as that no pets are allowed or certain conditions must be met before an owner may lease his or her unit.

(e)Under the new Act a declaration can be amended by the Registrar Of Land Titles, if it contains an obvious typographical error, by a court order if it contains a less obvious error or ambiguity, (e.g. the declarant failed to make the unit balconies “exclusive use”), or by obtaining the written consent of owners who represent 90% or 80% of the units, depending upon what is to be changed.

(4)    BY-LAWS

(a) By-law’s are passed by the Board of Directors and must then be approved by the owners representing at least 51% of the units within the condominium corporation. The approved by-law must then be registered on title to the Condominium before it becomes effective.

(b) By-law number 1, (unless it has been replaced) sets out the basic organizational and administrative functions of the condominium corporation, including the duties of it’s Board of Directors and officers.  The by-laws also make provision for calling owners’ meetings and for the election and qualification of the Board of Directors.

(c) The method for collecting common expenses and how non-payment is dealt with is also set out in the by-laws.

(d) Other by-laws may be passed to deal with such things as, borrowing money, granting leases or easements over the common elements, changing the number of directors, defining what is a “standard unit” for insurance purposes, and creating “occupancy standards” for the units, (i.e. limiting the number of people who may reside in a unit)  and other matters relating to the administration of the condominium.

(5)   RULES

(a) All condominium corporations have rules which form the standards of behaviour for the community.  These govern the day-to-day use of the units and the common elements.

(b) Most condominium corporation’s rules contain provisions that prohibit; excessive noise or other nuisances; alterations to common areas; storage of commercial vehicles, boats, trailers and similar equipment/vehicles; and require the removal of pets that become a danger or nuisance to the other owners. They can also deal with many other issues such as the use of swimming pools, spas and other recreational amenities, the use of elevators for moving, barbequing and even what colour of window covering may be used in a unit.

(c) Owners, (and the Board of Directors) have the right to insist that the rules be complied with by all other unit owners, tenants or other residents of the condominium complex.

(d) The Act allows condominium corporations to apply to a Judge for an order  directing compliance with the provisions of the Act, and the corporation’s declaration, bylaws and rules, (see “Remedies” below). Legal costs incurred by the condominium corporation are generally ordered to be paid by the offending unit owner normally on a substantial liability basis. Under the new Act these costs as well as other monetary damages attach to the unit as an additional common expense and payment may be enforced by way of a condominium lien.

Reproduced with the consent of the Northwestern Ontario Chapter of the Canadian Condominium Institute and the Golden Horseshoe Chapter of the Canadian Condominium Institute, Level 100 Condominium Administration Course.

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