Troublesome Tenants in Condominiums – Part 2

5.  Remedy in Damages

The condominium corporation can seek costs from a unit owner who violates the condominium by-laws. Therefore, a condominium corporation can require the unit owner to pay for the damages their tenant caused.  The unit owner can then recover such costs from the tenant.

Pham v. Strata Plan NW 2003 [2007] B.C.J. No. 785 (B.C.S.C.)

Facts: Pham, the unit owner, rented her unit to two tenants who operated a marijuana grow operation.  The operation caused significant damage to the unit and the common areas.  After the police shut down the operation, the condominium corporation, through the property manager, wrote to Pham advising her that she was to pay for the cost of repairs to the common areas and any outstanding maintenance fees owed by the tenants.  When Pham did not respond, additional letters were sent.  The repair work was done costing over $100,000.  The condominium corporation placed a lien on the property.  Pham sold the property and netted $61,500.

Question: Whether or not the condominium corporation could dip into the net sale proceeds to recover part of the cost of repair?

Ruling: The unit owner was responsible for the damages caused by the tenant.  It was found that the condominium corporation had the right to carry out the repairs under its by-laws.  Pham had not properly rented out the unit in accordance to the by-laws.  Pham was enriched by the repairs paid by the condominium corporation.  It would be unconscionable for the unit owner to benefit from her conduct and for the corporation to bear the costs.

The unit owner is responsible for the damages caused by the tenant if the unit owner would be enriched by the repairs performed by the condominium corporation.

Re. E.R. and C.,  Unreported (September 2, 2004) 04-0375 (Ont Sup. Ct.)

Facts: E.R. rented his condominium unit to C.  C’s son, J, moved in with C.  J. caused various nuisances in the condominium common areas.  Complaints were made against J. to the property management company.  E.R. was contacted, and the condominium corporation warned E.R. that if he did not deal with his unruly tenants, the condominium corporation would seek a compliance order.  E.R. terminated the lease, but before C. and J. vacated, J. hosted a party and additional damage was done to the common areas.

Question: As J. was not a tenant, who was responsible for the costs of repair to the condominium common areas?

Ruling: C., the tenant, is responsible for the actions of his guest, J.  C. and J. are responsible for the costs of the repair and the cost of the court application to the unit owner, E.R..  However, E.R. is ultimately responsible to the condominium corporation for all damages done by the tenant.

Tenants are responsible for the actions of their guests.  The unit owner is responsible for the damages caused by the tenants and their guests; but the unit owner can seek to recover such damages from the tenants.

Halton Condominium Corporation No. 315 and Sid Gucciardi and Caterina Gucciardi (April 15, 2004) 04/11605 (Ont. Sup. Ct.)

Facts: The Gucciardis purchased a condominium unit and noticed that there were some pockmarks and footprints on the concrete in the porch.  The Gucciardis contacted the builder regarding the defect, but the builder took no action.  Years later, the concrete began to crack and the Cucciardis contacted a contractor to install ceramic tiles over the cement.  However, the by-laws required that the condominium corporation’s consent before improvements or renovations could be made to a unit.

Question: Whether or not the unit owner can bypass the condominium by-laws to make improvements to the unit?

Ruling: The installation of the ceramic tiles was a renovation and not a repair despite the fact that the cement was cracking.  Condominium ownership was part unique and part communal.  The by-laws of the condominium corporation were the “fundamental rule”, and must be “abided by all the unit holders”.  The unit holder must restore the porch’s cement flooring and pay for the costs of the condominium corporation.

The condominium by-laws are the ultimate rules to be followed by all who reside in the condominium.

6.  Self-Help Not Recommended

The condominium corporation should not resort to self-help remedies.  Removing a tenant’s item that is left in the common area may result in a charge under the Criminal Code for theft.

7. Remember Occupier’s Liability

Ontario’s Occupier’s Liability Act imposes an obligation on the occupier to ensure the safety of all those on its premises.  The condominium corporation is responsible for the safety of everyone who uses the common areas (such as unit owners, tenants, and guests).

The condominium corporation can also be liable for injuries that a tenant suffers around the unit or in the common areas.

Cater (Guardian of ) et al. v. Ghag Enterprises Ltd., et al. [1991] B.C.J. No. 656 (B.C.S.C.)

Facts: The plaintiff was a tenant at the defendant condominium.  The plaintiff had an eight year-old daughter who enjoys riding her bicycle.  There was a hole in the driveway area.  One day, the daughter rode her bicycle into the depression and broke her leg.  The tenant brought an action against both the unit owner and the condominium corporation.

Question: Who was responsible for the girl’s injuries?

Ruling: The condo corporation and the unit owners were both occupiers; therefore, they were jointly responsible for the injuries of the girl.  Liability was attributed 75% to the unit owner and the condo corporation and 25% to the girl.A condo corporation can be held jointly liable for the injuries suffered by a tenant while on the condominium premise.

Allison v. Rank City Wall Canada Ltd. [1984] O.J. No. 3094 (Ont. H.C.J.)

Facts: The plaintiff, a tenant at the defendant’s apartment building, was assaulted in the underground parking garage.  The lighting in the parking area was dim, and there was infrequent security patrolling.  There was also no close-circuit television monitoring.  There was a limited liability clause in the lease contract that limited liability of the landlord to any harm suffered by the tenant.

Question: What is the effect of a limited liability clause on the harm suffered by the tenant?

Ruling: The apartment owner was found negligent because the safety measures were inadequate.  The limited liability clause did not limit the apartment building’s obligation to take reasonable precautions to ensure the safety of its tenants.

A condominium corporation must take reasonable precautions to ensure the safety of the tenants in the common areas.

8.  Residential Tenancies Act and the Unit Owner

The Residential Tenancies Act provides that a tenancy may be terminated only in accordance with this Residential Tenancies Act (“RTA”) (Section 37(1)).

The Landlord is not entitled to recover possession of a rental unit subject to a tenancy unless the tenant has vacated or abandoned the unit, or an order of the Board under the RTA evicting the tenant has authorized the possession   (Section 39 of the RTA).

There are only certain specific reasons under the RTA for a landlord to terminate a tenancy before the end of the term.  Those basically deal with non-payment of rent, termination for cause for misrepresentation of income, illegal acts, damage, interference with reasonable enjoyment, an act impairing safety, too many persons in the unit and further contravention after prior notice of termination (Section 59-68 of the RTA);

An application by the Landlord after notice of termination is required before possession can be obtained unless the landlord and tenant agree that the tenant is going to leave, and an agreement in the prescribed form is executed after the lease commences.

Under Section 134 of the Condominium Act, it is possible to get an order of the court to terminate a tenancy if the tenant breaches an existing court order, or the tenant has failed to remit common expenses after the owner has defaulted on the payment and the tenant has received written notice from the Condominium Corporation to make the payments to the Condominium Corporation.  (Section 134 of the Condominium Act).

SUMMARY

There are remedies available to the Condominium Corporation to deal with problem tenants.  The Condominium Corporation has to involve the unit owner right from the beginning, and try and get the unit owner to enforce the obligations of the tenant and the tenant’s guests.  If the problems require going to the courts, then the “devil is in the details” and the Condominium Corporation has to make sure that the necessary notices and demands have been sent to the unit owner and the tenant and that the necessary steps are taken in the courts to remedy the problem.  The remedy may be getting a court order requiring the tenant to comply with the rules of the condominium and requiring payment for damages.  If that is not sufficient, then it may be necessary to subsequently ask for a termination of the tenancy agreement.  If the unit owner and the tenant don’t pay for the damages, then eventually the Condominium Corporation can have the condominium unit sold to pay for the damages.

A unit owner that faces a problem tenant is well advised to try and make sure that the tenant complies with its obligations and that the Condominium Corporation does not have to bring any court proceedings to get the tenant to comply.  If the Condominium

Corporation brings the court proceedings, then the unit owner will often end up paying for the legal costs of the Condominium Corporation on a substantial indemnity basis (i.e. almost 100% of the legal costs).  If the unit owner ends up going to court to deal with the tenant under the Condominium Act, then the Condominium Corporation may want to be a party to the application, so that if the application fails then the Condominium Corporation is not prevented from asking the court for a similar order arising from the same fact situation.

 (The invaluable help of Karen Poon, Articling Student with Cheadles LLP in assisting with the preparation of these materials is gratefully acknowledged by Doug Shanks.)

Selected Sections of the Condominium Act, 1998

S.O. 1998, CHAPTER 19

Notification by owner

83   (1)   The owner of a unit who leases the unit or renews a lease of the unit shall, within 30 days of entering into the lease or the renewal, as the case may be,

(a) notify the corporation that the unit is leased;

(b) provide the corporation with the lessee’s name, the owner’s address and a copy of the lease or renewal or a summary of it in the form prescribed by the Minister; and

(c) provide the lessee with a copy of the declaration, by-laws and rules of the corporation.

Termination of lease

(2)   If a lease of a unit is terminated and not renewed, the owner of the unit shall notify the corporation in writing.

Record of notices

(3)   A corporation shall maintain a record of the notices that it receives under this section.

Lien upon default

85  (1)   If an owner defaults in the obligation to contribute to the common expenses, the corporation has a lien against the owner’s unit and its appurtenant common interest for the unpaid amount together with all interest owing and all reasonable legal costs and reasonable expenses incurred by the corporation in connection with the collection or attempted collection of the unpaid amount.

Expiration of lien

(2)   The lien expires three months after the default that gave rise to the lien occurred unless the corporation within that time registers a certificate of lien in a form prescribed by the Minister.

Certificate of lien

(3)   A certificate of lien when registered covers,

(a)  the amount owing under all of the corporation’s liens against the owner’s unit that have not expired at the time of registration of the certificate;

(b)  the amount by which the owner defaults in the obligation to contribute to the common expenses after the registration of the certificate; and

(c)  all interest owing and all reasonable legal costs and reasonable expenses that the corporation incurs in connection with the collection or attempted collection of the amounts described in clauses (a) and (b), including the costs of preparing and registering the certificate of lien and a discharge of it.

Notice to owner

(4)   At least 10 days before the day a certificate of lien is registered, the corporation shall give written notice of the lien to the owner whose unit is affected by the lien.

Service of notice

(5)   The corporation shall give the notice by personal service or by sending it by prepaid mail addressed to the owner at the address for service that appears in the record of the corporation maintained under subsection 47 (2).

Lien enforcement

(6)   The lien may be enforced in the same manner as a mortgage.

Discharge of lien

(7)  Upon payment of the amounts described in subsection (3), the corporation shall prepare and register a discharge of the certificate of lien in the form prescribed by the Minister and shall advise the owner in writing of the particulars of the registration.

Default with respect to leased unit

87  (1)   If an owner who has leased a unit defaults in the owner’s obligation to contribute to the common expenses, the corporation may, by written notice to the lessee, require the lessee to pay to the corporation the lesser of the amount of the default and the amount of the rent due under the lease.

Service on lessee

(2) The corporation shall give the notice to the lessee by personal service or by sending it by prepaid mail addressed to the lessee at the address of the unit.

Notice to owner

(3)   If the corporation gives a notice to a lessee, it shall give a copy of the notice to the owner of the unit that the lessee has leased.

Service on owner

(4)  The corporation shall give the copy of the notice to the owner by personal service or by sending it by prepaid mail addressed to the owner at the address for service that appears in the record of the corporation maintained under subsection 47 (2).

Rent paid to corporation

(5)   Upon receiving a notice under subsection (1), the lessee shall make the required payment to the corporation even if an encumbrancer of the unit has acquired the right of the lessor to receive rent under the lease.

No default in lease

(6)   The payment to the corporation shall constitute payment towards rent under the lease and the lessee shall not by reason only of the payment to the corporation be considered to be in default of an obligation in the lease.

Changes made by owners

98  (1)   An owner may make an addition, alteration or improvement to the common elements that is not contrary to this Act or the declaration if,

(a)   the board, by resolution, has approved the proposed addition, alteration or improvement;

(b)   the owner and the corporation have entered into an agreement that,

(i)    allocates the cost of the proposed addition, alteration or improvement between the corporation and the owner,

(ii)   sets out the respective duties and responsibilities, including the responsibilities for the cost of repair after damage, maintenance and insurance, of the corporation and the owner with respect to the proposed addition, alteration or improvement, and

(iii) sets out the other matters that the regulations made under this Act require;

(c)   subject to subsection (2), the requirements of section 97 have been met in cases where that section would apply if the proposed addition, alteration or improvement were done by the corporation; and

(d) the corporation has included a copy of the agreement described in clause (b) in the notice that the corporation is required to send to the owners.

No notice or approval

(2)   Clauses (1) (c) and (d) do not apply if the proposed addition, alteration or improvement relates to a part of the common elements of which the owner has exclusive use and if the board is satisfied on the evidence that it may require that the proposed addition, alteration or improvement,

(a)   will not have an adverse effect on units owned by other owners;

(b)   will not give rise to any expense to the corporation;

(c)   will not detract from the appearance of buildings on the property;

(d) will not affect the structural integrity of buildings on the property according to a certificate of an engineer, if the proposed addition, alteration or improvement involves a change to the structure of the buildings; and

(e) will not contravene the declaration or any prescribed requirements.

When agreement effective

(3)   An agreement described in clause (1) (b) does not take effect until,

(a) the conditions set out in clause (1) (a) and subsection (2) have been met or the conditions set out in clauses (1) (a), (c) and (d) have been met; and

(b) the corporation has registered it against the title to the owner’s unit.

  Lien for default under agreement

(4)   The corporation may add the costs, charges, interest and expenses resulting from an owner’s failure to comply with an agreement to the common expenses payable for the owner’s unit and may specify a time for payment by the owner.

  Agreement binds unit

(5)   An agreement binds the owner’s unit and is enforceable against the owner’s successors and assigns.

  Deductible

105(1)   Subject to subsection (2) and (3), if an insurance policy obtained by the corporation in accordance with this Act contains a deductible clause that limits the amount payable by the insurer, the portion of a loss that is excluded from coverage shall be a common expense.

Owner’s responsibility

(2)   If an owner, a lessee of an owner or a person residing in the owner’s unit with the permission or knowledge of the owner through an act or omission causes damage to the owner’s unit, the amount that is the lesser of the cost of repairing the damage and the deductible limit of the insurance policy obtained by the corporation shall be added to the common expenses payable for the owner’s unit.

Same, by-law

(3)   The corporation may pass a by-law to extend the circumstances in subsection (2) under which an amount shall be added to the common expenses payable for an owner’s unit if the damage to the unit was not caused by an act or omission of the corporation or its directors, officers, agents or employees.

Owner’s insurable interest

(4)   The amount payable by an owner under this section or as a result of a by-law passed under this section constitutes an insurable interest of the owner.

Use of common elements by owners

116       An owner may make reasonable use of the common elements subject to this Act, the declaration, the by-laws and the rules.

Dangerous activities

117       No person shall 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.

Compliance with Act

119(1)   A corporation, the directors, officers and employees of a corporation, a declarant, the lessor of a leasehold condominium corporation, an owner, an occupier of a unit and a person having an encumbrance against a unit and its appurtenant common interest shall comply with this Act, the declaration, the by-laws and the rules.

Responsibility for occupier

(2)   An owner shall take all reasonable steps to ensure that an occupier of the owner’s unit and all invitees, agents and employees of the owner or occupier comply with this Act, the declaration, the by-laws and the rules.

Right against owner

(3)   A corporation, an owner and every person having a registered mortgage against a unit and its appurtenant common interest have the right to require the owners and the occupiers of units to comply with this Act, the declaration, the by-laws and the rules.

Mediation and arbitration

132(1)   Every agreement mentioned in subsection (2) shall be deemed to contain a provision to submit a disagreement between the parties with respect to the agreement to,

(a) mediation by a person selected by the parties unless the parties have previously submitted the disagreement to mediation; and

(b) unless a mediator has obtained a settlement between the parties with respect to the disagreement, arbitration under the Arbitration Act, 1991,

(i)    60 days after the parties submit the disagreement to mediation, if the parties have not selected a mediator under clause (a), or

(ii) 30 days after the mediator selected under clause (a) delivers a notice stating that the mediation has failed.

Application

(2)   Subsection (1) applies to the following agreements:

1.   An agreement between a declarant and a corporation.

2.   An agreement between two or more corporations.

3.   An agreement described in clause 98 (1) (b) between a corporation and an owner.

4.   An agreement between a corporation and a person for the management of the property.

Disagreements on budget statement

(3)   The declarant and the board shall be deemed to have agreed in writing to submit a disagreement between the parties with respect to the budget statement described in subsection 72 (6) or the obligations of the declarant under section 75 to mediation and arbitration in accordance with clauses (1) (a) and (b) respectively.

Disagreements between corporation and owners

(4)   Every declaration shall be deemed to contain a provision that the corporation and the owners agree to submit a disagreement between the parties with respect to the declaration, by-laws or rules to mediation and arbitration in accordance with clauses (1) (a) and (b) respectively.

Duty of mediator

(5) A mediator appointed under clause (1) (a) shall confer with the parties and endeavour to obtain a settlement with respect to the disagreement submitted to mediation.

Fees and expenses

(6)   Each party shall pay the share of the mediator’s fees and expenses that,

(a) the settlement specifies, if a settlement is obtained; or

(b) the mediator specifies in the notice stating that the mediation has failed, if the mediation fails.

Record of settlement

(7)   Upon obtaining a settlement between the parties with respect to the disagreement submitted to mediation, the mediator shall make a written record of the settlement which shall form part of the agreement or matter that was the subject of the mediation.

Compliance order

134(1)   Subject to subsection (2), an owner, an occupier of a proposed unit, a corporation, a declarant, a lessor of a leasehold condominium corporation or a mortgagee of a unit may make an application to the Superior Court of Justice for an order enforcing compliance with any provision of this Act, the declaration, the by-laws, the rules or an agreement between two or more corporations for the mutual use, provision or maintenance or the cost-sharing of facilities or services of any of the parties to the agreement.

Pre-condition for application

(2)   If the mediation and arbitration processes described in section 132 are available, a person is not entitled to apply for an order under subsection (1) until the person has failed to obtain compliance through using those processes.

Contents of order

(3)   On an application, the court may, subject to subsection (4),

(a) grant the order applied for;

(b) require the persons named in the order to pay,

(i) the damages incurred by the applicant as a result of the acts of non-compliance, and

(ii) the costs incurred by the applicant in obtaining the order; or

(c) grant such other relief as is fair and equitable in the circumstances.

Order terminating lease

(4)   The court shall not, under subsection (3), grant an order terminating a lease of a unit for residential purposes unless the court is satisfied that,

(a) the lessee is in contravention of an order that has been made under subsection (3); or

(b) the lessee has received a notice described in subsection 87 (1) and has not paid the amount required by that subsection.

Addition to common expenses

(5)   If a corporation obtains an award of damages or costs in an order made against an owner or occupier of a unit, the damages or costs, together with any additional actual costs to the corporation in obtaining the order, shall be added to the common expenses for the unit and the corporation may specify a time for payment by the owner of the unit.

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