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The short answer to this question is, no. Condominium corporations will not reimburse unit owners for their common expense fees. If there are any savings in a fiscal year, the corporation is likely going to reallocate the amount saved to another part of the budget that could use the money. Furthermore, they may keep any savings to further build up the reserve fund or to keep it in the operating budget for the following year. Allocating money in this fashion may permit the corporation to reduce the percentage by which common expense fees will increase the following year.
In short, yes. Because condominium units are “special types of property” governed by the Condominium Act, 1998 there are “special rights” for the mortgage company (called a “mortgagee”) that are set out in section 88 of the Act and further terms of a condominium mortgage that are different from a mortgage for freehold property. Essentially, if you default, the mortgagee needs to have a right to step into your shoes and have all of the rights of a condominium unit owner (such as voting at AGMs and receiving notice of meetings).
Section 88 includes provisions that are deemed to be included in every mortgage for a condominium unit, and key amongst these is that if you default your obligation to pay the common expense amounts (“condo fees”) due and payable for your condominium unit(s) then your mortgage is in default. Once this happens, the mortgagee can step into your shoes. The mortgagee can also start to pay all common expenses you owe, on your behalf, which will be added to the costs of your mortgage, together with all other fees and charges set out in your mortgage. Further, a mortgagee can, under section 47, give a condominium corporation notice that the mortgagee wishes to receive notice of all meetings and that the mortgagee has the right to vote on behalf of the unit that is mortgaged.
There are many important and significant differences between owning a freehold property and owning a condominium unit. The freedoms associated with freehold ownership is what many people think of when they think about home ownership. With a freehold property, the owner owns the home itself and the lot of land it sits on. The owner of a freehold property is able to alter the interior and exterior of their home to a great degree, and is responsible for the upkeep of the property.
In the condominium context, a unit owner has exclusive ownership over his or her unit with boundaries set by the corporation’s declaration. The unit owners of all of the units also collectively own the common elements of the property as tenants in common, in proportions that are set out in Schedule D of the corporation’s declaration. The costs of operating and maintaining these common element areas is jointly shared by the individual unit owners in the form of monthly maintenance fees. Owners of condominium units must comply with the Condominium Act, 1998, the corporation’s declaration, by-laws and rules. These governing documents can impose substantial restrictions on the freedom of a unit owner to deal with his or her property, for example these documents can place restrictions on the ability to own pets or the ability to renovate a unit without the prior consent of the condominium corporation’s board of directors. As such, it is important that all prospective purchasers of condominium units review the corporation’s governing documents and educate themselves on the rights and responsibilities of unit owners prior to purchase.
Hopefully the above provides some options for such a situation and can be resolved through dialogue.
Under section 84 of the Condominium Act, 1998, all unit owners are obligated to contribute to the common expenses in the proportions specified in the declaration. No unit owner is exempt from this obligation. When a unit owner fails to pay their common expense fees, section 85 of the Condominium Act, 1998 authorizes the corporation to register a lien against the condominium unit for the unpaid amount together with all interest owing and all reasonable legal costs and expenses in connection with the collection of the unpaid amount. If you are unable to pay your maintenance fees, you may have to consider other living arrangements or sources of financing that may be available to you.
As you know, special assessments occur when a condominium corporation is met with a large and often unexpected cash requirement and the Board of Directors cannot fund the requirement out of the funds on hand. The authority to levy special assessments is a power of a condominium corporation under sections 56 and 84 of the Condominium Act, 1998. Section 84 requires that all of the owners of a condominium corporation contribute to the common expenses of the corporation, in the proportions set out in the declaration, and section 56 allows a condominium corporation to have a by-law which governs the assessment and collection of common expenses. Further details about the special assessment powers and method of collecting special assessments can be found in a condominium corporation’s general, or operating by-law.
Funds required under a special assessment are collectable in the same way that common expenses are and unfortunately, once a special assessment has been levied, pursuant to the Act and in accordance with the by-law, there is no method to contest it. Because a special assessment forms part of the common expenses for a unit, any non-payment of a special assessment can result in a lien being registered on a condominium unit.
With respect to funding a special assessment, first check your homeowner’s insurance policy as a number of condominium insurance policies have endorsements to cover special assessments in certain situations and second, it may be necessary to obtain a loan to pay the special assessment.
Finally, a note on special assessments. The “risk” of special assessments is directly tied to the financial and physical health of a condominium corporation. Keeping common element fees low for years on end and/or not undertaking major repairs and replacements in order to save unit owners money and “keep condo fees low” will only result in special assessments down the road. It is prudent for unit owners to ensure that their reserve fund is fully funded and that the studies are updated as required.
There are a number of routes that can be explored if you feel that a Board of Directors is acting in a biased or unfair manner. Firstly, and most importantly, what you may perceive as biased or unfair conduct may not be “biased or unfair” or, if in fact it is “biased or unfair”, the Board of Directors may not realize this. A best first step in any type of dispute is to have a reasonable discussion, usually through written correspondence, setting aside emotions and personal allegations, with the Board.
One method of addressing bias and unfairness is to replace directors which you feel are acting unfairly, either when their positions are up for election at an Annual General Meeting or through the requisition process in section 46 of the Condominium Act, 1998, using this process to remove and then replace directors.
There are also alternative dispute resolution and litigation methods to deal with serious bias and/or unfairness. Where the “biased or unfair” conduct is the result of a disagreement between a condominium corporation and a unit owner about the corporation’s declaration, by-laws, or rules, the Act requires, as subsection 134(4), that the disagreement be submitted to mediation and arbitration under that section.
From a litigation perspective, section 135 of the Act permits a unit owner to make an application to court for relief where the conduct of a condominium corporation (which is the conduct of the Board of Directors) is, or threatens to be, “oppressive or unfairly prejudicial” to a unit owner or if the conduct “disregards the interests” of a unit owner. With such a remedy, the Ontario courts have held that section 135 protects the “reasonable expectations” of a unit owner and that it cannot be used as a “wish list”. A court will also give regard to the cumulative conduct of a condominium corporation. The reasonable expectations of a unit owner are determined by looking at the arrangements that exist between a condominium corporation and the unit owner, including the Act and the corporation’s declaration, by-laws, and rules.
Hopefully the above provides some options for such a situation and can be resolved through dialogue.
I was sold a condominium unit with a parking spot located in another condominium building, next door to my condominium, and the parking garage is shared by the two condominiums. Is this allowed?
It depends. Quite often, condominium corporations that are adjacent to each other (like multiple phases of a development) have a number of “Shared Facilities” that are shared between the two condominium corporations and their respective unit owners have rights to use the “Shared Facilities”. In the case of parking spots, which are often condominium units called “parking units” and which have a deed to each one, sometimes a unit owner in one phase of condominium development is permitted to own a parking unit (and sometimes also storage lockers, called “locker unit(s)”) in another phase. All of these rights of use and occupation are set out in a condominium’s declaration. When a client is purchasing a condominium unit(s) of any type, a prudent real estate lawyer should review with their client the exact location of each type of condominium unit that the client is purchasing together with all pertinent restrictions on use and occupation.
In most cases, unit owners are responsible for insuring their own possessions. Although you can approach the Board or management to recover the remaining loss, it is likely that you will be unsuccessful. Increased surveillance and security goes a long way in preventing these types of crimes, unfortunately there is always a risk and the corporation, security and management cannot, and do not, guarantee that surveillance or security will completely prevent theft. Pursuant to section 26 of the Condominium Act, 1998, Condominium Corporations owe a duty under the Occupiers’ Liability Act as occupiers of the Common Elements. The Corporation must take such care as is reasonable in the circumstances, to see that persons entering on the premises and the property brought on the premises are reasonably safe while on the premises. As such, the Corporation must take steps to make the premises reasonably safe, but will not be held to a standard of perfection.
In St. Louis-Lalonde v Carleton Condominium Corporation No. 12, a plaintiff alleged negligence against the Condominium Corporation when an elevator door closed on her scooter and caused injury. In dismissing the claim of negligence, the Ontario Superior Court of Justice found that there was a reasonable system of maintenance and inspection. In seeking to hold the Condominium Corporation liable for damage or injury as an occupier under the Occupiers’ Liability Act, the burden lies with the injured person to prove on a balance of probabilities that the occupier failed to perform the actions necessary to discharge the duty of care determined to be reasonable in the circumstances to see that the visitor would be reasonably safe, and by reason of that failure the injury occurred. It does not imply an obligation to guarantee safety or meet a standard such that no one will ever be injured.
Similarly, in the Alberta case of Fisher v Marquis Condominium Corp. the plaintiff’s vehicle was damaged when it hit the condominium’s garage door. The plaintiff alleged that the damage occurred because the sensor system designed to prevent such a collision was not functioning properly, and further alleged the defendant condominium complex knew this and allowed the door to be used anyway. In holding the plaintiff had failed to prove negligence on the part of the defendant, the court noted that although the condominium complex was an “occupier” under the Occupiers’ Liability Act, the standard to be applied is reasonableness and not perfection. An occupier must take reasonable care in the circumstances to ensure those on the premises are reasonably safe. This does not require that an occupier insures the safety of users of its premises, being liable for any and all damage they may suffer while on the premises. Instead an occupier will only be liable if such damage arises from its failure to take reasonable care to make the premises reasonably safe.
In this case, your Condominium Corporation operates both security and surveillance systems in order to keep persons entering on the premises and the property brought on the premises reasonably safe. Under the law, as long as the Corporation is taking reasonable steps in the circumstances and was not negligent, it will not be liable for injuries or damage to persons or property caused while on the premises.
Under section 93(2) of the Condominium Act, 1998, reserve fund monies are to be used solely for the purpose of major repair and replacement of the common elements and assets of the Corporation. If the board or unit owners disagree with the auditor’s interpretation of the Act regarding the use of the reserve fund, the Board of Directors should speak to the Corporation’s lawyer who will be able to provide a legal opinion as to whether the reserve fund monies can be used for all, or part, of a particular project.
When considering whether a particular project will constitute a major repair or replacement as to allow the Corporation to use reserve fund monies, courts have reviewed the expenditures separately to determine what work can properly be paid for out of the reserve fund, and what work may constitute an upgrade which cannot be properly paid for by reserve fund monies. In Little v Toronto Condominium Corporation No. 590, the court considered whether inappropriate reserve fund expenditures were made on security system upgrades, the purchase of exercise equipment, the replacement of the entrance canopy, lobby renovations and design fees. The court considered each expenditure separately and ultimately dismissed the application, finding that the expenditures could be considered analogous to “replacements”, and that the updating work done did not constitute an improvement as to make the use of reserve fund monies improper.
If the Corporation does not comply with the requirements of its reserve fund study with respect to funding, it is in breach of the Act, and a unit owner or other stakeholder could bring an application to require the corporation to comply. The inadequacy of the reserve fund would also need to be disclosed in the status certificate, which could have a negative impact on unit values. Lastly, if the Board of Directors knowingly allow the Corporation to disregard its reserve fund study, the Board could be held to be in breach of its duty of care and the Board members could be personally liable for any damages that might result.
Under section 60(1) of the Condominium Act, 1998, at the first meeting of the owners in a new condominium, the owners must appoint an auditor to hold office until the close of the next annual general meeting. If the owners do not do so, the board must appoint an auditor as soon as possible thereafter. At all subsequent annual general meetings of the owners, the owners shall appoint the auditor to hold office until the close of the next annual general meeting under section 60(2) of the Condominium Act, 1998. If the owners do not appoint an auditor at an annual general meeting, then the current auditor will continue to hold office until a successor is appointed.
In order for a meeting of the Board of Directors to be properly held, the meeting must be held on proper notice and a quorum of the board must be present. Once a quorum is present, decisions may be made by a majority of those directors who are present at the meeting.
Where a Corporation hires an employee directly rather than contracting with a third-party contractor, the Corporation acquires certain responsibilities, including to remit certain source deductions from the employee’s pay (e.g., income tax, CPP and EI), and to not terminate the employee (unless for cause) without providing reasonable notice. This latter responsibility poses the greatest risk for the Corporation, as the cost of litigating a wrongful termination claim can be significant. This risk can be mitigated (but not entirely eliminated) by having a properly-drafted employment agreement with the employee.
If the Corporation’s declaration provides that the Corporation is responsible to maintain and repair the windows, in our view this would continue to be the case even if the owner and the Corporation had agreed that the owner would pay a portion of the cost of replacing the windows (presumably in exchange for having same replaced sooner than would otherwise have occurred). The exception to this would be if the window replacement was carried out by the owner pursuant to a Section 98 agreement, in which case the Condominium Act, 1998 contemplates that the agreement could vary the responsibility to maintain and repair the improved windows as between the corporation and the unit owner. The Section 98 agreement would be registered on title to the unit, and would also be noted on the status certificate.
In the case of a slip and fall on the Corporation’s property, it will be up to the person suing (and his or her lawyer) to determine who is named as a party defendant to the claim. Typically, the owner or occupier of the property (being the Corporation) will be named, and other individuals who are involved in the management or maintenance of the property (e.g., the Property Manager and/or the landscaping/snow removal contractor) may also be named. The Property Manager’s primary responsibility is to keep good records and to make certain that the landscaping/snow removal contractor does the same, including documenting what arrangements were in place for snow removal, and whether those arrangements were being properly carried out. The Property Manager and the landscaper/snow removal contractor should also document the condition of the property where the slip and fall took place as soon after as possible (assuming that the Property Manager is notified about the slip and fall at the time that same occurs).
Typically, Shared Facilities comprise part of one or more Condominium Corporations (whether units, common elements or a combination of the two). In that case, the Shared Facilities are governed by the Act and by the Corporation’s governing documents in the same manner as the other parts of the property. Additionally, in the event that there is a Shared Facilities agreement in place, the Shared Facilities would be governed by the provisions of that agreement.
The Corporation may, in certain circumstances, add amounts to the common expenses payable for an individual unit. These amounts may include but are not limited to things like costs incurred by the corporation to repair or maintain a unit where the owner has failed to do so, or the lesser of the cost of repair or the Corporation’s insurance deductible where the unit owner has caused insurable damage to a unit or the common elements. The particulars of the amounts that the Corporation may add, and the circumstances in which these amounts may be added, are governed by the Act and by the Corporation’s governing documents (especially the indemnification clause found in the declaration and to a lesser extent the by-laws and rules).