Ontario Condo Law Blog : Toronto Condominium Lawyer & Attorney : Gardiner Miller Arnold Law Firm : Ontario, Ottawa, Hamilton, Kitchener

As one of our annual traditions, it is time to unveil our picks for the top 10 cases of the year gone by.  2011 brought us a bumper crop of condo-related cases by Ontario courts and tribunals, with almost 50 reported decisions cited in the @ChrisJaglowitz Twitter feed and frequently summarized in our microblog entries.

Here are our selections:

#10 -- York Region Condominium Corporation No. 890 v. RPS Resource Property Services, 2010 ONSC 3371

News of several condo frauds broke in 2011 but there was only one reported court decision on the topic, for a fraud between 2003 and 2005.  The management firm here “borrowed” money from one condo to finance its own operations and those of its other condo clients and then repaid the money before year-end so as to avoid detection by the condo’s auditors.   The plot unravelled when the condo changed managers and the fraudster was short $370,000 at year-end.  The management firm and its principal were liable for breach of contract, breach of trust and conversion and were ordered to repay the $370,000.  The condo’s claim against its bank was dismissed.  We commented on this case and listed a number of takeaway points.

#9 -- York Condominium Corporation No. 26 v. Ramadani, 2011 ONSC 6726

The court granted a compliance order requiring the removal of a dog accused of peeing on a balcony.  Despite the owner’s arguments, the condo was found to have acted reasonably in demanding the dog's removal.    Condominium boards and managers must act reasonably in enforcing condo rules and what is “reasonable” will be decided on a case by case basis, but courts will not substitute their own opinion for that of the board or manager.   Justice Strathy gives a good overview of the current law related to condo rule enforcement and his decision stands for the proposition that unit owners who think that a condominium must prove an owner’s wrongdoing beyond a reasonable doubt before taking steps against them are just fooling themselves and needlessly risking their financial security.  The case also confirms that the court has a broad discretion in fashioning an appropriate remedy which minimally affects the unit owner but which effectively solves the problem.

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

The federal government has just announced plans to tighten borrowing so as to help cap growing household debt and ensure the stability of the housing market. Changes announced today include requirements for larger down payments on purchases, shorter amortization periods on mortgages and a reduction of the maximum amount that can be borrowed against a home.

Notably absent from the today’s announcement is the more vigorous qualification requirement for condominium purchasers that was reported by the National Post on Thursday and again on Friday as an item under serious consideration. This measure relates to the debt ratio calculation used to qualify purchasers for CMHC-insured mortgages on condo units and called for the inclusion of 100% of the applicable condo common expense fees as part of the benchmark Total Debt Service formula, up from the current level of 50%. This change would make it more difficult for people to qualify for a loan to purchase a condominium unit. For an explanation of the mechanics of Total Debt Service formula and the impact of changing it, see this piece at the Canadian Mortgage Trends blog.

• Email This
• Print
• Comments (3)
• Trackbacks
• Share Link

In a blog post last week entitled “Let’s put an end to phantom buyers,” Toronto Realtor Andrew la Fleur wrote an open letter calling for an end to a “significant problem” he describes as follows:

Phantom Buyers is a term that I have coined for buyers of pre-construction condos who are not really buyers. Usually what happens is this: when a new condo launches of any significance in the city, a large number of Realtors will camp out for several days to be first in line when the VIP broker event takes place. Many of the Realtors who are in the first several spots in the lineup do not have any actual clients who want to buy! These agents will buy units in their own name (usually the cheapest units available), and then they will use the 10-day rescission period to try to find an actual buyer to take the unit(s) they have ‘reserved’ in their name.

He then goes on to explain how those agents try to unload these units and then gives some reasons why the practice should be halted.

There are two problems with the passage above.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Once every six blue moons, Tarion proposes a change to the Ontario New Home Warranty Plan that actually benefits purchasers of new homes without giving any kind of benefit to homebuilders or developers. This is one of those momentous, rare occasions.

In mid-October 2010, Tarion gave notice of its proposal to amend its regulations to combat the rather disreputable practice of a small number of condo developers that charge purchasers the [over]estimated municipal taxes or development charges for new units without refunding the difference if a lesser amount was actually paid to the municipality. This practice of developers pocketing the difference was described months ago in the regular newspaper column of Toronto real estate lawyer Bob Aaron. See his articles here and here. He called for some change to be made.

Luckily, Mr. Aaron is a member of the board of the Tarion Warranty Corporation and it seems that he has successfully persuaded Tarion to do something about this!

In the notice of the proposed amendment to its regulation, Tarion summarized the measure as follows:

Tarion would like to ensure that builders are not including charges as adjustments to the purchase price of a new home that have not actually been incurred by the builder. This amendment to the regulation will make the restriction of these charges a new term and condition of builder registration.

The actual proposed wording of the prohibition to be added to Tarion’s regulation is as follows:

The registrant shall not charge as an adjustment or readjustment to the purchase price of a home, any amount as reimbursement for a sum payable to a third party unless and to the extent such sum is ultimately paid to such third party.

This change, if passed, should persuade those few bad apple developers to stop the unfair practice of pocketing the difference between what they collect from purchasers and what they remit to municipalities or others. Indeed, a developer found in breach of this provision stands to lose their Tarion registration. While the proposed change does not provide a direct way for consumers to recover the difference, it should allow purchasers a certain amount of clout when negotiating with developers. It may also give rise to a legal right to sue a developer for that difference in court if need be.

Public input is being received until November 25, 2010. Comments can be submitted electronically through the Regulatory Registry on the ServiceOntario website.  Give your two cents today. 

Hats off to Bob Aaron and Tarion for taking this step to enhance consumer protection!

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

A troubled condo project in Ottawa is being taken over this week by the developer’s major creditor. The Ottawa Citizen reports that this creditor announced it is terminating the existing purchase agreements and that:

The former purchasers of the condos were told they would receive their deposits back. But it’s not clear about other expenses, such as upgrades and fixtures that have already been purchased.

This situation illustrates that while a purchaser’s deposit for the purchase price is protected by section 81(1) of the Condominium Act, 1998 (“the Act”), not all monies paid to a developer are covered by this statutory requirement that money be held in trust by the developer’s lawyer or another trustee.

• Email This
• Print
• Comments (3)
• Trackbacks
• Share Link

The saga of the doomed luxury condo development at 1 Bloor in Toronto took an interesting turn earlier this month when the project was sold.

Great Gulf Homes announced that it had purchased the land at the corner of Yonge and Bloor Streets from developer Bazis International as part of a court-approved process to keep the project from falling into receivership. Bazis had initially purchased the land for $61 million but had defaulted on its loans before construction could begin.  

Despite the insolvency of the developer, those purchasers who braved the cold and lined up outside for days in late 2007 to buy units at 1 Bloor won’t lose a dime of their deposits (reportedly over $70 million). They can thank section 81 of the Condominium Act, 1998, which provides that deposits paid for the purchase of proposed condo units must be held in trust by a trustee or a law firm.  Section 82 provides that developers must pay interest on these deposits. 

Though their deposits are safe, those who purchased units at 1 Bloor are wondering what kind of condo they are going to get for their money.   The fate of the project won’t be known until after the sale to Great Gulf Homes closes in September but the new concept will probably be far less ambitious than the 80-storey, half-billion dollar skyscraper that was originally planned.  GMA's very own Gerry Miller shared his view on the project in this article in last Friday’s Globe and Mail.

Update (Sept 4/09):   Kris Scheuer of the Town Crier reports on her blog that 1 Bloor purchasers are now being refunded their deposits.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Something unusual is going on in Vancouver this winter.   It's snowing -- a lot.

In reporting on life in the snow in her State of Vancouver blog, journalist Frances Bula shares her readers' comments about people failing to shovel their sidewalks.   

Among the commentators is a Vancouver city council candidate who focuses on the large number of downtown condominiums that have not cleared their sidewalks.  He suggests that snow-clogged sidewalks in front of condominiums may just be the tip of the iceberg in terms of poor maintenance and repair practices at those buildings and could be a danger sign.    He then offers some sensible suggestions to condo boards and prospective purchasers.    

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In a recent entry on the Toronto Neighbourhoods and Real Estate blog Move Smartly, lawyer Rachel Loizos offers some wise advice for prospective condo purchasers:   "Before you commit to purchasing a condo unit, make sure you have reviewed the rules."

She then lists the rules that most commonly affect purchasers and goes on to say:

The cost for non-compliance can be high as the condo corporation has the right to obtain a court order to force you to comply. You may also get stuck with their legal costs in the matter.

It is worth emphasizing that those legal costs can and often do reach the tens of thousands of dollars.   In the recent case of Italiano v. TSCC 1507 (summarized here), the condo successfully pursued a unit owner for violating the noise and nuisance provisions in the condo declaration and rules.  In the end, the at-fault unit owner was ordered to pay over $80,000 in legal costs to the condo corporation.   This was on top of what the owner had to pay his own lawyer.    Ouch!

Purchasers who don't carefully examine the condominium declaration and rules before buying are taking an enormous risk.

• Email This
• Print
• Comments (3)
• Trackbacks
• Share Link