A recent CAT decision considered whether a condo’s claim for indemnification for legal costs in issuing a compliance letter was reasonable and whether the owner was required pay it.

The condo issued a compliance letter to the owner citing multiple incidents of noise, nuisance and harassment and demanded the owner reimburse the condo for the cost of the letter. The owner requested the security incident reports that allegedly supported the compliance letter but paid the condo’s requested costs after receiving a second notice of intent to lien. The owner challenged the chargeback and argued that the action taken by the condo in sending the letter without any warning was unreasonable and so were the costs.

The CAT determined that the condo’s costs for issuing the compliance letter were unreasonable and it could not claim indemnification from the owner. The condo argued that there were several incidents to justify its claim, and therefore a compliance letter was necessary. But the CAT decided that the condo failed to prove the breaches in the compliance letter. The condo did not provide the owner with some of the security reports requested, and the incidents were described in those reports as minor. Plus, the condo offered no evidence of the alleged incidents beyond the description in the compliance letter. There was no evidence from the security guards at the proceeding.

The condo also failed to warn the owner of the alleged conduct in a timely way (or at all) and didn’t give the owner an opportunity to participate in the investigation or respond to the allegations before issuing the compliance letter. The condo “escalated to a legal letter without attempting other interventions” or investigating the allegations.

The CAT noted that a condo’s enforcement steps and costs must not be unreasonable or capricious. But the condo’s costs in this case were not reasonably incurred, and the owner should not be responsible for reimbursing the condo.

We’ve said it before – be reasonable. Condos are entitled and obliged to seek compliance with governing documents but must be reasonable in enforcement actions. A chargeback will be reviewed to make sure the costs are actually connected to a breach.  Complaints must be investigated and fair warning should be provided to owners. Speak with a lawyer about the sufficiency of your condo’s evidence before escalating to the next step.