The Superior Court of Justice recently raised an interesting question: can a condominium corporation foreclose on a unit to enforce its lien? While the Court didn’t answer the question, raising the question seemingly casts doubt on what a corporation can or can’t do to enforce a lien. Fortunately, we don’t have to wait for another case to get our answer: earlier decisions have made it clear that a condominium lien can be enforced through foreclosure.
When condo owners get hit with a lien, things typically go one of two ways: the owner pays the lien and everyone moves on with their life or the owner disputes the lien and a contentious battle ensues. A registered lien secures “reasonable legal costs and reasonable expenses incurred by the corporation to collect the lien” per section 85 of the Condo Act. Corporations often turn to their lawyers in lien battles and recoverable legal costs and expenses begin to mount. One owner recently learned that lesson the hard way.
Condo boards and owners should be familiar with the concept of “common elements” and “units”. While there is no “one size fits all” approach to distinguishing the two, in simplified terms, anything that is not part of a “unit” is a “common element”. Diligent boards and owners should review the condo’s Declaration for inclusions/ exclusions to and from the unit, maintenance and repair obligations and Schedule “C” to determine unit boundaries; the condo’s registered plan drawings will lay that out in an illustrated form. Understanding these points is critically important.
In Landont Ltd. v. Frontenac Condominium Corp. No. 11, Landont Ltd. used their unit to operate a commercial parking lot. Landont and FCC 11 agreed that the concrete slab below the lot was a common element, but this case turned on whether a waterproofing membrane installed on the upper surface of the concrete slab was part of the common elements. The distinction fundamentally determined which party was responsible for maintaining and repairing the membrane.
The CAT’s decision in Abou El Naaj v. Peel Standard Condominium Corporation No. 935 reflects a problematic trend of condos failing or refusing to participate in Tribunal proceedings. We do not recommend ignoring a CAT application… Just like real live cats, they don’t go away by simply ignoring them.
We understand why condos might not…
The Condominium Authority Tribunal recently granted an order under Rule 4.5 of its Rules of Practice for the first time since its inception. Rule 4.5 states:
If the CAT finds that a Party has filed a vexatious Application or has participated in a CAT Case in a vexatious manner, the CAT can find that Party…
Most condos now conduct business through electronic meetings, which can be recorded by the host. Meeting recordings are not a novel concept but our recent dependence on electronic meetings has given them new life. Minute takers have historically recorded in-person meetings to aid in accurate minutes and to best recall the details of important discussions. Similarly, an electronic meeting recording can serve the same purpose – ensuring accuracy and transparency in meetings where there is a broad interest to owners but owners can’t attend in the traditional sense. We are never against something that promotes but also clearly memorializes (hopefully) fair process.
The electronic condo meeting and recording should be for the benefit of the condo and its owners. To ensure that, we’ve developed best practices for electronic meeting recordings, which can translate to in-person meetings too.
When Amlani v. YCC 473 was released at the start of the year, it was the immediate frontrunner for “2020 Condo Case of the Year”. YCC 473 appealed and even in a year of fascinating cases, the Amlani decision still holds its seat at the top of that mountain.
The initial Amlani decision dealt with a common situation. In a nutshell, the board received complaints about Mr. Amlani’s smoking so they instructed their lawyers to deal with the matter. YCC 473 relied upon the indemnity provision in its declaration to charge back its legal expenses to Mr. Amlani and subsequently register a lien against Mr. Amlani’s unit to collect its legal fees.
The initial judge held that YCC 473 could not rely upon it’s the indemnity provision to charge back its legal costs for two key reasons:
1. Mr. Amlani did not commit “an act or omission to or with respect to the common elements and/or all other units” as required by the indemnity provision; and
2. YCC 473’s interpretation of its indemnity provision contravened section 134 (5) of the Condo Act as the costs it claimed related to compliance and enforcement costs without being embodied in a court order.
Section 134 (5) of the Condo Act allows a corporation to add its enforcement costs to an owner’s common expenses if a court awards the corporation its damages or costs in bringing a compliance application. Section 134(5) does not itself authorize a lien for legal fees incurred prior to the compliance application: to register a valid lien for legal fees, the court must first award these fees. However, many condominiums rely on their indemnity provisions as a “catch-all” provision to permit a corporation to add certain costs to an owner’s ledger resulting from their acts or omissions, often without requiring a court order.
The Amlani decision sparked considerable debate amongst condominium lawyers. Some of our esteemed peers argue that you cannot rely on an indemnity provision to charge back legal compliance and enforcement costs without first obtaining a court order. Others took the position that Amlani was a fact-specific decision that turned on the specific wording of YCC 473’s indemnity provision; they argued the Amlani decision does not stand for the proposition that a court order must be obtained before any pre-litigation legal compliance and enforcement costs can be charged back.
The Divisional Court recently set the record straight: condos cannot rely on their indemnity provisions to enable a lien to be registered against a unit to charge back compliance and enforcement costs without a court order. This does not mean a condo can’t recover its pre-litigation compliance and enforcement costs – condos can seek these costs in an s. 134 (5) order but registering a lien for these costs before the order is obtained is improper.
As we blogged on July 14, 2020 – The Ministry of Government and Consumer Services intends to proclaim a “Condominium Guide” into force effective December 1, 2020. Submissions from the public on the proposed contents are due August 14, 2020.
We made brief submissions on further potential headings for the Condo Guide table of contents. These include status certificate and pre-construction condo purchase topics, first year deficiency and funding issues, conversion condominiums, and touch on the requirements for condo insurance, owner insurance and an explanation of standard unit vs. improvement coverage
In our view, the suggested contents are comprehensive and hopefully the plain-language content will be too!
In making our short notes, we had longer thoughts. Here are some items we hope get fleshed out in the Condo Guide content:
When the City of Toronto first enacted its mandatory mask by-laws, condominiums were noticeably exempt. But after much feedback, the City of Toronto has amended its mandatory mask by-law to require masks in interior condo common elements such as hallways and elevators. By August 5, all Toronto condominium corporations must adopt a mandatory mask policy.…
The Leafs are back on the ice, the Raptors are looking strong as they gear up to defend their championship and the Jays have taken flight. Things are looking good for Toronto and it doesn’t stop with our sports.
On July 29, 2020, the Ontario government announced that Toronto will be joining its neighbours by moving into Stage 3 of the Province’s reopening plans (unfortunately for our friends in Windsor, they must wait a little longer). Many are excited for the relaxed restrictions and some are rightfully hesitant to assume things are “back to normal”. But what exactly does Phase 3 mean for condominiums across the province?