Status certificate error costs condominium

What happens when a condominium fails to set out the monthly fees associated with a parking unit in a status certificate? That is was what apparently happened in 1716243 Ontario Inc. v. Muskoka Standard Condominium Corporation No. 54. The unit owner brought an application against the condominium seeking: a declaration that it was not obliged to pay monthly common element fees for two parking spaces that it owned, an order that a lien registered against its units be discharged, and costs. The condominium brought its own application against the unit owner seeking an order that the unit owner was obliged to pay monthly common elements fees according to the Act and the condominium’s declaration and by-laws. 

The court found that the condominium had made an error when it failed to include the monthly fees associated with the parking units in the status certificate. However, the court found that the unit owner could only rely upon the status certificate until the end of the fiscal year for which it was prepared. The court referred to paragraph 9 of the status certificate and said that it “clearly sets out that the budget on which the common expense payment is set…was accurate, but that a new budget may result in increases…” As a result, the court found that the unit owner was obligated to pay monthly fees for the parking units at the beginning of the next fiscal year when the new budget was implemented. The court also found that the condominium had the right to register a lien against the unit once the unit owner failed to pay the monthly fees for the parking units in the new fiscal year.

As for the lien itself, the court found that the condominium was entitled to register the lien for arrears that occurred more than 3 months prior to the registration of the lien as it was allowed to apply payments made “in the manner that they see fit by allowing the default to roll forward every thirty days.” As a result, the condominium was able to collect arrears on the parking units for the previous 23 months by applying the payments on the residential unit toward the arrears on the parking units. However, the court held that it would be inequitable to allow the condominium to recover all of its costs and interest because it was its error that caused the problem. The court awarded only $750.00 for the costs of the lien and no interest if the owner paid within 60 days.

This case is a good reminder of the consequences that can occur where a condominium is not diligent in preparing and reviewing a status certificate before it is sent to an owner or potential purchaser. It also confirms that a condominium may apply payments to the oldest arrears first to delay the registration of a lien against the unit for arrears.

 

 

 

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