There are a number of reasons why it may be desirable for a piece of property to no longer be a condominium. Sometimes buildings fall apart and need to be demolished. Sometimes part of the property needs to be expropriated by the municipality to widen a road or construct a public service. Sometimes it may be desirable to sell a piece of the property to a neighbour or developer. Sometimes the owners cannot agree on the management or direction of the condominium. In some of these cases, termination may be the best option.
Part VIII of the Condominium Act, 1998 outlines the various options for terminating a condominium. A condo may be terminated for any reason with the consent of the owners and those with registered claims against the property (s.122), upon substantial damage to the property (s.123), upon sale of part or all of the property (s.124) or by court order (s.128). Each section of the Act has its own requirements and process.
Although the Act permits terminations of condominium corporations, there have been only a handful completed in Ontario. The Superior Court recently approved the termination of Simcoe Condominium Corporation No. 32.
Simcoe 32 was a operated as a time share resort. According to court documents, the condominium was in financial difficulty and could not continue to operate. About 80% of the owners that voted were in favour of terminating the condominium, but there were numerous mortgages registered on title to the units, including some held by the bankrupt developer, which would have made it nearly impossible (at least without great expense) to terminate the condominium on consent.
The court determined that termination of the condominium was appropriate in the circumstances. The condominium was terminated by the judge and the property vested in the names of the former directors as trustees until the property was sold. Once the property is sold, the assets are to be distributed to the former unit owners according to the plan approved by the court earlier this year. A contingency fund is to be held in trust by the condominium’s lawyer for 12 months. The lawyer must deliver any funds remaining in trust at the end of the 12 months to the Salvation Army.
While it is more common for parts of a condominium to be terminated for expropriation or sale reasons, there may be other reasons, as this case suggests, that it may be desirable to terminate the entire property.