As I mentioned in my previous post, the most common question that I’m asked about shared facilities agreements is how to terminate them. The reason? Many (if not all) condominiums have disputes related to their shared facilities agreements. Sometimes the problem is the agreement itself. It is difficult to read, has confusing language, or contains inconsistent provisions. Sometimes one or more of the parties refuses to participate in decisions or pay their fair share. Sometimes the agreement is ignored by the parties completely; sometimes they don’t even know it exists!
It is no wonder disputes arise: the Condominium Act, 1998, does not require shared facilities agreements to be fair. As long as the agreement and terms are properly disclosed to the parties it will be enforceable.
Mediation & Arbitration
Most shared facilities disputes are resolved using mediation, and if necessary, arbitration. There are a few reasons for this. First, most agreements require arbitration of disputes related to the agreement. Second, section 132 of the Act requires mediation and arbitration of disputes related to agreements between two or more condominiums, such as shared facilities agreements. The amendments to the Act make it even clear that mediation and arbitration are required for shared facilities disputes. Third, many parties elect to participate in mediation (and to a lesser extent arbitration) even when the process is not required because of its advantages over court: it is quicker, more cost-effective, and the parties retain more control over the process. Unfortunately, in some cases a court proceeding may be the best option.
Minor disagreements are perfectly acceptable and studies show that they can actually result in better decisions. However, when the disagreement leads to heated arguments, dysfunction, indecisiveness, delay, or extraordinary costs, it is not healthy. Try these tips to avoid major disagreements:
- Read the agreement! Often times a disagreement arises because one of the parties is familiar with the terms of the agreement and another is not. It is hard to have a meaningful conversation about the agreement without having at least a basic level of knowledge of its terms.
- Communicate. Even if the agreement gives all decision-making authority to one of the parties, that party shouldn’t make decisions without at least consulting the other parties. The other party may have information that is relevant to the decision, or a creative solution to the problem. Discuss issues freely and openly; don’t withhold vital information from the other parties unless necessary (i.e. privileged).
- Work together. Meet regularly and at least as often as required by the agreement. Even if there is a property manager for the shared facilities, keep the managers for the individual parties informed of decisions made. Make decisions after careful consideration; not based on an “us vs. them” mentality. Ensure that the shared facilities representatives for the parties can work together; if possible, avoid having a committee with people who can’t stand each other.
If the agreement is causing a dispute because it is unclear, or confusing, ask a condominium lawyer to review it and provide an opinion. I have done a number of these reviews in recent months. A diagram or chart summarizing the obligations can be a handy tool for existing or new board members.