Whose Notice is it Anyway?

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The Condominium Act, 1998 provides that an owner is entitled to notice when a condominium corporation takes action to perfect and enforce a lien, however, the recent decision in Mei Ki Ching v Carleton Condominium Corporation No. 203 demonstrates that a spouse that is not a registered owner of a unit may be entitled to the same notice.

Facts

  • McIntosh (the “Owner”) is the sole registered owner of a unit within the condominium plan (the “Unit”);
  • Ching (the “Spouse”) is not a registered owner of the Unit;
  • The Unit was the matrimonial home of the Owner and Spouse;
  • The Owner and Spouse separated in July of 2014;
  • The Owner continued to occupy the unit after separation;
  • In May of 2015, the Spouse registered a designation that the unit was the matrimonial home (the “DMH”);
  • The DMH contained the Spouse’s name and current address;
  • In March of 2017 the Owner defaulted in the Owner’s contributions to the common expenses of the condominium corporation;
  • In March of 2017 the condominium corporation began taking steps to perfect and enforce its lien in accordance with the Condominium Act, 1998;
  • The condominium corporation eventually takes possession of the Unit; and
  • After the condominium corporation took possession of the Unit the Spouse obtained an order granting her exclusive possession of the Unit and vesting the Unit in her name.

The Decision

The Family Law Act, 1990 makes it clear that each spouse has an equal entitlement to the matrimonial home and to give effect to such equal entitlement, a spouse with the right of possession in the matrimonial homes has the same right of redemption or relief against forfeiture as the other spouse and is entitled to the same notice respecting the claim and its enforcement or realization.  The provisions of the Family Law Act, 1990 further required the condominium corporation to provide notice to the Spouse at the usual or last known address of the Spouse or, if none, the address of the matrimonial home.

Despite being aware of the Spouse’s current address because of the registration of the DMH, the condominium corporation failed to provide notice to the Spouse when it took actions to perfect and enforce the lien.

The Court found because reasonable inquiries (in this case, a title search for a nominal fee) by the condominium corporation could have made the name and current address of the Spouse known to the condominium corporation, the condominium corporation was required to provide the Spouse with same notice that was provided to the owner respecting the lien and its enforcement.

Because of the condominium corporation’s failure to provide the required notice, the Court found the lien to be invalid against the Spouse, although the Spouse was required to make certain payments towards common expenses, a special assessment, and late fees.

The Issue for Condominium Corporations Generally

In this case, the DMH provided the condominium corporation with all the information it required to effect proper notice on the Spouse.  Other than a title search, which, absent the registration of a DMH would likely not provide a condominium corporation with the necessary information to determine if there is a spousal interest in the unit, the Court provides no guidance as to what efforts a condominium corporation must take to be considered to have made reasonable inquiries.

Is a condominium corporation to make inquiries of the registered owner? Search marriage records? Contact the lawyer that acted on behalf of the owner when such owner purchased the property?

In the absence of any information about a spouse, will it be sufficient to address all notices to the registered owner and spouse (i.e. John Smith and Spouse) and send them to the unit or the registered owner’s address for service?

There is no doubt reasonable inquiries will depend on the particular circumstances that surround a condominium corporation’s enforcement efforts but, the industry may not get guidance as to when the inquiries of a condominium corporation are reasonable in the circumstances until a similar case is decided.

My Favourite Condo Lessons of 2017

2017

Just as I did last year, I’ve put together a list of my favourite condo lessons for 2017. Every condo director, owner, manager, and other person living in or working for condominiums should know these lessons:

10. An owner cannot bring apply for a minor variance from a zoning by-law for common element parking spaces. The board of directors is obligated to manage the common elements, which includes applying for any minor variances that may be required for the common elements. A different result may have occurred if the owner had the exclusive use of all of the common elements the minor variance would apply to, but in this case the owner only had exclusive use of 6 of the 82 parking spaces. Read our post on the case here: https://ontcondolaw.com/2017/10/03/who-can-apply-for-a-minor-variance-for-the-common-elements-condo-or-owner/

9. Only lawyers should register liens. Most lawyers jumped for joy when a decision about a lien was released in May of this year. During the trial a report from the Law Society was produced to show that, in the eyes of the Law Society, a paralegal is not authorized to register liens; only lawyers should register liens. The interesting part is that in most firms the law clerks, not lawyers, register liens. And don’t get me started on lawyers who give their clerks access to their registration keys…yikes. Here is our previous post on the topic: https://ontcondolaw.com/2017/05/29/is-lien-work-really-for-lawyers-only/

8. Condos can charge interest at almost criminal rates. A case this summer confirmed that a condo can charge interest at 30% above the prime rate if a by-law authorizes it. For  more information, read the MTCC 1067 v. 1388020 Ontario Corp. case available here: https://www.canlii.org/en/on/onsc/doc/2017/2017onsc4793/2017onsc4793.pdf

7. Green energy initiatives are becoming increasingly popular as hydro costs soar and the government is making it easier for condos to implement some of them. For instance, submetering of the units for electricity consumption does not require the approval of the owners; the board can implement it by resolution of the board alone. Condos cannot prohibit clotheslines, but may have restrictions or conditions for their use. For more information, see our previous post on green energy initiatives: https://ontcondolaw.com/2017/05/10/green-initiatives-in-condos/

6. Similarly, electric vehicles and charging stations are likely to be a hot topic in future years as demand for electric vehicles increases.  For more information on some of the legal issues associated with electric vehicles and charging stations see our previous post: https://ontcondolaw.com/2017/04/27/electric-vehicles-in-condos/ 

5. Degrading and harassing behaviour may be prohibited by section 117 as it may be likely to cause psychological harm.  Some owners abuse managers and directors with vulgar language, yelling, and threats. The court has indicated that extreme cases would violate section 117, which prohibits conduct that is likely to cause injury to persons or damage to the property. It would also constitute workplace harassment, which condominiums have a duty to protect their workers from. See our previous post on: https://ontcondolaw.com/2017/04/23/if-you-cant-say-something-nice/

4. Owners need to be careful about sending defamatory emails to other owners and residents. Where an owner sends defamatory emails about directors or the manager, the condominium may obtain an order directing an internet service provider to disclose info to the condo to enable it to identify the person. Defamation is a communication that tends to lower the esteem of the subject in the minds of ordinary members of the public. For more information or to read the case in its entirety, see our previous post: https://ontcondolaw.com/2017/07/26/defamation-in-condos-an-update/

3. The courts will not amend a declaration because an owner feels it is inconsistent with the Act or unfair. The courts have confirmed that their involvement in such matters is limited by the Act to situations where there is an error or inconsistency in documents or where the documents are oppressive. The court will not interfere with validly passed by-laws either. For more information, read our previous post: https://ontcondolaw.com/2017/08/22/summer-case-law-reading/. For a more recent decision by the courts, see the following case: https://www.canlii.org/en/on/onsc/doc/2017/2017onsc6542/2017onsc6542.html

2. Many more condos may make the switch from self-managed to professional managers in 2018 and beyond because of the next lesson on this list. For more information, see our post for self-managed condos: https://ontcondolaw.com/2017/12/18/self-managed-condominiums/

And the top lesson of 2017 (it was also the top for 2015 and 2016) is…

1. The Protecting Condominium Owners Act, 2015. Unless you have been living under a rock for the past year, you know the Condominium Act, 1998, (and a number of other statutes) were amended this year. Some of the key changes in force now include:

  • The creation of the Condominium Management Regulatory Authority of Ontario (CMRAO) to oversee condo managers. [www.cmrao.ca].
  • The mandatory licensing of condo managers by February 1st, 2018.
  • The creation of the Condominium Authority of Ontario (CAO) to oversee condos. [www.condoauthorityontario.ca].
  • The creation of the Condominium Authority Tribunal (CAT) to hear condo disputes. The CAT’s jurisdiction is currently limited to record disputes, but the intention is to extend it to other areas in the future.
  • Mandatory training for directors and disclosure obligations for candidates for the board of directors.
  • A new process for calling owners’ meetings, including new forms for the preliminary notice, notice, and proxies.
  • Allowing teleconferencing for board meetings without a by-law.
  • Reducing quorum for owners meetings after two unsuccessful attempts to achieve quorum.
  • Reducing the approval level required for certain by-laws, like adding disclosure obligations for candidates.
  • More communications with owners in the form of three new certificates: periodic information certificate, information certificate update, and new owner information certificate.
  • A new record request process where owners, mortgagees or purchasers want to obtain records of the condominium.

There are new forms associated with many of the changes described above. The forms are available here: https://www.ontario.ca/search/land-registration?openNav=forms&sort=desc&field_forms_act_tid=condominium

The deadline for registering condos was recently extended to February 28, 2018. For more information, visit the CAO’s website.

More changes are coming on January 1st, 2018. You can read about those here: https://ontcondolaw.com/2017/12/12/amendments-coming-january-1-2018/

More changes will come into force on February 1st, 2018 and later in 2018 (and maybe early in 2019). Changes still to come include:

  • The regulatory part of the licensing of managers, such as a complaints and discipline process.
  • Extending warranty coverage through Tarion to residential conversion condominiums in some instances.
  • A process for preparing a budget and notifying owners of changes to it.
  • A process for charging costs back to owners (i.e. infractions, damage).

Stay tuned! Next year should be full of lessons as more of the amendments are released and we have an opportunity to interpret them.

Changes are Coming – Chargebacks

chargeback.jpgLast Friday I participated in the ACMO Burlington conference as a speaker on the legal panel. One of the topics that I briefly spoke about was chargebacks and liens. I spoke about the changes coming to the lien and chargeback processes in the Condominium Act, 1998 (the “Act”). Today I’m going to summarize my presentation for those who were not able to attend the conference.  Continue reading

The Condo’s Lien Right – When Does Default Occur?

bank.jpgRecently, the court released an interesting decision on cost awards against owners and the right to lien.The facts are lengthy, but it is important to understand the background.

The condominium brought a compliance proceeding against one of the owners. The condominium was successful. The judge made an endorsement that required the owner to pay $15,000.00 in costs within 30 days of the date of the endorsement. The condominium switched counsel and management companies shortly after the endorsement was made. Several months later the condominium added $44,000 to the unit owner’s ledger. The condominium’s lawyer then sent a letter to the owner demanding payment within 30 days.  The owners did not pay so the condominium’s lawyer sent a notice of lien in November 2011 and registered the lien in December 2011. The condominium served a statement of claim for possession and a default judgment was signed in April 2013. A notice of sale was sent in May that indicated $77,709 was owing. The condominium obtained possession of the unit in November 2013.

In December 2013, the owner stopped paying his mortgage. The lender, CIBC, began making demands for payment. CIBC obtained judgment on October 22, 2014, for $135,411 plus costs. For unexplained reasons, CIBC was not aware of the power of sale proceedings of the condominium and the fact that the condominium was set to sell the unit within a few days. The condominium and CIBC agreed to continue with the sale of the unit and hold the proceeds in trust until a court could determine the priority of the lien and mortgage.  Continue reading

Improper Use of the Indemnification Clause

Many declarations contain a clause that requires the owners to indemnify the corporation for a loss, cost, damage or injury to the common elements or units if it was caused by the owner, his family, tenants, guests etc. Many condominiums attempt to apply these clauses to other types of expenses incurred by the condominium, such as legal costs.

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Parking Dispute Draws Criticism from Judge

Yet another case has been released where the judge hearing the case has been very critical of the parties, especially their failure to consider mediation or act reasonably. In Couture v. Toronto Standard Condominium Corporation No 2187 (2015) a dispute arose about a parking space.

Here are the brief facts: the condominium has 44 units, but only 32 parking spaces. The declaration indicated that parking would be assigned at the “sole discretion of the Corporation.” It also required vehicles to be licensed, insured, and in good repair. The owner was fortunate enough to have been assigned a parking space when she initially purchased her unit. In 2012, the condominium revoked her rights to use the parking space as it claimed that she was not complying with the declaration because the vehicle was not in good repair or licensed. She removed the vehicle and claimed that as long as she paid the rental fee of $50.00 per month she was entitled to keep the space whether there was a vehicle using it or not. Continue reading

Condo can’t revive lost lien right using section 134

The Court of Appeal released another condominium case this month: Toronto Standard Condominium Corporation No. 1908 v. Stefco Plumbing & Mechanical Contracting Inc. As a refresher, this is the case where the declarant refused to release control of the condominium to the owners. The owners called the turn-over meeting and elected a new board. The declarant refused to acknowledge them. An application was brought to validate the meeting; the owners were successful. The declarant failed to comply with a court order that it produce records and an accounting of all payments made. The condominium recreated the accounting records and determined that one owner owed close to $50,000.00. A lien was registered against the owner’s units, but the lien could only cover the previous 3 months as set out in the Act. Prior to this, the owner defaulted under his mortgage. The mortgagee sold his units. Unfortunately, there was not enough money from the sale of the units to pay the mortgagee and the condominium so an issue arose as to which took priority – the condominium’s claim for arrears (outside of the lien) or the mortgagee’s claim under the mortgage.

The condominium argued that section 134 of the Condominium Act, 1998 gave the court the authority to make an order that the arrears took priority over the mortgage. The application judge characterized it as an “attempt to revise lien rights previously lost.”  The judge ordered the owner to pay common expense arrears, but only those under the lien took priority. The rest of the arrears were to be paid after the mortgagee. The condominium appealed.  Continue reading

Condominium Fines & Chargebacks

Every so often I have a client ask me if they can fine a unit owner because of behaviour that is annoying (i.e. constantly paying their fees late) or unsavoury (i.e. rude or vulgar language). Unfortunately for condominiums (and fortunately for the offending owners), condominiums in Ontario cannot fine unit owners for their undesirable behaviour. However, there are other charges that may be levied against a unit because of the behaviour of the unit owner or occupant. These are typically referred to as “chargebacks”.

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