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.

A Warning to Owners Leasing their Units

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A recent case provides a warning to owners leasing their units. Briefly, the facts are as follows. A unit owner leased her unit to a tenant. The tenant “did not live harmoniously with his neighbours” and was in constant conflict with management. He sued the condominium for over $5,000,000. The condominium’s lawyer wrote to the owner to warn them that the costs incurred by the condominium to defend itself against the tenant’s claim would be sought from them. The owner’s son, who was power of attorney, ignored the warning and provided an affidavit in support of the tenant’s claim against the condominium. The tenant’s claim “failed miserably” and the condominium sought to recover about $86,000 in legal fees from the owner.  The owner refused to pay and the condominium registered a lien against the unit.

The court found no reason to question the validity of the lien. The main argument presented by the defendants was that the owner was not properly served by the condominium. The court found that the owner was in India at the time and it was difficult for her own family to contact her. “It would not be realistic to require the corporation to serve her personally and the law does not require it.”

The court reviewed the new provisions of the Condominium Act, 1998 at paragraph 27:

The Condominium Act establishes what must be done to serve a document for the purposes of the Act:

  • Section 46.1(3)(b) requires the corporation to keep a record of each unit owner’s address for service if that address is in Ontario.
  •  Section 46.1(4) states that a document can be served on an owner in several different ways including delivery by prepaid mail addressed to the owner at the address for service that appears in the records of the corporation.

The court was satisfied that the documents were served on the owner when the condominium sent the document via registered and regular mail to the address for service provided by the owner. “There was nothing more that the corporation could do.”

The owner also disputed the validity of the process because the condominium did not bring an action or have a hearing before registering the lien. The court reviewed section 85(1) of the Act and confirmed the process does not require an action to be commenced prior to the registration of a lien against a unit. The condominium must register the lien within three months of the default and must provide notice of the lien at least ten days before registering it. The condominium satisfied the requirements of the Act.

The owner tried to argue that it was not fair for them to be responsible for their tenant. In response, the court said:

[36]           The simple answer to the questions raised by the Sandhu family is that section 134(5) of the Condominium Act makes the unit owner responsible for the financial consequences of her tenant’s actions. If a corporation is awarded costs in an order which is made against an owner or an occupier of a unit, the costs, including the legal fees of the corporation, are added to the common expenses of the unit. That is simply the law of Ontario.

[37]           There are very good reasons for that law. One must consider the nature of condominiums and the rules that are necessary to regulate them. A condominium draws many strangers to live together in a single building. For many unit owners, the purchase of their condominium unit will be the largest financial investment of their lives. It is essential that the building is managed in a way that preserves the value of the property and maintains a sense of fairness for everyone.

[38]           The sense of fairness is created by imposing strict responsibilities both on unit owners and managing corporations. Unit owners are responsible for paying their share of the common expenses and for the conduct of any one who occupies their unit. The corporation is responsible for collecting the common expenses and notifying the unit owner of any troubling behaviour by a tenant. The purpose of the legislation is to ensure that the actions of a single unit owner do not give rise to additional expenses for all the other unit owners.

The court, while sympathetic to the owner’s situation, granted judgment in favour of the condominium and granted it possession of the unit so it can sell the unit to recover the amounts owing under the lien.