Canada: Condos Q&A: No Substitute For Legal Advice When Buying

Last Updated: May 13 2014
Article by Robert Noce

Q: Two years ago, we purchased a townhouse in a five-unit complex. At the time, the condo board president told us that, due to the size of the condominium corporation, we did not need a reserve fund study, and none has ever been completed. Our realtor, home inspector and mortgage company did not seem concerned by this, so we made the purchase. Since moving in, we have had significant issues. There is no money in the reserve fund and we are trying to figure out how to fix this mess. We know that there will be significant special assessments in the future and that a reserve study needs to be completed. Any advice would be appreciated.

A: Your first mistake was relying on a realtor, home inspector, and your mortgage company to give you what, in essence, is legal advice. Your question indicates that you sought legal advice from everyone but a lawyer. Second, the board president was wrong to tell you that the condominium corporation was not required to do a reserve fund study; the law requires every condominium corporation in Alberta, regardless of size, to have a reserve fund study done every five years. With respect to the significant issues you now face, you will need to figure out who is responsible for those repairs, either the individual owners or the condominium corporation. You should review your condominium plan to see if you can find these answers.

Helpful hint: When buying a condominium, no matter how hot the market may be, or how fine the product looks, you should always do your due diligence. Buying a condo means buying into something where a group of owners (the board) controls your financial destiny. You are not buying a pair of shoes at The Bay that you can return or exchange at any time. If ever there was a time to shell out a bit of cash for legal advice, that would have been the time.

Q: I own a bare land condominium. The board has notified me that they want to enter my home to verify who lives here. Can they do this?

A: There is nothing under the Condominium Property Act that would allow the corporation to enter your unit simply to see who lives there. Unless there is evidence that the safety of owners or the security of the building is at risk, this could be considered an invasion of privacy.

Helpful hint: Condominium boards should be aware of their legal rights and limitations with respect to dealing with issues in people's homes. When in doubt, consult a lawyer.

Q: A few years ago, we discovered that our property management company had made a mistake with respect to our custodian's pay. The board members trusted the property manager to do the right thing and never questioned it until we found out. Is there anything we can do?

A: If the condominium corporation suffered a loss or damages as a result of the negligence of the property manager, then you may have a claim against your property manager, if you were able to prove negligence. The evidence is critical in understanding who is at fault. Also, you should be aware of the limitation period in civil law, as to when you can advance a claim. You have not provided me with dates so I offer no thoughts on that point.

Helpful hint: When someone makes a mistake and you suffer a loss as a result of that mistake, you may have a claim against that person. It is important to determine the amount of the loss and whether or not it is worth pursuing.

Q: In 1999, I bought half a duplex in a 26-unit condo development. During construction in 1997, the developer imposed a covenant that restricts the installation of satellite dishes on units. However, since completion, several satellites have been approved by previous boards. The current management company says that the restrictive covenant supersedes the new bylaws, and therefore the board cannot consider any action on requests until the covenant is removed. How do we make that happen?

A: It is very difficult to remove a restrictive covenant. In this case, you should engage a lawyer to review it and help.

Helpful hint: Most registrations on title can be discharged; however, the process is complicated.

Q: Our condominium complex developed a slab problem in its parkade, and over 100 residents had to leave their parking spaces and personal storage units for almost a year until repairs were complete. The special assessment was almost $4 million (about $25,000 per unit). Should there be compensation for the inconvenience of losing parking and storage space for an extended period of time?

A: The short answer is yes. However, if the condominium corporation were to pay any compensation to owners, it would mean that the money was coming from their own pocket. Condominium corporations derive their revenue from owners, specifically monthly condominium fees. If there is insufficient money to pay for the expenses of the condominium corporation, then it will either have to increase monthly condominium fees or issue a special assessment. It would be like robbing Peter to pay Paul.

Helpful hint: Unfortunately, these inconveniences happen, and inconvenience is not unique to condo living.

Originally published in The Edmonton Journal.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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