Condo buyers’ class-action suit bears watching
Excerpt from an article by Bob Aaron
A group of unhappy condominium owners has commenced a class action against the developer of their Thornhill condominium project, claiming that the common expenses shown in the sales materials were significantly understated.
Between 1999 and 2002, Cantertrot Investments was marketing condominium units in The Residence of Beauclaire, on New Westminster Dr., in Thornhill.
Before entering into the agreements, purchasers received a flyer indicating that maintenance fees for the units were “estimated at $0.32 per square foot,” including utilities, visitor parking, concierge and one locker.
Before signing agreements, the purchasers also received a disclosure statement as required under the Condominium Act. The statement indicated that $413,000 were the “total funds required” to be contributed by all owners in the form of common expenses during the first year following registration of the condominium.
Based on the proposed budget and the draft condominium declaration, monthly common expenses for units in the project would range from $171.42 to $421.65, depending on unit size.
The condominium declaration was registered on June 28, 2002 and, by law, the developer was responsible for any shortfall between the proposed budget and the actual budget for the first year of operation.
A year later, the new board of directors reviewed the finances of the building and had no choice but to approve a budget showing increases of more than 62 per cent in common expenses for the second year of operation.
Even after the increase, the new budget implemented a deficit of $48,000, which was funded by a special assessment of about $15 per unit each month for four years.
In 2004, a group of the original purchasers retained Samuel Marr and Vadim Kats, of the Toronto law firm, Landy Marr LLP, to launch an intended class action against the developer, its principals and the real estate brokers involved in marketing the condominium units.
In order to start a class action in Ontario, a judge must be satisfied that certain tests are met and the legal proceedings would be more efficient if handled under one umbrella rather than having dozens of individual plaintiffs each commence their own lawsuits.
After months of legal manoeuvring by both sides, Superior Court Justice Maurice C. Cullity recently certified the action as a class proceeding, allowing it to proceed with two plaintiffs - Solly Lewis and Hersl Kalif - representing themselves and those with similar interests.
The allegations in the claim of the plaintiffs is that, as a result of the alleged understatement of common expenses, the original buyers from Cantertrot suffered increased maintenance fees after the condominium’s first year, loss of the services that had to be cut back to keep the budget in line, and diminished property values.
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