Tag Archives: common expenses
Honesty won’t resolve disclosure form issues
Bob Aaron – Toronto Star
It’s time to reveal The Great SPIS Myth – the prevailing fiction about the Seller Property Information Statement (SPIS), a disclosure form published by the Ontario Real Estate Association (OREA).
Although its use is endorsed and encouraged by many OREA member boards, real estate agents remain sharply divided on whether the form is too dangerous to use, and whether it protects the public or the agents who try to get sellers to sign it.
I have been very critical of the form because it results in a great deal of litigation among sellers, unhappy buyers and the agents who are caught in the middle.
The official position of OREA and industry commentators who support it is that the problem with the SPIS is not the form itself, but that some sellers do not tell the truth.
The key to the successful use of the SPIS, OREA says, is honesty. In every one of the court cases I have written about in this column, OREA’s view (set out in a letter to me last month) is that “it was not the SPIS form itself that caused legal difficulty for the sellers: rather it was the failure of the sellers to be forthright in their disclosures about the property.”
This, in my view, is the fatal flaw in the OREA logic. I call it The Great SPIS Myth – the fiction that if sellers are honest they won’t wind up in litigation over the SPIS form.
A careful analysis of the reported court decisions shows that this position is simply not accurate, and that is probably why OREA’s president declined my request for an interview.
Consider some of the questions on the form:
“Does the survey show the current location of all buildings, improvements, easements, encroachments and rights-of-way?” My response: only a licensed land surveyor can answer this question. Even the most honest seller doesn’t have the skills to answer it properly.
“What is the zoning on the subject property? Does the subject property comply with the zoning? If not, is it legal non-conforming?” Unless a seller is intimately familiar with the municipal zoning bylaw, it would be foolhardy to answer these questions.
“Are there any restrictive covenants that run with the land? Are there any drainage restrictions?” Few sellers have a current title search at hand in order to properly understand or answer these two zingers.
“Are there any local levies or unusual taxes?” To me, all taxes are unusual and most sellers have no idea if there are any levies.
“Is the sale of the property subject to GST?” Only someone familiar with the GST legislation would be safe in answering this.
“Has the use of the property ever been for the growth or manufacture of illegal substances?” Note the use of the word “ever.” Unless the proverbial “honest seller” knows what happened in the house under previous owners, this question could be an invitation to litigation.
“Is the property under the jurisdiction of any Conservation Authority?” Not something most homeowners would have the slightest clue about.
Other questions ask for the size of the electrical service, the type of wiring, , whether there is any lead or galvanized metal plumbing, and what is under the carpeting. How the honest but typical homeowner is supposed to know the answers to these questions off the top of her head is beyond me.
Condominium owners are asked to itemize what is included in the common expenses, whether a reserve fund study has been completed, how much money is in the reserve fund, and whether there are any pending rule or by-law amendments. Again, these are not questions that even the most honest condominium owner could readily answer without extensive investigation.
Bob Aaron is a Toronto real estate lawyer and board member of the Tarion Warranty Corp.
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Contact the Jeffrey Team for more information - 416-388-1960
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Little owners can do to increase size of condo board
Gerry Hyman – Toronto Star
Q: Many owners favour increasing our board from three to five directors and it was discussed at a recent owners’ information meeting. Two of the three directors voted against the increase at their next board meeting. What can owners do to have the owners vote on a bylaw amendment to increase the size of the board?
A: Bylaws, including those amending previous bylaws, are passed by resolution of the board and must then be approved by an affirmative vote of owners of a majority of the units. Owners cannot initiate a bylaw or requisition an owners’ meeting to have a vote for the purpose of requiring the board to pass a bylaw.
If a large number of owners are in favour of increasing the size of the board, directors rejecting that change may have difficulty getting re-elected when their terms expire.
Q: The end-suite windows in our 35-year-old high-rise building are so weather beaten that both drafts and insects are getting into the suites. A contractor advised that the window frames should be replaced immediately. The board has taken the position that the amount specified in the reserve fund study for window replacement has been reached and no further replacements will be carried out. Our declaration provides that windows are common elements and that window maintenance and repairs are the responsibility of the corporation. There is plenty of money in our reserve fund. Can the board refuse to carry out the work?
A: The corporation is required under the Condominium Act to carry out common element repairs. Repairs must be done whenever they are required. A board cannot refuse to carry out necessary repairs because the reserve fund study suggests that the repairs will not be required until a later date or because the study estimates a cost that turns out to be too low. The work must be done even if there is not enough money in the reserve fund and a special assessment of owners is required.
Q: I am about to buy a resale condominium unit. What is included in the condo fees? What “gotchas” should I be aware of?
A: Condo fees are each owner’s share of the common expenses of a condominium corporation. The Condominium Act defines common expenses as “the expenses related to the performance of the objects and duties of a corporation and all expenses specified as common expenses in this Act or in a declaration.” In other words, all expenses properly incurred by the corporation are common expenses.
The board prepares a budget for each fiscal year of the corporation setting out the amount of the estimated common expenses. Each owner’s monthly contribution will be determined by multiplying that amount by the owner’s common expense percentage as set out in a schedule to the declaration and dividing by twelve.
The status certificate for the unit you are purchasing will specify the amount of the monthly common expense contribution for the unit and whether the owner is in default. It will also specify whether since the last budget the board has declared any common expense increase or any assessments to increase the reserve fund and whether the board is aware of circumstances that will necessitate an increase in the common expenses or will require a special assessment.
The corporation will be bound by the information in the status certificate that you receive.
Lawyer Gerry Hyman is an expert in condominium law and appears Saturdays in New in Homes & Condos.
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Contact the Jeffrey Team for more information - 416-388-1960
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Condo solves disputes by buying control
By J. Robert Gardiner
Gardiner Miller Arnold LLP, Barristers and Solicitors
1202 – 390 Bay Street, Toronto, Ontario M5H 2Y2
PH: 416-363-2614 | FX: 416-363-8451
gerry.miller@gmalaw.ca | www.gmalaw.ca
A Toronto condo’s unit owners have approved a substantial alteration allowing the condo to acquire, control, manage and renovate the real estate in its building and the hotel operations of The Suites at 1 King West at a cost of $17.9 million – 100% financed during the credit crunch recession and with the expectation of reduced common expenses!
380 of TSCC 1703′s 575 luxury residential kitchen/office/living/bedroom suites are enrolled by participant owners in the Rental Program. Once the head office of the Dominion Bank, The Suites at 1 King West is also an architectural marvel; the 51 storey-high, thinnest residential condominium in the world has magnificent views over Toronto’s financial district and Lake Ontario. One King West is renowned for its magnificent Grand Banking Hall, the elaborately-coffered walnut, marble and gilded Chairman’s Historic Boardroom as well as the Austin Gallery and meeting rooms which now constitute a prime meeting/presentation/banquet/wedding facility.
One King West achieved notoriety when it became the battleground of its developers, Harry Stinson and David Mirvish, forcing the condo’s innocent unit owners to become pawns in their tumultuous receivership battles. TSCC 1703 had many incentives to take control of the building’s realty and its own destiny: unit values had plunged during the instability and stigma of the receivership and third party control problems had to be overcome. TSCC 1703′s board worked with Gardiner Miller Arnold LLP, which undertook extensive due diligence before submitting TSCC 1703′s Offer to Purchase the assets which was accepted by the receiver during August, 2008, beating 32 other initial bidders.
Overwhelming support for the asset acquisition transaction was demonstrated at the initial and adjourned Special Meetings of Owners in October/November, 2008, using GMA’s precedent adjourned voting procedures. 78% of all owners (93% of all the owners who bothered to vote) voted in favour of the asset acquisition [s. 18 of the Act], the borrowing by-laws [s. 21] and the substantial alteration [s. 97 (4) – (6)] – a rare and impressive outcome in condo-world, especially considering the high number of non-resident unit owners involved.
As of December 1, 2008, TSCC 1703 acquired control of all the key freehold real estate within its building through the magic of the loan common expense assessment financing provided by Morrison Financial Services Limited. Maxium Financial Services Inc. will finance the cost of valuable renovations and energy cost-savings initiatives. Events at One King West Ltd. now manages the rental program, which is achieving industry-high levels of occupancy after only 2-1/2 years from start-up. Its function rooms and food and beverage operations have flourished under the guidance of Kosta Tomazos of CK Atlantis Inc.
Bob Gardiner, the interim President and sole director of Events is organizing an intricate web of agreements and leases having complex ramifications. Bob credits TSCC 1703′s impressive board of directors for the wisdom, acumen, hard work and creativity to achieve such a resounding success: “Nobody but the board would have thought we could have overcome all of the insurmountable hurdles we have plowed right through. TSCC 1703 is the only possible entity that could save its building and unit owners from the hazards of third party control.”
Congratulations to TSCC 1703′s remarkable board of directors – Brian Smith, Bob Verdun, Ken Grant, Beverly Snodgrass, Thomas Tyson, Gary Bateman and Alex Wilson, with the support of Yehudi Hendler and Maria Delgado, property managers of Y.L. Hendler Ltd.
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Contact the Jeffrey Team for more information – 416-388-1960
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