Condos Work!

Some of our readers may have seen the article in the April 28, 2014 issue of 'MacLean’s' magazine: ‘Why Condos are a Living Nightmare’.

The Maclean’s article included the following sentence: ‘Canadian condos are rife with internal politics, neighbour infighting and power struggles stemming from the complicated network of condo boards, owners, investors, tenants and property managers.’

I don’t agree.

Of course there are some disputes and difficulties any time people are living in close quarters, and any time people are sharing property and expenses. [As legal counsel, we tend to see those disputes.]

But the vast majority of condominiums are operating extremely well, with sound economic planning and with positive internal relationships.

Condominiums make excellent sense for many homeowners, investors and occupants. Condominium owners and occupants get to enjoy the economic benefits of shared services, the security and support that come with dedicated administration and/or professional management, and also the community and friendship that come with close living.

With very few exceptions, condominiums work. They work because of the countless hours of selfless, volunteer work put in by thousands of condominium Board members across the country. And they work because of the hard work and dedication of condominium property managers across the country.

I’m often amazed at just how well condominiums work. I’m amazed at how cooperative and malleable people can be. And condominium owners and occupants achieve this cooperation largely on their own, with the guidance of their elected Boards of Directors.

There are disputes, of course, but they are the exception – and they are relatively few and far between.

CCI Ottawa Session – Living Well in a Condominium – What Every Condo Owner Needs to Know – Tuesday, May 27, 2014

Christy Allen of Nelligan O'Brien Payne LLP will be speaking at the Condominium Institute (CCI) Ottawa session on Living Well in a Condominium – What Every Condo Owner Needs to Know. The session will take place at 7:00 pm on Tuesday, May 27, 2014 at the Hellenic Meeting and Reception Centre, 1315 Prince of Wales Drive.

This is a “must attend” session for every condo owner or anyone thinking of buying a condo! After attending this session, you will have a better idea of the relationship between a condominium declaration, condominium bylaws and condominium rules, and more importantly, how these documents apply to you, as an owner. You will also gain insight on your rights and responsibilities as a unit owner, as well as an understanding of the roles of the manager, the condo board, and the unit owners.

Don’t miss out, seating is limited, so be sure to register soon!

Find out more information about the session and how to register.

New Video: The Basics of Condominium Insurance

Condominium corporations in Ontario are required to arrange a base level of insurance for the benefit of all owners, covering the common elements and units. 

The corporation’s insurance does not provide 100% coverage however, and only covers the ‘standard unit’. Owners normally arrange their own additional insurance for coverage beyond the corporation’s insurance for unit improvements as well as contents.

In our latest condo law video, ‘The Basics of Condominium Insurance,’ Nancy Houle, partner and practice group leader of the firm's Condominium Law group, provides a brief introduction to condominium property insurance.  

Don’t Miss the ACMO and CCI-Ottawa Conference on Friday, May 30, 2014!

Don’t miss out on your chance to attend the Association of Condominium Managers of Ontario (ACMO) and Canadian Condominium Institute (CCI) Ottawa Conference on May 30, 2014! Nancy Houle and James Davidson of Nelligan O'Brien Payne LLP will be providing updates on the Condo Act, licensing managers and insurance.

The conference will feature industry experts from various law firms, management companies, trades and developers discussing timely and relevant issues that are geared towards condominium property managers, Boards of Directors and home owners.

Conference topics will include:

  • Condo Act Update and Licensing Managers
  • Hoarding – When is it a Problem?
  • Canadian Revenue Agency and Taxation of Condos
  • Insurance – To Claim or not to Claim
  • Dealing with Bed Bugs
  • Legal Update (Review of Key Recent Condo Cases)

Find out more information about the conference and how to register.

Safeguarding a Non-profit Condo’s Status

Condominium corporations are typically non-profit organizations, making them exempt from income tax. However, according to the Canada Revenue Agency (CRA), a condo corporation could lose its non-profit status if it generates income from activities that are not incidental to the corporation's overall non-profit objectives.

All of this raises the question: what sort of activities, profits or revenues might jeopardize a condominium corporation's non-profit status, thereby exposing it to income tax, including tax on interest earned by the corporation's reserve fund investments?

There are no court decisions on this point; however, the CRA has published a few relevant technical interpretations. It should be noted that the CRA interpretations do not have the force of law, and are only an expression of CRA's views. A court might rule otherwise.

From a review of the CRA interpretations, it's not clear when a revenue-generating activity will be considered "incidental" to the corporation’s non-profit status. The most one can say is that it will depend upon the particular circumstances in each case.

In his article, ‘Safeguarding a Non-profit Condo’s Status’, author Jim Davidson summarized the CRA interpretations, including those related to suites, rooftop solar panels, for-profit businesses, telecommunications towers, storage lockers and caretaker suites. 

This article originally appeared on the Real Estate Management Industry (REMI) News Network http://www.reminetwork.com/condobusiness.

Look Before you Lease: Issues to Consider when Leasing Rooftop Space to Telecommunications Providers

It may sound like a great deal when your condominium corporation is approached by a telecommunications provider to rent space on the roof of your condominium building, but before you sign the lease, there are a few issues to consider. 

The following are some of the many issues that your condominium corporation should consider when deciding  whether or not to lease rooftop space to a telecommunications provider.

  1. Does the condominium corporation have an appropriate by-law in place authorizing the lease under s. 21 of the Condominium Act?
     
  2. As part of the lease process, does the condominium need to comply with Section 97 of the Condominium Act with respect to changes to the common elements. At the very least, notice to the owners may be required, and as a result, a meeting of the owners might be requisitioned. For example, owners sometimes wonder about possible health issues; and owners may have other concerns that they would like to discuss.
     
  3. The installation proposed by the telecommunications provider should be reviewed by an engineer at the expense of the lessee. The lease may provide not only for the location of equipment on the roof, but also for installation of conduits throughout the building to service the equipment.
     
  4. How will the installation affect the use and enjoyment of any rooftop terrace by the owners taking into account the location of the equipment and the visual impact?
     
  5. It is important to have the corporation's lawyer review the proposed lease at the expense of the lessee. The lease will usually contain a series of options to renew, and can be for an extended period of time. There are many issues to consider in the lease, including disruption of other telecommunications servers renting space on the rooftop, annual rent increases, and consequences related to early termination of the lease by the lessee, to name only a few.
     
  6. Carefully consider what rent is appropriate for the lease of the space. Some questions to consider include: What is fair market rent? What rent is being paid for similar rooftop installations? How desirable is this particular location for telecommunications providers? Consider asking for a signing bonus.
     
  7. Are there any income tax implications in relation to the rental income? Based on current Canada Revenue Agency policy, there are likely no implications, but this may merit consideration.