In paragraph 12 of the status certificates, a condominium corporation must disclose any circumstances, of which the corporation is aware, that may result in an increase in the common expenses for the unit. Could this include a unit problem?
In my view, the answer is: “In some cases, yes.”
There are many “common element issues” that might need to be disclosed in paragraph 12 of the status certificates. Here are some examples:
- An unexpected common element defect;
- A common element repair or replacement that is required, or may be required, earlier than predicted by the reserve fund plan;
- A common element repair or replacement that is, or may be, more costly than predicted by the reserve fund plan;
- Any common element repair or replacement that is not covered by the reserve fund plan or the operating budget;
- A reserve fund plan that calls for special assessment(s) or increase(s) in contributions to the reserve fund (beyond inflation) at any time in future;
- A proposed common element alteration or improvement (as soon as it is receiving serious consideration);
- An unexpected disaster that is not fully covered by insurance;
- Any annual operating expense that is, or may be, more costly than predicted in the corporation’s budget.
Once the corporation has actual knowledge of one or more of these risks or possibilities, the corporation then must ask itself the following question:
Could this result in a special assessment/increase in common expenses (beyond inflation)?
If the answer is “yes,” then this must be disclosed in paragraph 12 of the status certificates. [Note: An inflationary increase is not a real increase. Increasing the common expenses by inflation simply keeps the common expenses constant, in real terms.]
A “unit problem” can sometimes also result in an increase in common expenses. For instance:
- a unit defect; or
- damage caused to the property (by a unit owner or occupant); or
- a violation of the Condominium Act, or the corporation’s Declaration, By-laws or Rules (by a unit owner or occupant)
might each result in an increase in common expenses (for the unit), because:
- the corporation may be required to repair the unit defect (if the owner fails to do so), and add all related costs to the owner’s common expenses (pursuant to section 92 of the Condominium Act or perhaps provisions in the Declaration); or
- the corporation may have the right to add all costs incurred to repair common elements (damaged by a unit owner or occupant) to the unit’s common expenses; or
- the corporation may have the right to add enforcement costs (incurred due to a violation by an owner or occupant) to the unit’s common expenses.
So, if the corporation has knowledge of a unit problem, the corporation should ask itself the following question:
Could this possibly result in an increase in the common expenses for that unit?
If the answer is “yes,” the problem might then need to be disclosed in paragraph 12 of any status certificate issued for that unit.