Amendments to the Condominium Act: Repair & Insurance Obligations in Relation to Units

The coming legislative amendments will bring some changes relating to repair and maintenance obligations of condominium corporations and owners.   What are those changes; and what impact will they have on condominium insurance?

The Condominium Act (the “Act”) currently indicates that, subject to the contents of a condominium’s declaration, the condominium corporation is responsible for repairing units after damage.  The amended Act will say that owners must repair their units – unless the declaration says otherwise.  In our view, this will have very little impact on most condominiums, for the following reason:  Almost all declarations spell out the repair and maintenance obligations.  In other words, the Act seldom determines the repair and maintenance obligations.  As a result, the repair obligations contained in the vast majority of condominium declarations will simply continue to apply, regardless of the changed wording of the Act.

This said, in our view, it will nonetheless make sense for all corporations to review their Declarations – and to consider whether or not the Declaration should be amended – for the following reasons:

(a) The definitions of “repair” and “maintenance” will change – and this might mean some changes of responsibility in the particular condominium.  [It would be a good idea for the corporation to understand any such changes of responsibility – and also to consider any resulting desire to amend the Declaration (see below).]

(b) If the Declaration does not spell out the repair and maintenance obligations, the amendments to the Act will indeed change the responsibilities in that condominium.

(c) Some corporations might simply wish to consider an amendment to the Declaration, to change the repair and maintenance obligations set out in the Declaration, whether or not as a result of the coming changes to the Act.

What about condominium insurance?

Notwithstanding the pending amendments to the Act, condominium corporations will still be obligated – under Section 99 of the Act – to obtain and maintain insurance covering the common elements and the standard units.   So even though owners may have the obligation to repair their units (as is most often the case now), owners have the benefit of insurance – arranged on their behalves by the corporation – covering their standard units.

The only changes to the insurance regime will be as follows:

(a) There will be a prescribed standard unit description that will apply in cases where condominium corporations don’t have a standard unit by-law.

(b) As described in our recent blog post, there will be changes to responsibility for the deductibles on condominium corporation insurance policies.

Otherwise, the insurance regime is not changing.

Stay tuned to Condo Law News for more blogs about amendments to the Condominium Act.

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Defining “Repair”

A recent decision of the Ontario Superior Court, Middlesex Condominium Corp. No. 195 v Sunbelt, again highlights the importance of defining “repair”, and particularly distinguishing between “repair” and “maintenance”.

The MCC 195 case dealt with two issues:

  1. Responsibility for certain hydro charges; and
  2. Responsibility for window repairs.

In this blog post, I will focus on the second issue – window repairs. In the MCC 195 case, the windows of the commercial units needed replacement (due to a building defect), and the condominium corporation asserted that this was the responsibility of the commercial unit owners.

MCC 195’s declaration says that the commercial owners are obligated to repair and maintain their windows – even though the windows are part of the common elements. However, the Court held that these window repairs were the responsibility of the condominium corporation because the windows were not designated for the exclusive use of the commercial owners. The Court said:

“[Section 91 of the Condominium Act] does not grant a condominium corporation the authority to impose on a unit owner the obligation to repair common elements after damage, except for common elements designated for the exclusive use of an owner.”

Here’s the bottom line:

  • Under the current Condominium Act, a condominium declaration can say that owners must maintain any part of the common elements.
  • However, under the current Condominium Act, a condominium declaration can only say that owners must repair their exclusive-use common elements. The MCC 195 case also tells us that this applies only to specifically designated exclusive-use common elements.

Thankfully, this issue is eliminated by the amendments to the Condominium Act, which are expected to come into force sometime in 2017. Under the amendments, Section 91 will allow a declaration to say that owners must maintain or repair any part of the common elements. So, that’s a good thing.

However, there’s another important – and possibly problematic – change contained in the amendments to the Act. The meaning of “repair” will change. Some work that is currently “maintenance” will become “repair” when the amendments come into force.

Currently, Section 90 of the Act says that the obligation to maintain “includes the obligation to repair after normal wear and tear”. In my view, this makes good sense. When something fails at the end of its normal life (i.e. after normal wear and tear), the required work sounds to me like “maintenance”. However, this is eliminated by the amendments to the Act, which introduce the following new definition of repair:

“’repair’ means to repair or replace after normal wear and tear, damage or failure.”

So, when the amendments to the Act come into force, what is now “maintenance” may soon be “repair”!

In most cases, this change in the meaning of the terms “maintenance” and “repair” won’t have any ramifications. But this change will matter in cases where responsibilities to maintain and repair a particular feature of the property are “split” or “divided” between the corporation and the owners. In those cases, the responsibilities may be about to change!

Need further clarification? Get in touch with our Condominium Law Group today.

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Owner Awarded Damages for Corporation’s Slow Repairs

A recent court decision confirms the rights of owners to claim for damages when their condominium corporation fails to attend to repairs with sufficient haste.

Here’s the key extract from the court’s decision in Ryan v. York Condominium Corporation No. 340:

If one examines the whole history and does not approach the facts incrementally, what emerges is that YCC 340 has had a known water penetration problem for over thirty years and has not fixed the problem. This is patently not reasonable. Even if one ignores YCC 340’s state of knowledge acquired before 2010 about the existence of a water penetration problem, the stark fact emerges that Mrs. Bird and Mr. Ryan advised YCC 340 about the water infiltration problem in April 2010 and repeatedly thereafter, but it took YCC 340 until November 2014 (4.5 years) to effect repairs that appear so far to have arrested the water infiltration problem and another year to remediate the presence of mould.”

The decision includes a number of interesting findings, including the following:

  • Mandatory mediation/arbitration did not apply to this claim, at least in part because the owner had included a claim for oppression under Section 135 of the Condominium Act.
  • In determining whether or not a condominium corporation has breached its repair or maintenance obligations, the court again confirmed that the standard is reasonableness – that is, whether or not the condominium corporation has acted reasonably in attempting to fulfil its obligations.
  • Although the court found that YCC 340 had breached its repair obligations, the court did not find any oppression. The court said: “Oppressive conduct is coercive, harsh, harmful, or an abuse of power”, and can also include “unfairly prejudicial conduct” or “conduct that unfairly disregards the interests of the claimant”. The court said that, in this case, the corporation’s conduct was “ineffective until recently but it was not abusive or oppressive”.

But what I found most interesting about the decision was the court’s award of damages to the owner. The court awarded Mr. Ryan $69,691.39, broken down as follows:

  • $37,457.07 – Common area expenses for the condominium unit for 2011 to 2015
  • $7,456.84 – Municipal realty taxes for the condominium unit for 2011 to 2015
  • $3,780 – Gas mileage expense for medical appointments 2011-2015 (28 trips)
  • $5,997.48 – Legal expense (for legal services prior to the court process)
  • $15,000 – For repairs to the interior of the condominium unit

The water damage had forced the owner to move to his farm property – far from the condominium. In short, he was not able to make use of his unit. Here’s some of what the court said about the damages:

The explanation for this award is that because of YCC 340’s failure to repair the damage to the common elements, Mr. Ryan’s quiet enjoyment of his Unit has been disrupted and he was unable to enjoy the benefits of ownership. The expense he incurred for common area expenses and for municipal realty taxes was a wasted expense. He, therefore, is entitled to recover $37,457.07 and $7,456.84 respectively.

He is also entitled to recover the travel expense to his medical appointments and his legal expenses. These were expenses he would not have incurred had YCC 340 complied with its obligations under the Condominium Act.

Mr. Ryan, however, is not entitled to recover his $20,000 claim for utilities and maintenance expenses for the farm property. These expenses were not wasted, and it would be double counting to make an award on this account. He is also not entitled to recover his claim for the $4,206.24 special assessment, which is or will be used to effect repairs to the condominium buildings. As a unit holder, Mr. Ryan remains obliged to pay this expense, which will be for his benefit.

The court did not award Mr. Ryan damages for mental distress “because he proved no loss under this head of damages”.

In summary: Condominium corporations must attend to common element repairs with reasonable haste. Otherwise, if owners lose the use of their units, they may assert claims against the corporation for “wasted” common expenses and realty taxes.

To read more about a corporation’s duty to repair and maintain, take a look at our previous blog post.

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Important Recent Court Decision Respecting Corporation’s Repair and Maintenance Mandate

There have been very few Court decisions to help us draw the line between projects falling within the Board’s mandate and projects requiring involvement of the owners – i.e. to help explain Section 97 of the Condominium Act. But we now have a very helpful decision on point: Harvey v. Elgin Condominium Corporation No. 3.

The facts in the Harvey case were as follows:

Elgin Condominium Corporation No. 3 is a 51-unit townhouse-style condominium, with “roof decks” above the garages. Fifteen years after the original construction, the roof-decks were failing and leaking, due to “extensive construction design and implementation flaws.” The corporation’s engineers recommended that the roof decks be replaced, and offered two options:

Option 1: New wooden decks and railings (replacing the original wood); or

Option 2: Vinyl decks, coupled with aluminium railings.

The engineers recommended option 2 because it would be less costly and easier to service and maintain, and would also avoid the elevation and drainage problems of the original design. These advantages outweighed the fact that vinyl decks would require added care to avoid puncture of the decking and underlying membrane.

The Board held meetings of the owners to discuss the two options, and even held an ordinary vote of owners on the options. Out of 24 voting owners, 20 voted in favour of Option 2. The Board then chose option 2, and levied the necessary special assessments, in the amount of $10,000 per unit, to proceed with the work.

One of the owners, Mr. Harvey, objected strenuously to the proposed work and ultimately sued the condominium corporation. Among other things, Mr. Harvey said that the project constituted a substantial change to the common elements, requiring a 2/3 vote of the owners because the cost of the roof deck replacement would greatly exceed 10% of the corporation’s annual budget. He asked for an Order that the work stop and that all special assessments be reversed.

The Court dismissed Mr. Harvey’s claims, finding that the project and special assessment fell within the Board’s mandate. The Court said that the Board had the right to proceed under either Section 97 (1) or Section 97 (2) (b) of the Act. Here are some of the key extracts from the Court’s decision:

…the wording of s. 97(1) understandably contemplates a degree of latitude appropriate to the circumstances, and evolving construction knowledge and methods. Not surprisingly, our courts therefore repeatedly have held that replacement of ‘old’, ‘defective’ or ‘worn out’ common elements with ‘new’, ‘improved’ or ‘upgraded’ material, equipment or designs still constitute ‘repair’ and ‘maintenance’, and this is so even when the result has a different, more contemporary, aesthetic appearance.

…[the condominium corporation] was entitled, [and indeed obliged, pursuant to its statutory duties of repair and maintenance], to embark on the garage deck remedial work without the need for unit owner notice or approval, let alone approval by the special majority vote contemplated by s. 97 (4) [which applies to ‘substantial changes’]

This case clarifies that condo corporations are entitled, and indeed obliged pursuant to their statutory duties, to attend to repairs and maintenance, even when the proposed new features may be somewhat different than the original.

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