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Residential Real Estate Uncategorized

No Right of First Refusal in the Sale of a Matrimonial Home

In a recent Ontario Court of Appeal decision, the court reiterated the principle that spouses may not be granted a right of first refusal in a matrimonial home.

A right of first refusal in real estate is a mechanism that gives a party the right to be the first allowed to purchase a particular property if it is offered for sale. 

What Happened?

The husband and wife separated and went to trial to resolve the ensuing financial issues. After a four-day trial, the trial judge ordered the husband to pay the wife an equalization payment of $226,670. 

Additionally, the trial judge ordered that, after a fair market value assessment, the husband had the “right to conclude the purchase” of the wife’s interest in the jointly-owned matrimonial home within 30 days, and to obtain the release of the wife from her obligations under the existing first mortgage registered against the matrimonial home.

Parties’ Positions

The wife appealed and asked the Court of Appeal to vary the trial judge’s order to omit the husband’s right to conclude the purchase of the matrimonial home. She sought the sale of the matrimonial home and the division of its net proceeds.

The husband contested the appeal, first, because he argued that the appeal should instead be heard by the Divisional Court and that it was on the trial judge to explain his order. Also, the husband wanted to purchase the wife’s interest in the matrimonial home. Finally, he stated that he had been required to live in a trailer while the matrimonial home sat vacant as the wife was living with her mother; the husband sought compensation for his resulting expenses and hardship.

Court of Appeal Decision

After dismissing the husband’s procedural objections, the court stated that the case raised a single issue: the arrangements for selling the matrimonial home. 

The court explained that a right of first refusal is a substantive right that has economic value. It cited previous case law which has established that, absent consent between the parties, one spouse does not have a special right to purchase the matrimonial home and that once the matrimonial home is ordered to be sold, each spouse is entitled to receive fair market value for his or her interest in it. In the cited 1992 case, the Ontario Court of Appeal had previously stated:

“A right of first refusal will most often work to discourage other interested buyers. If a spouse is granted a right of first refusal, the effect of it is to remove that spouse from the competitive market for the matrimonial home. The existence of a right of first refusal distorts the market, because it provides a benefit to one party, which eliminates the need for that party to compete with any other interested purchaser. Finally, if the spouse with a right of first refusal is in possession, the existence of the right of first refusal will provide a disincentive to maintaining the property, so as to increase its value and saleability.”

Consequently, the court explained that a right of first refusal falls outside the boundaries of what is ancillary or what is reasonably necessary to implement the order for sale of the matrimonial home. It distorts the market for the sale of the matrimonial home by eliminating the need to compete against any other prospective purchaser, thus potentially reducing the amount the joint owning spouse realizes on the sale.

The court found that, in the absence of consent, the right of first refusal should not have been granted by the trial judge in this case. It stated that if the husband wanted to purchase the matrimonial home, he would have to compete with any other interested purchaser.

As a result, the court allowed the appeal and ordered that the matrimonial home could be listed for sale immediately by the wife.

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Baker & Company has adopted all of the COVID-19 safety precautions and vulnerable employees have been invited to work from home. We are fully operational and continuing to work on client assignments. Where possible, meetings are being held via video link or by telephone conference.

Baker & Company’s lawyers have a reputation for closing residential purchase, sale and refinance transactions smoothly and without surprises. Whether you are buying or selling your home, cottage, investment property or vacant land, we can assist you from the beginning to the end of your transaction. We represent individuals and families in all kinds of real estate matters. We act diligently to ensure you have a positive and stress-free experience.

At Baker & Company in Toronto, we take the time to meet with you and understand your unique needs in order to guide you through your next residential real estate transaction.  We rely on our broad base of experience and expertise to provide exceptional legal advice and risk management. Call us at 416-777-0100 or contact us online for a consultation.

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Property Disputes Real Estate Law Residential Real Estate

Purchaser Denied Certificate of Pending Litigation on Closing Date

A certificate of pending litigation (CPL) is a tool used to put others on notice that a property is the subject of ongoing litigation. With a CPL registered on title, others will be prohibited from dealing with the property by selling it, registering a mortgage, or refinancing. However, a recent decision showed that an Ontario court was reluctant to grant a purchaser with the right to register a CPL on the title of the property he was set to purchase later that same day.

Purchaser Seeks to Block Sale Until Provided With Warranty

The purchaser and sellers entered into an Agreement of Purchase and Sale (APS) for a residential home in Newmarket. The sellers were a father and two sons, who had renovated the existing home as well as constructed additions to the home themselves with the intention that the father would eventually reside in the home. The nature of the type or extent of the renovation and construction work was not made clear to the court. In July of 2018, the Tarion Warranty Corporation (“Tarion”) issued a letter to the owners that the house met the requirements for an “owner-built home”.

On January 5, 2020, the parties entered into an APS for the sale of the home. According to the terms, the closing was to take place “no later than 6:00 pm on February 5, 2020”. The plaintiff had the home inspected in mid-January and visited the home again on January 26th. He had identified some issues with the construction that he had requested to be addressed prior to closing. This led him and his wife to contemplate the idea of a warranty with respect to the construction to give them protection once they became the owners of the property.

On January 31st, the plaintiff’s lawyer inquired with the seller’s lawyer as to whether the property was warranted by Tarion. Later that day, they received a reply stating that the property had not been registered under the warranty program as the home had originally been intended for one of the sellers. The response also stated that the nature of the work had been a renovation rather than new construction and that the structure of the home had not been changed.

The day before closing, the sellers confirmed that no Tarion warranty would be provided and that no HST would be collected on the purchase (as would have been the case with a newly constructed home). The next day, the closing day, the plaintiff reached out to Tarion directly and inquired as to whether the house qualified for warranty protection. Tarion provided the following response:

If the home was never occupied then it should have been enrolled and the builder should have been registered with Tarion. A home is not required to be enrolled to be covered under the warranty but the determination has to be made by Tarion that the home is eligible for coverage. That usually involves investigation and that is always more than one day. From the information you have provided it would seem likely that the home is entitled to warranty coverage but I cannot confirm that to you right now. I will get back to you with more information as soon as possible.

The plaintiff then brought an emergency ex parte motion for leave to register a CPL against the property, halting the sale until the warranty issue was resolved.

What are the Requirements for a Certificate of Pending Litigation?

As set out in the decision Perruzza v. Spatone, 2010 ONSC 841, the requirements are as follows:

  • There must be a triable issue as to the interest in the land (note that it is not required that the plaintiff demonstrate a likelihood of success)
  • The party opposing the CPL is required to establish that there is no triable issue with respect to the interest in the land
  • A court must look at all relevant factors and use its discretion in determining whether a CPL should be granted. These factors can include:
    • whether the property is unique
    • the ease or difficulty in calculating damages
    • the intent of the parties in acquiring the land
    • the harm to each party if the CPL is granted

In considering the factors, the court denied the plaintiff’s request for a CPL in the case at hand. The court considered the following in reaching this decision:

  • The APS did not provide for a Tarion warranty and no representation was made with respect to the construction being Tarion-warranted. The plaintiff appeared to make this demand in the final hours.
  • While the plaintiff claimed to be “ready, willing and able” to close, the court found that he was unwilling unless his last-minute condition was met.
  • The plaintiff presented no evidence that the sellers would be unwilling to correct any defects after the date of closing, nor that they had insufficient financial assets should they be required to satisfy a future judgment.
  • The plaintiff brought the motion ex parte on the date of closing and had made no attempt to try to extend the closing first.
  • The potential harm to the defendants (sellers) should a CPL be granted outweighed any potential harm to the plaintiff.

At Baker & Company in Toronto, our real estate lawyers take the time to meet with you and understand your unique needs in order to guide you through your real estate matter, whether commercial or residential.  We rely on our broad base of experience and expertise to provide exceptional legal advice and risk management in a variety of transactions, or through litigation. Call us at 416-777-0100or contact us online for a consultation.

Categories
Litigation Property Disputes Real Estate Law Residential Real Estate

Suing a Condo Corporation for a Delay in Repairs

What a condominium corporation’s obligations to individual owners with respect to repairs? If an owner is unsatisfied with the response to repeated complaints, are they entitled to damages? When might a condo corporation’s failure to address an issue to an owner’s satisfaction be considered oppressive?

A recent decision of the Ontario Superior Court of Justice dealt with these questions, following a five-year battle between a condominium owner and the corporation.

A Five-Year Complaint History

The complainant had purchased a unit on the top floor of a 15-storey condominium building. Four years after moving in, she began to notice an excessively loud noise emanating from what sounded like an industrial fan or a motor on the roof of the building that disturbed her significantly. She made a verbal complaint to the condominium corporation in 2014 about the noise and when nothing was done, she made a further complaint in writing.

In 2019, five years after the owner’s initial complaint, the condominium corporation replaced two exhaust fans that were located above the owner’s unit. While the noise was still present, the owner said that this helped to reduce it significantly. The complainant brought an action against the condo corporation for failure to meet its statutory obligations with respect to repairs and maintenance, as well as oppression.

What Exactly Are a Condominium Corporation’s Obligations?

Under ss. 89 and 90 of the Ontario Condominium Act, a corporation does have a statutory obligation to repair and maintain the common elements of a condominium:

89 (1) Subject to sections 91 and 123, the corporation shall repair the units and common elements after damage.

90 (1) Subject to section 91, the corporation shall maintain the common elements and each owner shall maintain the owner’s unit.

However, the court, in this case, was careful to point out that the standard of a corporation’s obligation is one of reasonableness. In this case, there was no evidence that the complained-about noise had occurred as a result of a failure to properly repair or maintain the fans that were eventually replaced. Further, there was evidence that the corporation had ensured that the fans were inspected and maintained on a regular basis, going back to before the complaints began.

To address the noise complaints, the corporation brought in a third party company to inspect the fans, and no underlying cause of the noise was found. The same company inspected the fans again six months later, and then six months after that. On the last visit, the company installed new blower assemblies on the fans above the complainant’s unit in an attempt to make them quieter.

In 2018, the complainant hired an acoustic engineer to inspect the fans. His report showed that the fans were old, contained some rust and did not appear to have any acoustic or vibration insulation. However, he did not test the fans beyond inspecting them visually.

Three months later, the corporation retained mechanical engineers to inspect the fans. The engineers recommended some servicing to address a slight bearing noise on one fan and said the other was actually quieter than industry standards. The corporation carried out the recommended service but the complainant said that the sound persisted.

Given the fact that the fans were regularly inspected and maintained, and that the corporation had the fans inspected by engineers specifically to address the complaints, it could not be said that the corporation had violated a reasonable standard of repair and maintenance. Further, the complainant alleged that the noise had been due to a failure to maintain the fans, but also said the noise persisted even after the service recommended by mechanical engineers had taken place.

Was the Corporation’s Conduct Oppressive?

The complainant alleged that the corporation had ignored her complaints and failed to address a serious issue that was highly disruptive for five years. However, the court found that this ignored several steps the corporation took during that time frame to identify and address the noise she complained of. When the corporation eventually did order new fans, the complainant, through her lawyer, objected to the manufacturer’s installation instructions, based on the opinion of a consultant she had retained to review them. The installation was delayed for nearly nine months due to this objection, and eventually, the complainant allowed the corporation to proceed with the original instructions.

While the corporation’s response had some faults, including failing to respond in writing initially, and then providing a memo from the superintendent that was dismissive and sarcastic in tone, overall the response was reasonable in the given circumstances. On the issue of oppression, the court ultimately concluded that:

A unit owner seeking an oppression remedy under the Condominium Act must show both that there was a breach of their reasonable expectations and that those reasonable expectations were breached by conduct legitimately characterized as oppressive. I find that [the complainant] had a reasonable expectation that [the corporation] would comply with its statutory obligations to repair and maintain its common elements. I also find that [the corporation] acted reasonably and in compliance with these obligations.

While condominium owners certainly have a right to expect action from their condominium corporation when it comes to the repair and maintenance of the common elements, the standard of reasonableness must be kept in mind. Prior to initiating a potentially costly and time-consuming action in court, a complainant should carefully consider whether they will be able to establish that the corporation failed to meet the reasonableness standard under the given circumstances.

At Baker & Company in Toronto, our lawyers take the time to meet with you and understand your unique needs in order to guide you through your real estate matter, whether commercial or residential.  We rely on our broad base of experience and expertise to provide exceptional legal advice and risk management in a variety of transactions, disputes, or through the litigation process. Call us at 416-777-0100 or contact us online for a consultation.

Categories
Real Estate Law Residential Real Estate

Failure to Close May be a Costly Risk

In today’s competitive housing market, it is becoming more and more common for purchasers to enter into an Agreement of Purchase and Sale with no conditions. Where it was once standard for a purchaser to insist on a home inspection and financial approval before finalizing a deal, the fierce competition means that people may be willing to take a bigger risk in order to secure the home of their dreams.

However, this can be a big risk that may result in significant cost to the purchaser should they be unable to secure financing in time before the closing, as illustrated in a recent decision of the Ontario Court of Appeal.

Financing Troubles After the Fact

In the case at hand, the vendors listed their home for $1,398,000. The market was especially active at this point in time and there were multiple offers. The vendors ultimately accepted the purchaser’s offer of $1,555,000. The closing date was set for two months later. In the meantime, the vendors agreed to purchase a new home closing a month before their sale, and took out bridge financing to cover the gap in between the transactions.

Leading up to closing, the purchaser’s lawyer was in communication with the vendor’s lawyer. The vendors’ lawyer sent a closing package to the purchaser’s lawyer 10 days before closing. Then just two days before the deal was set to be finalized, the vendor’s lawyer was informed that a new lawyer had taken over in representing the purchaser and asked for an extension on the closing date by approximately a week. A few days later, the purchaser requested a further extension for another three days.

The vendors agreed to the extension, provided the purchaser agreed to pay the additional interest on their mortgage, line of credit and bridge loan. the purchaser agreed. On the new closing date, the purchaser’s lawyer advised that she did not yet have mortgage instructions from a financial institution. Later that day, she followed up to let the vendors’ lawyer know that the purchaser had ceased communication with her.

Meanwhile, the purchaser applied for a mortgage with two financial institutions and was denied. He informed his real estate agent that he would not be able to purchase the home.

When the transaction did not close, the vendors re-listed the home at the original asking price. Nearly two weeks later, their lawyer was contacted by a new lawyer for the purchaser, saying he had received approval on a mortgage and sought a 10% reduction in the price of the home. They responded with a proposal to resolve the matter and did not receive a reply. The vendors ended up selling their home for considerably less than the original sale – a difference of $275,000. The vendors brought an action against the original purchaser for damages.

The Deposit & The Damages – One and the Same?

The purchaser claimed that he had never needed financing approval to purchase the home because he had intended to pay with cash. He further argued that the vendors had not fully tendered for closing and had further failed to mitigate their damages by not accepting his offer to purchase the home at a reduced price.

The motions judge held that the purchaser could not rely on the defence of tender when he was clearly not in a position to close the transaction. Further, while it had been open to the vendors to accept the purchaser’s offer to close and pay a reduced price, they could not be obligated to do so. Further, the judge found that the vendors had taken reasonable steps to mitigate by not accepting the first offer once the home was re-listed and instead waited for the best possible price. The judge awarded the vendors damages for the difference in the purchase price, as well as costs of re-staging the home, carrying costs and interest, totalling over $300,000. Further, the judge held that the purchaser had forfeited his deposit, which would not be credited toward the damages award. The purchaser appealed.

The Court of Appeal dismissed the purchaser’s appeal except with respect to the issue of the deposit. The purchaser argued that the deposit should be credited towards the total amount of damages, and the Court of Appeal agreed, finding:

While the agreement only specifically calls for the deposit to be credited to the purchase price on completion of the agreement, the measure of damages is based on the difference between the purchase price and the lesser amount that the property sold for after the purchaser’s default. In other words, it is based on the vendor receiving the purchase price that was bargained for. One can infer that the intent of the parties was that the deposit be applied to the purchase price whether received on completion or as damages…The motion judge in the instant appeal erred in law by holding that the deposit be forfeited and not credited to the vendor’s damages.

Exercise Caution Before Signing an Agreement

As demonstrated above, failing to close on an Agreement of Purchase and Sale can have hefty financial consequences for the party in breach. You may be held liable for interests and carrying costs, but there is also the consideration of the purchase price. The housing market can fluctuate quite significantly, and as in this case, result in drastically different purchase prices just months apart. While the temptation to enter into an Agreement condition-free is strong when the market is hot, purchasers are advised to complete their due diligence in advance and know their financial situation before they begin a house search in earnest.

At Baker & Company in Toronto, our real estate lawyers take the time to meet with you and understand your unique needs in order to guide you through your real estate matter, whether commercial or residential.  We rely on our broad base of experience and expertise to provide exceptional legal advice and risk management in a variety of transactions, or through litigation. Call us at 416-777-0100or contact us online for a consultation.

Categories
Real Estate Law Residential Real Estate

What Constitutes a ‘Material Change’ to an Agreement of Purchase and Sale?

A recent decision of the Ontario Court of Appeal (ONCA) was faced with determining whether a condominium corporation’s failure to begin construction on a parkette and entry gates by the closing date on a unit in the development constituted a ‘material change’ to the Agreement of Purchase and Sale (APS).

The Background Facts

The appellant had purchased a new construction condominium for $1.6 million, putting down a deposit of $133,000 at the time of signing the APS. The closing date was set for December 13, 2017. A month before the closing date, the builder notified the appellant’s lawyer that the condominium unit was ready for occupancy and that the transaction would be closing as planned.

The appellant’s lawyer requested an extension of the closing date by a month, as the appellant had been unable to secure a mortgage for the balance of the purchase price. The respondent agreed to an extension of one week. On the new closing date, the appellant’s lawyer contacted the respondent and requested a further extension of one day, to allow the appellant “to investigate an issue related to the property”. The respondent consented.

The following day, the appellant’s lawyer contacted the respondent again to say that, contrary to the Disclosure Statement, the construction of a parkette and exit and entry gates had not yet been started. As a result, the appellant wished to extend the closing until those common elements had been completed. The lawyer further stated that their client reserved the right to rescind the APS completely if the respondent no longer planned to construct those elements, pursuant to s. 74 of the Condominium Act (the “Act”). The respondent replied by saying that the appellant had failed to close the transaction and that the respondent was terminating the APS and retaining the deposit.

The respondent later sold the unit for $1.3 million to another purchaser, $300,000 less than the amount in the original APS. The appellant brought an action for the return of her deposit and a determination that she had rightfully rescinded the APS, and the respondent claimed damages for breach of the APS.

Lower level decision

In the original decision, the trial judge considered the appellant’s argument that the respondent’s failure to begin construction of the parkette and entry/exit gates by the date of closing amounted to a ‘material change’ of the APS. In doing so, the court looked at the definition of ‘material change’ under s. 74(2) of the Condominium Act:

[A] change or series of changes that a reasonable purchaser, on an objective basis, would have regarded collectively as sufficiently important to the decision to purchase a unit or proposed unit in the corporation that it is likely that the purchaser would not have entered into the agreement of purchase and sale for the unit or the proposed unit or would have exercised the right to rescind such an agreement of purchase and sale under section s. 73, if the disclosure statement had contained the change or series of changes, but does not include,

…

[A] change in the schedule of the proposed commencement and completion dates for the amenities of which construction had not been completed as of the date on which the disclosure statement was made.

The court went on to say:

The test for what is a “material change” provides some guidance as to what the legislature considered to be fundamental to an agreement of purchase and sale of a condominium such that if that change occurred, the Purchaser was entitled to end the agreement. The legislature did not consider a change in the construction schedule for amenities to be a material change.

Ultimately, the court found that the issues relied upon by the appellant were not sufficient to rescind the APS, and dismissed the appellant’s action, finding in favour of the respondent. The appellant then appealed the decision.

The Court of Appeal

The Court of Appeal (ONCA) found no fault in the original decision. With respect to s. 74(2) of the Act, the ONCA affirmed the lower court’s interpretation. The appellant further argued that the lower court had erred in characterizing the parkette and gates as ‘amenities’ rather than essential features of the community. The ONCA disagreed, citing a clause of the original APS, which read:

In any event, the Purchaser acknowledges that failure to complete other units within the Condominium in which the Unit is located, or the common elements on or before the Occupancy Date shall not be deemed to be a failure to complete the unit.

Ultimately, this case demonstrates that purchasers of new construction real estate must exercise extreme care when seeking to rescind an APS, or considering the option of not closing on the set date. The financial ramifications can be quite significant. If considering such actions, it would be prudent to seek advice from a knowledgable lawyer well in advance fo the closing date in order to review all potential options.

At Baker & Company in Toronto, our real estate lawyers take the time to meet with you and understand your unique needs in order to guide you through your real estate matter, whether commercial or residential.  We rely on our broad base of experience and expertise to provide exceptional legal advice and risk management in a variety of transactions, or through litigation. Call us at 416-777-0100 or contact us online for a consultation.

Categories
Property Disputes Real Estate Law Residential Real Estate

Condominium Corporation Not Permitted to Reopen Approval Process for Structural Changes

A home renovation can be a long and drawn-out process; one that causes great inconvenience to a homeowner and may require extensive permissions before it can even begin. Anyone who undertakes a major renovation after completing the due diligence to obtain the necessary permits would be justifiably surprised and upset if said authorization was revoked after the work had been completed. That is just what occurred in a conflict that was recently decided by the Ontario Superior Court between condominium owners and the condominium corporation. The dispute centred around the lack of an agreement under s. 98 of the Condominium Act (the “Act”).

What is a s. 98 Agreement?

Before looking at the case itself, it is helpful to review the purpose of s. 98 of the Act. This section requires that an owner enter into an agreement with the condominium corporation before making any changes that affect the common elements of a condominium. If the changes are approved, the corporation will enter into an agreement with the owner(s) with the primary purpose of setting out the following terms:

  • To apportion the cost of the proposed change(s) between the owner(s) and the corporation;
  • To set out the maintenance, repair, and insurance obligations with respect to the proposed change(s).

Generally, once an agreement is executed, it will be registered on title for the property.

Background of the Case

The applicants in the case at hand were the owners of one unit in a twenty-unit condominium in Muskoka. Soon after purchasing the unit, the applicant husband was appointed to the Board of Directors (the “Board”), a role that he filled for three years. At one point the applicants expressed an interest in buying another unit in the building in order to accommodate more visitors, and the owners of the unit next door to theirs advised them that they were planning to sell. Before committing to purchase the unit, the applicants submitted a proposal to the Board seeking approval to create an opening between the two units in order to create one large condominium. The changes would affect a common element in the building, being the shared wall between the two units.

At the time of the proposal, the Board consisted of four members, one being the applicant husband and another being the owner of the unit next door to the applicants. All four of the Board members were present for the meeting, along with the property manager. However, the owner of the unit the applicant wanted to purchase declared a conflict of interest and excused himself for the relevant portion of the meeting. The applicant remained for the entire meeting but abstained from voting on his proposal. The proposal was approved, leading the applicants to then purchase the condominium from their neighbour. At the meeting, those present had discussed the need for a formal agreement under s. 98 of the Act, but one was never put into place. At the time, the condominium corporation was in the habit of approving changes to common elements without a formal s. 98 agreement.

The applicants completed extensive renovations, opening the connecting wall between the units, and removing the kitchen in one unit to create a more cohesive single condominium. After the changes had been completed, a new Board president was elected. The new president took issue with the lack of a s. 98 agreement with respect to the applicants’ renovations, and all other changes that had been made by other condo owners. It was decided that all owners who had made changes affecting common elements would be required to enter into retroactive agreements. The applicants were provided with an agreement to sign, which contained a clause not found in the agreements received by other owners. It stated as follows:

The Improvements shall be removed by the Unit Owner, at the Unit Owner’s sole expense, before the Unit is sold.  Specifically, the Unit shall be restored to the condition before the Improvements were made, including but not limited to the reinstallation of the common element demising wall within the Unit and any changes that were made by the Unit Owner related thereto.  

The Court’s Ruling

The applicants brought a claim against the corporation, saying that the clause overreached by requiring the restoration of changes unrelated to the common elements. They claimed that the corporation’s behaviour was oppressive and unfairly prejudicial in light of the fact that the changes had already been approved and completed, and the agreements provided to the other owners did not contain a similar clause. The corporation responded saying that the permission previously granted was invalid due to the applicant’s conflict of interest, which resulted in a non-quorum at the meeting, and cited the lack of a s. 98 agreement to further invalidate the approval.

The court found in favour of the applicants, reasoning:

Board approval was sufficient and was given.  [The applicant] did not have a conflict because the proposal was not material to the Condominium.  There was therefore a quorum.  The approval is not problematic as a result of these issues. I therefore conclude that there was an effective Board approval given for the structural change made by the applicants.  The relief sought by the Condominium, which assumes that it can begin the approval process again, is therefore inappropriate.

The court awarded the applicants $10,000 in general damages due to the corporation’s oppressive and unfair conduct. The court did agree that a s. 98 agreement was necessary but ordered the overreaching language in the oppressive clause be removed. The applicants will be required to restore the common wall prior to selling either unit, but would not be required to say, reinstall a kitchen in the second unit. The changes unrelated to the wall would not be covered by a s. 98 agreement as they are not common elements. The applicants would be under no obligation to restore them since restoration was not contemplated at the time approval was granted.

This case should be a lesson to condominium boards regarding the importance of putting a s. 98 agreement into place from the start and setting out all expectations with respect to changes affecting any common elements. A corporation will likely be prevented from placing an unfair onus on condominium owners after the fact if that onus is deemed to be oppressive or unfair.

At Baker & Company in Toronto, we take the time to meet with you and understand your unique needs in order to guide you through your real estate matter, whether commercial or residential.  We rely on our broad base of experience and expertise to provide exceptional legal advice and risk management in a variety of transactions, or through litigation. Call us at 416-777-0100 or contact us online for a consultation.