Condo Issues

Robert Noce

Q: I am considering purchasing a condominium unit for the first time. How can I determine if the reserve fund is adequate? Who provides this information? How can I find out how well the corporation is being managed? What other questions should I ask, and who should I ask? How can I find out if there are any lawsuits against the condominium corporation?

A: Good for you! These are the types of questions that every potential purchaser should be asking as part of their "due diligence." The onus is on a purchaser to review the reserve fund study and plan, to determine whether or not the current funds are sufficient to meet the needs of the condominium corporation. If the condominium corporation identifies $300,000 in expenditures in 2015, and there is only $25,000 in the reserve fund, then you can realize that there are insufficient funds to cover the repairs and maintenance work.

Therefore, the condominium corporation will either have to increase condo fees or issue a special assessment.

In terms of how well the corporation is managed, that is a difficult question to answer.

You could review the minutes of the Board and/or the past annual general meeting. As well, if the condominium corporation has changed property managers in a short matter of time on several occasions, that could be a sign of problems. If you can ask a current owner in the condominium corporation some of these questions, you may get some helpful answers.

To find out if there are any lawsuits against the condominium corporation, you could do a search at the courthouse.

Other things to ask are whether the condominium corporation imposes fines on owners, and how effective are they at enforcing the bylaws. Has the corporation borrowed any money? It is essential to do your due diligence.

Helpful hint: Some of the questions that you need to ask can be done by you as a potential purchaser. However, if you need someone to give you a perspective or analysis of some of the condominium documents, you should hire a lawyer or some other expert in the condominium field, before your purchase is complete.

Q: I live in a 105-unit townhouse condo. Many owners are concerned about the amount of renters that we have. Our property manager says that, according to the Condominium Property Act, we cannot restrict renters. My friend lives in a 114-unit villa condo and their bylaws state that they may have only two renters. Is it possible for our condo Board to enact such a restriction?

A: Your property manager is correct. The Condominium Property Act prevents corporations from restricting the rights of an owner to lease his/her unit to a third party. I would suggest that the bylaw in your friend's condo is not legal. As with any single-family home, an owner is free to rent their unit out to a third party, and no bylaw can restrict that right.

Helpful hint: From a policy perspective, it makes sense to allow a unit owner to determine whether or not he or she wants to rent their unit to a third party. The owner is ultimately responsible for the unit and will be responsible for any payment of fines incurred and not paid by a renter for bylaw infractions.

Q: We have had problems getting people to want to take a turn on the Board. Many of us have been on the board for a long time and we want someone else to do the work. What happens if no one steps up to the plate and we do not get a Board elected?

A: Every condominium corporation in Alberta must have a Board. If no one comes forward to sit on the Board, then your property manager would have to hire a lawyer and make an application in court to appoint an administrator for the condominium corporation. This will mean an increase of costs to all of the owners and an embarrassment to the condominium corporation.

Helpful hint: It is incumbent on all owners to participate in some form within the condominium corporation. If you don't like to co-operate with other people or be actively engaged in some way, then do not buy a condo. There are many rental properties available that will allow you to live in a low-maintenance setting without the burden of participation and interaction with other people.

Q: If a condo corporation were to become insolvent because many owners are refusing to pay a special assessment fee and their monthly condo fees, what would happen to units that are in good standing?

A: This would be a disaster! If a condominium corporation were unable to pay its bills, then it could be exposed to a number of lawsuits. As well, the value of those units in good standing would start to decrease. Anyone who looked at the financial statements of this condominium corporation would immediately run from investing or buying into a unit in that building. The condominium corporation has an obligation to pursue the owners who have not paid their assessments or fees. This means filing caveats on their titles and beginning foreclosure proceedings. There is no excuse for ignoring this issue.

Helpful hint: There are other options available under the Condominium Property Act if a corporation cannot pay its debts, such as terminating the condominium corporation.

Q: Our condominium complex backs out onto city land and a ravine filled with trees. Without permission, two owners have planted additional trees and shrubs on the city's property. In a few years, these trees will be blocking my view of the ravine. Do I or the city have recourse to have the trees and shrubs removed?

A: First, no one has the legal authority to plant trees and shrubs on someone else's property. You may want to consider contacting the municipality and advising them of this illegal act. The city may or may not take steps to deal with this issue. However, you do not have any authority to remove the trees and shrubs from city property. If you were to do so, you would also be engaging in an illegal activity. With respect to the trees threatening your view, no one owns a view.

Helpful hint: Nobody likes a busybody; if you are going to start a fight with your neighbour, make it something worthwhile.

Q: In a previous column, you suggested that a prospective condo buyer might ask whether the corporation imposes fines on owners and how effective they are at enforcing bylaws. I noticed that the property management company for my condo publishes a ton of fines for a number of infractions, yet I do not recall seeing any reference to fines in the bylaws. Can the property manager issue fines? Who gets the money?

A: In order for a condominium corporation to impose a fine on an owner or tenant, the bylaws of the condominium corporation must give them that power. If your bylaws do not give the condominium corporation the authority to issue fines, then it cannot. Any revenue generated from the fines would go into the operating funds of the condominium corporation. The fines belong to the corporation, not to the property-management company.

Helpful hint: To issue a fine, there is a process that has to be followed under the bylaws of the condominium corporation. The enforcement of fines is set out in the Condominium Property Act.

Q: In a condominium corporation, where does the responsibility of the corporation end and the responsibility of an owner begin?

A: It depends; if we are talking about a conventional type of condominium building, such as a low, medium or highrise building, then generally the owner is responsible for everything within the four walls and the ceiling and floor. My answer may be different with respect to a bareland condominium. To effectively answer this question, you need to review your condominium plan and the bylaws of the condominium corporation.

Helpful hint: No two corporations are the same, and an answer that applies to one may not be the answer for yours.

Robert Noce, Q.C. is a partner with Miller Thomson LLP in both the Edmonton and Calgary offices. He welcomes your questions at condos@edmontonjournal.com. Answers are not intended as legal opinions; readers are cautioned not to act on the information provided without seeking legal advice on their unique circumstances. Follow Noce on Twitter at @RobertNoce.