Repairs, Maintenance and Renovations
So, You Want to Make the Attic a Family Room? – Sounds like a Great Idea!
From the Volume 12, Summer 2022 issue of the CCI GHC Condo News Magazine
Not surprisingly, it is quite common for unit owners to want to modify their condominium unit space. We find that the desire to modify is more prevalent in townhomes, especially as townhomes age. The desire to renovate the kitchen, the bathroom, the attic and the bedrooms is normal. HGTV inspires!
The challenge presented by this goal is that many renovations impact directly, or indirectly, the common elements as condominium units do not stand in isolation of other condominium units and the common elements. Common elements are owned as tenants- in-common by every single unit owner. This is why Section 97 of the Condominium Act is relevant. In order to make a modification to the common elements, a vote is often required by unit owners.
Section 98 specifically contemplates modifications made by unit owners to the common elements all to ensure either that Section 98 is complied with or Section 98 does not apply. Renovations should be vetted by the Corporation. The Corporation’s Board of Directors would be prudent to put in place a set of protocols and a process to analyze renovations and make the review systematic for ease of the Board and unit owners. To the extent that a renovation is exclusively with respect to the unit and creates no impact to the structure or the common elements of the Corporation, then it's easy to allow renovation to proceed. Renovations should also be inspected post-renovation to ensure that they comply with what was presented to the Board. Unit owner files of the Corporation should retain all data presented.
Where the renovation impacts the common elements, the Corporation needs to look closely at compliance with Section 98. Section 98 breaks down changes made by owners into two categories: those that affect the common elements and those that affect the exclusive use common elements.
Where an owner wishes to make a common elements modification, the Board needs to approve that modification by resolution. So before a resolution is passed, the Board needs to collate information and effectively evaluate the same in order for the Board to fulfill its duty under Section 37 for due diligence purposes. Accordingly, a corporate due diligence checklist should include: drawings by a qualified party (not unit owner sketches) (drawings should be stamped drawings if there are structural, electrical or plumbing changes); there should be building permit applications, as applicable, that are issued by the municipality however, it must be abundantly clear that the municipality should not be permitted to issue building permits without the consent of the Board.
In our experience, municipalities often ignore the parameters of the Condominium Act. This can escalate disputes amongst the parties. So while the town or the municipality controls the issuance of building permits, municipalities should be much more aware of the compliance requirements under the Condominium Act and the requirement of consent by the Board. Just because you have a building permit, it does not mean that you do not have to comply with the Condominium Act or have the right to change the common elements.
Before the modification can proceed, an agreement must be designed to allocate the risks associated with the modification to the common elements back to the unit owner. Other unit owners do not benefit from the modification and should not bear the risk of the same. The total cost of repair, maintenance and insurance should be borne by the unit owner who wishes changes.
If the modification is to a regular common element (not exclusive), Section 97 also must be complied with, which means in certain cases, a vote of unit owners will be required to approve that modification because that modification to the common elements impacts the common elements that are owned by everybody. So be nice to your neighbours!
Where the modification is to exclusive use common elements, you do not have to deal with the requirements under Section 98 (1) (c) and (d), however the criteria for the Board is very clear and, in my opinion, these criteria should be not exclusively applied to exclusive use common elements amendments because the statutory criteria contains an assessment that should be used for all common element modifications for the purpose of assessing risk.
The Board of Directors should be digesting the constating documents and assess the common element modification in each of these baskets. One of the key ones that I think is important to think about is what is the impact of the modification of the common element to the reserve fund and whether or not that gives rise to costs. As well, does the modification to the common elements also give rise to increased insurance premiums to the Corporation. One of the challenges we are seeing with Section 98 modifications is the insurance obligations being borne by the unit owner under their own policy. As you are aware, condominium unit owners and the Corporation insure together under one policy to ensure that there is adequate insurance.
But what happens when a unit owner changes that risk profile by creating a modification? Some may argue, “well, there is no change to the risk of the condo”. I would strongly disagree with the absoluteness of that statement. Each modification must be considered individually. This is why, if you take out a structural wall, there is going to be an impact unless the modification is somehow countered by the appropriate structural modification to adjust for the structural wall removal. If you undertake plumbing in the basement, and you have to break through the common element concrete floor, there is an increased risk to the Corporation because there is water there that wasn't there before and we all know that water is a risk for condos. Therefore, it is very important that the allocation of risk be addressed in the Section 98 agreement.
Finally, a Section 98 agreement and the modification is only valid once the agreement is registered on title. Don't make the mistake of relying on the premise of a lone board member walking down the street and promising you that you can modify your attic by putting in a family room. All legal and binding decisions must be made by the Board of Directors at a duly constituted meeting; everything must be put in writing and then registered on title. Where a unit owner vote is required, the Act must be complied with as well.
Section 98 agreements are not simplistic agreements. Quick sidenote, they cannot be done by bylaw and comply with the Condominium Act.
Where there are multiple modifications overtime, there are ways to address that too. Bulk Section 98 agreements can be a cost-effective methodology of approving modifications that nobody knew about. Getting everybody on board is key so that future unit owners are bound to the same standards. Failure to put in place a registered Section 98 is negligent, so, please ensure that you speak to counsel and get those Section 98 agreements in place in advance.
Patricia Elia is a senior lawyer with Elia Associates and has practiced law for over 25 years in the areas of condominium law and corporate law, in large, medium and the boutique specialty law firm of Elia Associates. Patricia is intrigued by the interplay of economics, the law and critical thinking models in condominiums and she likes to understand people. As a trained mediator, she understands the value of early and creative dispute resolution opportunities. As an active industry participant, she believes that the sharing of knowledge has the potential to empower Boards of Directors. Patricia’s commitment to condominiums has been in leadership roles such as the President of CCI Huronia, Co-Chair of CCI’s National Council, a member of CCI National Executive and a member of all 5 Ontario chapters. She has also sat as Vice-Chair of CCI National’s Government Relations Committee and Governance Committee. She is a founder of Women in Condos. She has been a Condominium Director for the last 19 years and a Unit Owner of a condominium. Patricia is passionate about the condominium industry because of the important role condominiums play in the lives of real people.
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