Legal

June 27, 2024 Published by Huronia Chapter - By Tony Servello

It's All In The Details

From the CCI Huronia Spring/Summer 2024 Condo Buzz Newsletter

Our office is frequently retained by Condominium Corporations (“Corporation”) and property managers to draft and register Section 98 agreements (“S98”).

There are generally two scenarios in which the retainer arises:

1. The Unit Owner plans on making a change to the exclusive use common elements and they are seeking approval prior to moving forward with the alteration.
   or
2. Just as commonly, the alteration has already been made and now the Corporation is seeking to retroactively bring the unit back into compliance with the Condominium Act (“Act”).

S98’s are mandatory under the Act whenever a Unit Owner wishes to make a change to the common elements. The reasoning underlying the requirement is twofold:

1. To set out the repair, maintenance, replacement, and insurance obligations for the improvements.
   and
2. To alert future purchasers of the obligations they will assume upon accepting title to the Unit.

A S98 is registered on title to a Unit and will be binding on each and every purchaser of that Unit moving forward. If requested, the Act places an obligation on the Corporation to provide prospective purchasers with a status certificate for a Unit along with a copy of any S98 registered against it. The Corporation must also provide a statement with regard to whether or not the Unit Owner is in compliance with the agreement.

When retaining a lawyer to draft and register a S98, it will be critical to ensure that the Unit Owner provides as detailed a description of the proposed work as possible. This will minimize the likelihood of a dispute between the Unit Owner and the Corporation as to the repair, replacement, maintenance, and insurance obligations for the alteration. Just as importantly, it will accurately describe to future purchasers the change to the common elements made by a previous Owner for which they will be responsible. It is important to keep in mind that there will be future Boards and Unit Owners who may have no idea about the circumstances surrounding the registration of an old S98, so the description of the work must be as clear as possible to avoid having the Corporation ultimately end up on the hook for the changes.

I have had discussions with property managers who have told me that they face consistent push back from Unit Owners when asking for more detailed descriptions of the changes the Unit Owner wishes to make. My response is simply that the Unit Owner must understand that this information is critical to the S98 and that the Corporation should not approve an alteration request in its absence. The Corporation is not obliged to approve an alteration request, and if the Unit Owner wishes to make changes to the common elements, they must acknowledge that there is a process to which they must adhere to. Moreover, if the change has already been made to the common elements without the Corporation’s approval, and a S98 has not been registered on title, the Corporation is not only within its rights to force the Unit Owner to remove the improvement, they are obliged to do so under the Act.

Tony Servello
Ain Whitehead LLP