A Declarant needs to provide Clear and Current Disclosure Information to Purchasers

In Toronto Standard Condominium Corporation No. 2051 v Georgian Clairlea Inc. (“Georgian”) the Ontario Court of Appeal affirmed the findings of the motion judge with respect to a declarant’s disclosure obligations as set out in the Condominium Act, 1998 (“Act”).

Subsection 72(1) of the Act provides that “the declarant shall deliver to every person who purchases a unit or a proposed unit from the declarant a copy of the current disclosure statement made by the declarant for the corporation of which the unit or proposed unit forms part” (emphasis added). The obligation to provide the current disclosure statement demonstrates that the Act intends for the declarant’s disclosure obligations to continue as the project changes between inception and final closing.
This intention of continuous disclosure is further codified in Subsection 74(1) of the Act where it is prescribed that a declarant is required to provide a purchaser of a unit or proposed unit with a revised disclosure statement or notice with respect to a “material change in the information contained in or required to be contained in a disclosure statement.

The disclosure issue in Georgian arose because of 2 vendor take back (“VTB”) mortgages given by the newly formed condominium corporation to the declarant while the declarant maintained control of the board of directors of the condominium corporation.

A VTB mortgage was provided in the amount of :

• $2,228,100.00 for HVAC equipment the declarant had previously disclosed would be leased by a third party to purchasers; and

• $1,026,000.00 for 32 parking units, 16 storage units, and 2 combination parking and storage units the declarant was unable to sell to purchasers.

Neither VTB mortgage appeared in the budget statement for the first year after registration of the condominium plan as no payment was due under either VTB mortgage for a period of 1 year.

During a motion for summary judgement, it was found by the motion judge that the 2 VTB mortgages were “material changes” as defined in Subsection 74(2) of the Act and that the re-disclosure/notice of these VTB mortgages was insufficient to satisfy the declarant’s disclosure obligations set out in the Act. The motion judge went on to conclude that the conduct of the declarant was oppressive to the interests of the purchasers. The Ontario Court of Appeal affirmed the motion judge’s decision.

Of interest in Georgian is the consideration of Subsection 74(3) of the Act by the motion judge. It is widely known that the Act and the disclosure obligations set out in the Act are meant to protect purchasers from the high-handed conduct of a declarant. As such, Subsection 74(3) of the Act requires “a revised disclosure statement or notice…clearly identify all changes that in the reasonable belief of the declarant may be material changes and summarize the particulars of them” (emphasis added).

It was argued by the mortgagee of the VTB mortgages (the declarant is now in bankruptcy) that the purchasers could have discovered the details of the mortgages in the disclosure documentation provided. However, the motion judge found that disclosure will not satisfy the obligations of the declarant set out in the Act where such disclosure is not “clear, coherent or consistent, or where such disclosure does not provide full and accurate disclosure”.

To that end, the motion judge considered the disclosure of each VTB mortgage separately and concluded the disclosure documents were confusing and failed to clearly identify the material changes. The Court of Appeal agreed with the conclusions of the motion judge.

For declarants, Georgian serves as an important reminder to fully and accurately disclose information in any document relating to a new condominium project. If a declarant intends to lease or sell a unit to the condominium corporation (pending the enactment of proposed Section 26.1 of the Act) it is our opinion it is not appropriate to exclude the costs associated with such lease or sale from the first year after registration budget without clearly disclosing that costs will be incurred in the second year of operations. It is of utmost importance that the collective disclosure documents clearly reflect the current intentions of the declarant.

Strict Compliance with the Terms of an Agreement is required to Strictly Enforce Contractual Rights



The Takeaway

The terms of a contract govern the relationship between the contracting parties.  If a party intends to strictly enforce a contractual right that party must have strictly complied with the prerequisite requirements to do so.

The Case

The type of agreement that gives rise to the dispute in Giuseppe Di Millo v 2099232 Ontario Inc, 20151407 Ontario Inc., and Inderjeet Dhugga is one that many land developers are familiar with.

Giuseppe Di Millo (the “Developer”) entered into an agreement of purchase and sale with 2099232 Ontario Inc. (the “Builder”) for the construction of a home on a specific lot (the “Lot”) within the Developer’s proposed subdivision (the “Agreement”).  The Agreement provided the Builder was to construct the home on the Lot within 30 months of closing.  The Agreement also provided that time was to be of the essence.

The Agreement included an option agreement that permitted the Developer to repurchase the Lot (the “Option”).  The 30 month period would have expired on March 5, 2015 but the parties agreed to extend the date until March 5, 2016.  In the summer of 2016 the Developer discovered the Builder had built a temporary structure on the Lot that did not comply with the municipal by-laws or the terms of the Agreement.

The Developer elected to exercise the Option upon the discovery of the temporary structure.  The Developer’s lawyer wrote the Buyer’s lawyer and set the closing date to purchase the Lot pursuant to the Option (the “Option Purchase”) as July 6, 2016 (the “First Notice”).  The First Notice did not comply with the terms of the Agreement.  Two months after the closing date set in the First Notice, in September 2016, the Developer discovered the Developer’s lawyer had done nothing to complete the Option Purchase.

The Developer changed lawyers and, on September 24, 2016,properly served notice on the Builder indicating the Developer’s intention to exercise the Option (the “Second Notice”).  The Second Notice provided closing of the Option Purchase was to occur October 24, 2016.

In the 18 months since the Second Notice was sent, the Developer had done nothing to complete the Option Purchase. The Developer stated that the Developer was ready, willing, and able to close the Option Purchase as scheduled but was unable to do so as the Builder had placed unauthorized 2nd and 3rd mortgages on the Lot that were required to be discharged.

In this case, the Court concluded the 2nd and 3rd mortgages did not prevent the Developer from exercising the Option.

The Court stated that:

by adding the ‘time is of the essence’ clause, the parties made it clear that they would be bound, strictly, by the terms of the Agreement.

The Court found that providing proper notice to the Builder 6 months after the Option first arose did not comply with the time is of the essence clause.  This finding was sufficient to dismiss the Developer’s application, however, the Court went on to consider whether the Developer was ready, willing, and able to close the Option Purchase.

The Court stated that the case law with respect to the exercising of an option is clear, the optioning party must tender.  The Developer supplied no evidence that the Developer had the funds to complete the Option Purchase.  Additionally, the Court heard that the Developer held a power of attorney for the Builder and had the ability to execute any and all documents to give effect to the provisions of the Agreement but failed to prepare or sign any documents with respect to the Option Purchase.

The Developer’s application was dismissed.

The full decision can be found here:


Renewal of a Commercial Lease and the Doctrine of Waiver

The Take Away

Once a party waives an enforceable legal right its ability to then enforce such right is not immediate.

The Case

A recent decision of the Court of Appeal reaffirmed the manner in which a party may revoke its waiver.

In North Elgin Center Inc. v McDonald’s Restaurants of Canada Limited, the parties had entered into a commercial land lease agreement for a period of 20 years (the “Lease”).  The Lease was subject to renewal.  The parties agreed the Lessee, McDonald’s Restaurants of Canada Limited, had provided its written notice to renew the Lease within the required period, however, the parties continued to negotiate the rental rate after the deadline to set such rental rate pursuant to the renewal provisions of the Lease.

The application judge held that through such negotiation the Lessor, North Elgin Center Inc., had waived its right to enforce the strict terms of the renewal provisions in the Lease.  The application judge later found that the Lessor’s waiver was revoked by an email sent by the Lessor to the Lessee.

The Court of Appeal disagreed.

The decision emphasises that to be effective, revocation of waiver requires:

  1. reasonable notice to be provided to the receiving party;
  2. the notice to include a clear indication that the party who granted the waiver will insist upon the strict enforcement of its legal rights; and
  3. the receiving party to be provided an opportunity to cure any defect resulting from its reliance on the waiver.

The full decision can be found here:


Man Lawyer

Post by: Craig Robson

When I was a junior lawyer, (back before computers) I worked in a firm with a senior counsel who was of an age to have fought in the first World War.  At the time, one of my co-juniors was a very capable young woman.

One day, the senior counsel approached/tottered towards the two of us and interrupted our conversation to ask my associate to do some typing for him.  She reddened and pointed out she did not know how to type.  The counsel was shocked.  He may never have had that response before from a woman employee in his office.  He wandered away muttering comments that made it clear he did not understand how she could be employed in a law office as a woman and not know how to type. He became even more confused when I, a young man, took his notes and typed them out for him.

We are over these types of scenarios, right!?  It’s a new age when men and women are treated equally in the legal profession?  Maybe not.

In the last couple of years some of our firm’s senior law clerks and one of the firm’s lawyers (all women) have noticed something that tells me gender equality is still a good ways off.  When these clerks and lawyer cannot get a response from a client or someone else that we are dealing with, they will eventually ask me if its “time for the man lawyer?”.    When that time comes, I will send a short email or make a short call and 99 out of 100 times I get a response, sometimes while I wait.  The recipients don’t usually know who I am, but it seems the fact that a man has contacted them makes all the difference in the world. This seems to be the case even when our clerks and lawyer are trying to get a response from other women.

I think we  will be a lot closer to gender equality when women’s emails and calls are considered as important as a man’s.  My hopes in that regard were dashed a little more today when the lawyer was asked if she was a “real lawyer”.   I don’t know of many male lawyers who get asked this question.


Craig Robson
(man lawyer)

Enforcement of a “One Family” Clause in Condominium Declarations

Enforcement of One Family Requirement in Condominium Declarations

Post by: Carly Haynes

We have noticed in recent court decisions the imposition of a restrictive definition of “one family” or “single family”[1] residence in condominium declarations where the term is not otherwise explicitly defined in the condominium declaration.

It is our concern that the application of this definition may result in unintended discriminatory practices based on family status or lack of family status and may not be supported by an analysis of the relevant case law.

The definition of “one family” residence which has recently been applied by the Ontario Courts seems to arise from a case involving Nipissing Condominium Corporation No. 4 whose declaration defines a family as:

a social unit consisting of parent(s) and their children, whether natural or adopted and includes other relatives if living with the family group

The declaration of Nipissing Condominium Corporation No. 4 further provides:

(1) Each unit shall be occupied only as a one family residence. For the purpose of these restrictions “one family residence” means a unit occupied or intended to be occupied as a residence by one family alone, including guests, and containing one kitchen, provided that no roomers or boarders are allowed.

A “boarder” for the purpose of these restrictions is a person to whom room and board are regularly supplied for consideration and a “roomer” is a person to whom room is regularly supplied for consideration.

(2) Notwithstanding any definition or provisions in any By-Law of the City of North Bay, no unit shall be used in whole or in part for any commercial or professional purpose involving the attendance of the public at such unit. Without limiting the generality of the foregoing, no unit or part thereof, shall be used as an office by a doctor, dentist, optometrist, drugless practitioner or other professional person.”

In our experience the foregoing declaration provisions are unusual if not unique.  In short, few other condominium declarations in Ontario attempt to define what constitutes a family for the purpose of enforcing a single family or one family residency restriction.

The facts in Nipissing Condominium Corporation No. 4 v Kilfoyl 2010 ONCA 217 (“Kilfoyl”) are quite straightforward, despite the potentially far reaching implications of the decision.  The condominium corporation applied to the court for a compliance order to enforce the declaration’s residency requirements.

The declaration, as noted above, stipulated that each unit could be occupied as a one family residence only.  The Respondent resident, on whom the case centers, rented his units to unrelated persons.  The Respondent argued that it was unreasonable to restrict occupancy based on familial relations, and that such a restriction amounted to a violation of the Human Rights Code (“the Code”), as a unit owner leasing his unit would be forced to reject or accept lessees based on their family status.

The Ontario Court of Appeal enforced the motion judge’s decision which found that this section of the Declaration did not breach the Code, and that the Respondent w498as obliged to respect the condominium’s declaration.  The court further found the condominium was justified in enforcing its unique definition of one family residence.

It is noteworthy to mention that this case was brought before the Ontario Human Rights Tribunal, who deferred to the Ontario Court of Appeal and also found no breach of the Code, see Kilfoyl v. Nipissing Condominium Corporation No. 4, 2010 HRTO 1036.

The Kilfoyl decision was relied on in Chan v Toronto Standard Condominium Corp. No. 1834, (“Chan”) which was also affirmed by the Ontario Court of Appeal.  In Chan, the court found that the unit owner Chan breached the condominium declaration provisions which limited the use of the units to “single family” occupancy by allowing multiple unrelated tenants to reside in one unit, similar in nature to a rooming or boarding house.  The court stressed the unique nature of the condominium community, which they outlined as distinct from the classic freehold ownership wherein owners are at liberty to deal with their property as they choose.

The declaration in question in Chan, unlike the declaration in Kilfoyl, does not contain a definition of “single family”, despite the term being present in the declaration.  The trial judge accepted the condominium corporation’s argument that the above definition present in the Nipissing declaration should be applied.  The definition was imposed on the resident Chan who was found to be in breach of the residency requirement.  The court in Chan made no mention of the fact the Kilfoyl declaration contained a very detailed and unique definition of “family”.

Our concern is this: if the unique definition of “family” which is found in the Nippissing Declaration is somehow deemed to be included in every declaration that makes reference to restrictions to one or single family residential use, this could lead to the exclusion of a wide range of relationships which do not fit neatly into “a social unit consisting of parent(s) and their children, whether natural or adopted and includes other
relatives if living with the family group”.  It is not likely this result was intended by the drafters of condominium declarations who restricted the use of residential units to a one family or single family occupancy.

For example, unmarried couples or friends who chose to reside together for economic or convenience purposes- should they or any other person be obligated to disclose whatever unknown personal details constitute them a “family unit”?

Despite the non-transient, non-student nature of these groups, they would be precluded from residing in developments which impose one family residency restrictions on their unit owners due to the simple fact they are not related.

This concern is seemingly becoming a reality following Ballingall v Carleton Condominium Corporation No. 111 (“Ballingall”) in which the trial judge stated [at paragraph 2] that following the Chan and Kilfoyl decisions, the legal landscape had changed.  The judge went on to say,

Since late 2011, the law has been clear that, in the absence of a definition in the condominium’s governing documents, use as a “single family residence” does not include rentals to multiple, unrelated, tenants- even if they are living there as a family…”

Consequences for Condominium Developers and Corporations

This imposition of the definition places a heavy burden on condominium corporations who do not wish to conform to this restrictive definition to amend their declarations, or risk non-compliance with their own documentation.

We advise developers of condominiums to make it clear in their declarations who exactly they intend to include and exclude through the imposition of residency requirements.  However, this advice does not help existing condominiums whose declarations include “boilerplate” clauses which restrict residency to one or single family use.  The existence of these clauses, in conjunction with recent case law, may result in over-zealous unit owners or directors attempting to force out occupants who are not related as parents or children of one another through court applications.

We are also concerned that none of the cases subsequent to Kilfoyl have made any mention of the unique definition of a one family dwelling in the Kilfoyl declaration.  This raises the question as to whether the courts were aware in Chan and Ballingall that there is no new definition in Kilfoyl as to what makes up a family or a one family dwelling, rather the court in Kilfoyl simply supported and upheld the unique definition in the declaration of Nippissing Condominium Corporation No. 4.

In our submission the Kilfoyl case has become an authority for a premise that is not supported by a careful reading of the case and the declaration that was before the courts.  We view these decisions as opening a Pandora’s Box of problems if applied to condominium declarations that restrict occupancy to one or single family use, but do not contain a similar definition of the term as present in the Kilfoyl declaration.

[1] The terms used by respective condominium corporations are not consistent, both “single family residence” and “one family residence” are found in the condominium documents, though in the cases cited in this post the interpretations applied by the courts restrict the meaning to the definition in the Nipissing Condominium Corporation No. 4, cited above.

Changes to the Condominium Act, 1998: Part 1 – Mandatory Provisions in the Declaration

Post by: Evan Holt

Bill 106 is proposing a substantial number of changes to the Condominium Act, 1998 (the “Act”). Over the next few weeks we will highlight certain changes and describe the impact these changes may have on condominium developers.  Throughout the discussion, one must remember that the Act is consumer protection legislation meant to address the imbalance of expertise and bargaining power between a developer and unit purchasers. Therefore, many of the proposed changes are efforts to increase the protection of consumers.

The Government of Ontario plans to have Bill 106 enacted by the end of 2015 and proclaimed by the end of 2016. However, extensive regulations that will provide further instructions, limitations and clarity to the Act are yet to be drafted and may not be of force and effect for some time after the enactment of Bill 106.035

The registration of a declaration is a required step in the creation of a condominium corporation. The declaration is a governing document of a condominium corporation and the requirements for its contents are set out in section 7 of the Act. The declaration must contain certain provisions.

As noted above, an extensive body of regulations will further the purpose of the Act. An important note with respect to changes in section 7 of the Condominium Act, 1998 is that it will be subject to any prescribed regulations as passed by the Government of Ontario.

A notable change with respect to the mandatory provisions to be included in the declaration of a condominium corporation are the addition of subsection 7 (2) (d1).

Subsection 7 (2) (d1) requires that a declaration contain a statement explaining how common interests and common expenses in the condominium are determined. These interests are usually determined by the number or size of units within the condominium corporation. We have generally included such a provision in the past, however, the inclusion of such a provision will be mandatory. A declaration must then provide purchasers with a clear understanding of how common interests and common expenses will be determined in the condominium declaration.

The proposed change to the mandatory provisions to be included in the declaration do not appear to be onerous on a developer. A developer does not acquire additional risk as a result of the changes and the consumer gains a greater level of understanding with respect to how common interest and common expense percentages are determined.

Part 2 of this discussion will speak to changes with respect to optional provision in the declaration.

To view Bill 106 click here.

To view the Condominium Act, 1998 click here.

Unresolved Warranty Claims Under The Ontario New Home Warranties Plan Act

Post by: Evan Holt

A recent decision of the Ontario Superior Court of Justice – Blair v Tarion Warranty Corp. (Tarion) –  confirmed that warranty claims under the Ontario New Home Warranties Plan Act (ONHWPA) can only be pursued by the current owner of a home.

The appellant, Blair, took possession of the subject property in February 2010 and complained to Tarion with respect to insufficient heating in the home. Tarion conducted an investigation that was completed in the summer of 2012 and concluded that duct modification needed to be completed.

After the investigation, in November of 2012, Blair installed within her condominium unit, a gas fireplace at a cost of $17,000.00. This installation was completed without the approval of Tarion. Blair claimed the cost of installation but Tarion denied compensation on February 28, 2013.

Blair appealed the refusal of reimbursement to the Tribunal. During the proceedings, Blair disclosed that she had sold the subject property on October 15, 2013. However, Blair stated that as part of the agreement of purchase and sale she had entered a collateral agreement with the purchaser to maintain her claim against Tarion. The Tribunal dismissed the appeal stating that when Blair sold the subject property she lost standing to continue her action against Tarion.

In this appeal, Blair alleged the Tribunal failed to recognize that the collateral agreement assigned the rights of the current owner to Blair.

Blair relied on the decision of the Tribunal in Liddiard v Tarion Warranty Corp., which included the following statement:

Nothing in this decision should be constructed as denying the Applicants the right to approach the current owners of the home and to seek some form of assignment of their claim.

Liddiard v Tarion Warranty Corp. was appealed to the Divisional Court where it was confirmed that a warranty “runs with the home”. The ONHWPA does not extend warranty coverage to previous owners. Additionally, the consumer protection nature of the ONHWPA is best served though fixing buildings and not compensating individual owners.

The court noted that the claim presented by Blair only dealt with the installation of the fire place and not with the insufficient heat provided to the unit. The current owners never assigned the right to pursue a claim with respect to the insufficient heat, such assignment would violate s. 13(6) of the ONHWPA.

In this case, the court concluded that as the purchaser of the subject property from Blair had no right with respect to the fireplace claim against Tarion, and therefore, such a claim could not be assigned. The purchaser acquired the property with the fireplace and benefited from its presence. Thus, when Blair sold the condominium unit she was compensated for the presence of a fireplace.316

Tarion submitted that a previous owner of a home subject to warranty coverage may be compensated for an unresolved warranty claim without contravention of the statutory warranties framework so long as:

  • any warranty claims are pursued by the then owner of the home; and
  • the arrangements still allow for the possibility of the builder or Tarion to remediate any valid defect, as opposed to providing only for the payment of compensation from Tarion.

Tarion goes on to provide 3 examples of how such a resolution could be reached:

  1. the purchase price could be discounted to reflect the uncertainty the purchaser may face with respect to the outstanding claim;
  2. the purchase price of the home is set to reflect the price of the remediated home. The purchaser would pursue the warranty claim and retain any compensation paid. This may also include a risk mitigation clause in which the vendor would be entitled to a portion of the compensation received by the current owner above a certain amount; and
  3. the vendor could provide Tarion with a signed appointment and acknowledgement explicitly stating that the vendor has been appointed an agent for and in the name of the current owner with respect to unresolved warranty claims. Additionally there should be provisions relating to accessing the home, and the authority of the agent. An agreement would need to be in place between the vendor and the current owner so that the vendor could recover any compensation granted to the current owner.

The consumer protection nature of the ONHWPA is for the protection of an owner or subsequent owner within the warranty period of a new home. This decision illustrates that although a previous owner may benefit from a claim brought by the current owner, the rights of the current owner to pursue an outstanding warranty claim may not be assigned.

To read the full decision click here.

Adverse Possession & Land Titles Conversion Qualified Lands

Post by: Evan Holt

A recently released Ontario Superior Court of Justice decision clarifies adverse possession claims with respect to property registered in Land Titles Conversion Qualified (LTCQ). The lands in dispute were converted to LTCQ on December 14, 1998. Here, “the critical time period is the time prior to the conversion of title into Qualified Land Titles”.

On October 22, 2004, the plaintiff purchased 322 King Street, Peterborough. The plaintiff had previously been a tenant of the property for a number of years. On December 22, 2000 the defendant purchased 320 King Street, Peterborough, which lies to the east of the plaintiff’s property.

The plaintiff asserted that the defendant no longer had a right-of-way over the easterly 8 feet of the plaintiff’s land. Additionally, the plaintiff asserted that possessory title had been established with respect to a triangular strip of land on the west side of the defendant’s property which had been enclosed by a chain-link fence, and a 6 inch encroachment on the defendant’s property caused by a garage constructed on the plaintiff’s land.

As of the date of registration, LTCQ lands are subject to:

  1. the limitations, qualifications and reservations contained in subsection 44(1) of the Land Titles Act (Ontario) save and except for the provisions of subparagraph 11 (subdivision control), subparagraph 14 (dower rights);
  2. the rights of any person who would, but for the Land Titles Act (Ontario), be entitled to the Lands or any part of it through length of adverse possession, prescription, misdescription or boundaries settled by convention; and
  3. any lease to which subsection 70(2) of the Registry Act (Ontario), attached hereto, applies.

Although not discussed here, as of the date of registration, LTCQ lands are not subject to provincial succession duties and escheats or forfeiture to the Crown.

“Section 51(2) of the Land Titles Act preserves a possessory title if the length of possession that is necessary has elapsed by the time the conversion in the Land Title system takes place”. Therefore, the plaintiff had to establish that prior to December 14, 1998, the requirements of possessory title were satisfied.


To establish a claim of possessory title, the plaintiff must prove:

  • actual possession for the statutory period;
  • that such possession was with the intention of excluding the true owner; and
  • discontinuance of possession for the statutory period by the true owner.

An affidavit dated October 21, 1998, provided by the now deceased previous owner of the plaintiff’s land stated that:

  • the garage was constructed and used prior to the previous owner’s acquisition of title to the land in 1939. During the occupation of the previous owner the garage was used without interruption or interference;
  • the owners or owner of the defendant’s property had maintained a fence in the same location as the chain-link fence continuously for a period greater than 30 years;
  • that no part of the 8 foot right-of-way had never been used by occupants or other permitted users of the defendant’s land.

The court found the statements made in the affidavit to be reliable despite the inability of the evidence to be cross examined. The court also found that this evidence demonstrated that the garage and fence had been in place for at least 10 years prior to conversion into the Land Titles system. No evidence to the contrary was provided by the defence. The court granted a declaration that the defendant’s land was subject to the encumbrances of the plaintiff.

The court found for the plaintiff with respect to the defendant’s right-of-way over an 8 foot portion of the plaintiff’s land. The court was satisfied that prior to LTCQ registration the predecessors in title to the defendant’s land had abandoned the right. This was demonstrated through the affidavit evidence and the location of the garage and fence that blocked the use of the right-of-way. In the alternative, the court also noted that the right-of-way was granted in 1913 and ceased to be enforceable 40 years after its original registration.

Access the full decision by clicking here.

Only specific relatives can be on title for HST rebate

Post by: Evan Holt

The HST new homebuyer’s rebate entitles qualified purchasers to a substantial rebate. The maximum federal and provincial portion of the rebate is $6,300 and $24,000 respectively.

A Tax Court of Canada decision released at the end of March has further clarified who can qualify for the rebate.

“[T]itle may be held by the buyer jointly with a specific blood relation, including a child and grandchild, a brother or sister, and relationships by marriage or common-law partnerships — even if the relative doesn’t live in the house.”

Here, an uncle was on title with his niece for mortgage financing purposes. As this relationship is not a category recognized by the legislation the purchaser did not qualify for the rebate.

“This means that if just one of the buyers does not qualify, even as the owner of a one percent interest in the property, none of the buyers can get the rebate.”

For the full Toronto Star article click here.

Choosing a Condo Plan That is Right for You – Part 3: Phased Condominiums

Post by: Carly Haynes

Our previous blog post discussed standard condominiums. This week we will offer a discussion on a specific type of standard condominium, phased condominiums.

Phased Standard Condominium Plans

As the name suggests, a phased condominium plan is a condominium plan that is developed and registered in stages.  Currently the Condominium Act, 1998 (the “Act”) only allows standard condominiums to be phased.  In phased condominium projects, there is one condominium plan which is expanded through amendments to the condominium declaration and description plans, with each new registration constituting a phase as new units are constructed. The condominium plan gradually increases in size as phases are added until the project is complete.  This type of project is attractive to builders  as they are able to balance sales of the units and registration of additional phases in order to ensure the project does not become over-extended.  After each phase is registered the builder can complete the closing of the units in that phase which allows the builder to obtain sales proceeds to assist in constructing the next phase.

The registration of the condominium declaration which brings the first building(s) into the condominium plan is not the first phase. Our office usually refers to this first registration as the Initial Registration.  The first “phase “is the next registration after the Initial Registration.  Needless to say this causes confusion.  Most people quite logically assume the Initial Registration is the first phase.  It isn’t.

References in this blog to a “declarant” mean the person/company that registers the condominium.  Often the builder is the declarant.

Typically phased condominium plans are made up of town homes but there are many examples of phased apartment building condominium plans and single family home condominium plans.

When considering undertaking a phased condominium project, it is important to note the first phase cannot register until title to the majority of the units in the Initial Registration of the condominium plan are no longer owned by the declarant and the declarant has delivered certain documents to the condominium corporation pertaining to the phase to be registered (this requirement applies to the first phase only, not subsequent phases). Furthermore, a phase cannot be registered until all facilities and services have been installed as required by the municipality to ensure  the phase being added to the condominium can function properly even if the planned additional phases are never added to the condominium.


Phase Disclosure

There are specific disclosure provisions for phased condominiums. Section 147 of the Act requires that all purchasers be provided with disclosure statements which provide specific information on phasing, including whether the declarant intends to create one or more further phases, the projected timing of registration of subsequent phases and details regarding units, location of buildings etc.

The Act permits the condominium corporation to apply for injunctive relief or damages if the declarant proposes certain changes to the proposed phase from what was disclosed in the disclosure statement which are “material and detrimental”.  This type of application could result in significant delays for a declarant, and as such a declarant  who is uncertain about future plans for future phases should fairly and completely disclose all options for the project that the declarant is considering in its disclosure statement to purchasers to reduce the chances of this complication.

A successful injunction application by a condominium corporation does not necessarily preclude the registration of the proposed phase.   It may simply mean the proposed phase will have to proceed as a separate condominium.  The approval authority may have concerns with this result but if the declarant has carefully drafted the condominium documents with proper cross easements between the registered condominium and the lands being held for future phases the problem should not be insurmountable.

Take Home: Pros and Cons of Phased Condominium Plans

The most substantial benefit of a phased condominium plan is that phasing eliminates the requirement to have all proposed buildings in a standard condominium plan completed before the condominium plan can be registered.  This allows a builder to build and close units in segments (and get proceeds of these sales) rather than having to wait for all of the proposed units in the condominium to be constructed before registering the condominium plan and transferring title to purchasers, allowing the declarant to start paying down their construction loan.  This can dramatically reduce the amount of the declarant builder’s construction loan as he or she is only borrowing enough at any one time to build part of the proposed development.

A phased condominium can allow a declarant to post less security with Tarion.   Rather than having to post security for the whole development (possibly at $20,000 per unit), the declarant is only required to post security for the units in the proposed phase.  This is subject to the declarant not entering into any agreement of purchase and sale for units in phases not covered by Tarion.

The only significant drawback  associated with phased condominiums is increased costs on multiple fronts for each phase due to the costs related to the registration of multiple phases, including application and approval fees, planner, lawyer, engineer and surveyor fees.

Finally, the individual unit sales agreements cannot be closed until the unit is built and registered within the condominium. As such, in order to justify the costs associated with each new phase, a sufficient number of agreements of purchase and sale need to have been entered into for the proposed units in the new phase. However, it often makes more financial and practical sense to create a phased condominium instead of multiple condominiums.