Condominium Management Law Blog

Back to Basics: Changes to the Common Elements by Owners

byMichelle Kelly

It is common for owners to want to make changes to their units and sometimes to the common elements. Some of these changes require the approval of the board of directors for the condominium. In most cases, minor changes within the unit will not require board approval unless the change involves structural, electrical, or plumbing changes (although it depends on the unit boundaries and the language in the declaration so be sure to check yours first).

Requirements

Section 98 of the Condominium Act, 1998 (the “Act”), addresses situations where owners want to make an "addition, alteration or improvement" to the common elements. The courts have defined "addition" as joining or connecting something to a structure; "alteration" as changing the structure; and "improvement" as the betterment of the property or enhancement of it.  Section 98 does not apply to every change – only if it is an “addition”, “alteration”, or “improvement”.

There are several prerequisites that the owner must satisfy before making a change to the common elements:

  1. The board must approve the change.
  2. The owner and the corporation must enter into an agreement (sometimes called a "section 98", "indemnity", or "alteration" agreement).
  3. Notice of the proposed change is given to all the owners (if applicable) and the corporation includes a copy of the agreement (if required to send the notice).

The third requirement only applies if section 97 of the Act would apply if the proposed change was made by the corporation.  In many cases, the only requirements will be board approval and entering into an agreement with the corporation. In addition, if the change is to the exclusive use common elements the owner may ignore the third requirement in the list above, but only if the board is satisfied that the proposed change:

  1. will not have an adverse effect on units owned by others;
  2. will not give rise to any expense to the corporation;
  3. will not detract from the appearance of buildings on the property;
  4. will not affect the structural integrity of buildings according to an engineer; and
  5. will not contravene the declaration.

Section 98 has not been complied with until the applicable conditions set out above have been met and the agreement is registered on title.

The Agreement

The Act prescribes some of the matters that must be addressed in the agreement between the owner and the corporation. The agreement must, at a minimum, do the following:

  1. Allocate the cost of the proposed change between the owner and the corporation;
  2. Set out the responsibilities for maintenance, repair after damage, and insurance of the proposed change; and
  3. Set out other matters required by the regulations, which currently adds a requirement that the agreement state who owns the change.

In addition to the above, the agreement will normally include notice requirements for both the owner and the corporation, indemnification clauses, and a variety of legal terms required to make the agreement legally binding on the parties. If the owner fails to comply with the agreement the corporation can add any costs or charges incurred by the corporation because of the owner's failure to the common expenses for the unit. 

There are different options when it comes to section 98 agreements.

In some instances, a single unit owner may enter into an agreement with the corporation. Sometimes the agreement will cover a specific proposed change, like installing a ramp, while other times the agreement will cover any changes made by the owner if the terms of section 98 are met. The main advantage of these agreements is that they can be tailored to the circumstances.

Another option is a "bulk" or "group" agreement.  In this type of agreement, multiple owners enter into a single agreement with the corporation. The main advantage of these agreements is that they allow a group of owners to share the costs for preparing and registering the agreement so the cost per unit is significantly less than preparing single unit agreements for the same number of units. These agreements are also easier for managers as the terms are the same for every participating owner; there are not multiple agreements with different terms and obligations to remember.

Lastly, we are aware that some firms are recommending section 98 by-laws as an alternative to registering separate agreements. In our view, these are not enforceable. We are aware of at least one case currently before the courts to challenge these types of by-laws, so condominiums would be wise to avoid these types of by-laws at least until the court renders its decision.

Common Mistakes

One of the most common mistakes that we see when it comes to section 98 is in its application. It may seem easy to understand when section 98 applies to a change made by an owner, but there are many situations that are often missed or ignored. For instance, where an owner installs new venting or exhaust systems within his unit the majority of the components may be within the unit, but if the venting requires changes to the exterior components of the unit (i.e. brick, siding) and those components form part of the common elements, the requirements of section 98 must be met.

On the other hand, if the change is made only to unit components section 98 does not apply. The owner may still require board approval to make changes to his unit if the declaration requires it, but section 98 does not apply.  Whether or not section 98 will apply to a particular situation will depend upon the type of change and the unit boundaries in the corporation. 

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