Know Thy Documents

How to Avoid Common Element Repair Disputes

CCI-Windsor-Essex, London and Area, Summer 2017

Determining who is responsible for the costs of repair and maintenance of common elements, such as windows, is a common issue. So - who pays? The Corporation? The Owner? How is this decided? Fortunately, a recent court case in London, Ontario provides some clarity.

We’re going to tell you how this could affect your Corporation by discussing relevant sections of your Declaration, the Reserve Fund Planning process, and updates coming with the new Condominium Act, expected to be released sometime in 2017.

Let’s start by taking a closer look at a recent case:

Middlesex Condominium Corporation No. 195 vs Sunbelt.

This case dealt with multiple issues, but the decision that we are looking at was with respect to a summary judgment motion that the Corporation brought, asking a Judge to decide on two specific issues within the larger action. The building in this case had aluminum-framed windows that were set into the exterior concrete wall. As a result of lateral movement of the building walls, stress had been placed on the window openings, causing damage to the windows. The Corporation obtained an engineer’s report, which found that the windows would need to be replaced with a different opening style to allow for natural movement of the concrete and so that the window framing did not sustain further damage.

The Corporation claimed that the windows and window frames were common elements over which Sunbelt (the owner of the commercial units) had exclusive use, and therefore Sunbelt was responsible for the costs of the repairs. Sunbelt argued that the windows were not exclusive use common elements and that the Corporation was responsible for the costs of the repairs. The Judge found that because the Corporation’s Declaration did not include a Schedule F – which would specify exclusive use common elements – and the Corporation’s description did not include an exclusive use portions survey, the windows were common elements and not exclusive use common elements, and the Corporation was therefore responsible for the costs of the repairs.

The parties were ordered to agree on costs or make written submissions, so no decision about costs has been made public with respect to this case. However, a motion for summary judgment is a complex and costly type of motion, and likely cost the parties tens of thousands of dollars each. The problem in this instance is that the Declaration was somewhat ambiguous when it came to repair and maintenance provisions. This case is a perfect example of a situation where a more clearly written Declaration, that was understood by all relevant parties, would have made a huge difference and likely would have prevented the parties from having this dispute in the first place and incurring significant legal costs.

The Corporation’s Legal Documents

In many cases, an experienced engineer can flag these ambiguities during the preparation of your Reserve Fund Study (RFS), which includes a review your Corporation’s legal documents. These typically comprise the Declaration and Amendments, as well as any By-Laws, Rules and Regulations, as well as the survey drawings, and Reciprocal or Cost Sharing Agreements that relate to shared facilities.

Within the Declaration, the Boundaries of Units are described in a section called “Schedule C”. This section defines the unit boundaries; any building components outside of this boundary are typically common elements. For example, if Schedule C indicates that the vertical unit boundary is “the interior or unit side surface of all windows and window frames,” that means that the windows are not a part of the unit – they are a common element. Of course, it is not always this simple. Further clauses in Schedule C may indicate for example “notwithstanding the above, each and every glass panel in each and every such window shall form part of the unit”, meaning the glass is unit owned, but the window frames are common elements.

To complicate matters further, the Maintenance and Repairs section of the Declaration describes who (unit owner or Corporation) is responsible for maintenance and repairs of specified building components. This section may indicate that “each owner shall maintain the exterior surfaces of windows”. Does this mean clean the glass? Repaint the frames? Replace the window? What does “maintain” even mean? More on that in a moment.

The survey drawings do help to clarify unit boundaries better than the Declaration alone. In many cases, however, the drawings are not available. The case above is an example of this: if the survey drawings had been available and had shown the windows of the commercial units as exclusive use common elements, the Corporation would likely have been successful in its claim that Sunbelt was responsible for the costs of repairing the windows.

Interpreting which building components are common elements can sometimes lead to disputes. In some cases, a Corporation may have been acting under one understanding of the Declaration for many years, only to learn later that their understanding was not correct.

Reserve Fund Study Updates: The Role of Your Engineer

When your engineer reviews your Declaration and realizes there may be an difference in common element interpretation from your previous study, they should inform you immediately and in the Draft Study. Further, for significant costs such as windows, your engineer will likely recommend the Board obtain a legal opinion. It is not the responsibility of the engineer to interpret the Declaration. In these cases, it is always best to obtain a written interpretation from a qualified condominium lawyer.

The Current Condominium Act

As the Condominium Act stands now, there are several sections that set out the repair and maintenance obligations of Corporations and unit owners:

Section 89 of the Act states that a Corporation must repair and/or replace the units and common elements after damage;
Section 90 states that a Corporation must maintain the common elements and unit owners must maintain their units, and this includes the obligation to repair, BUT this does not include the obligation to repair after damage (only after wear and tear); and
Section 91 allows a Corporation to alter the obligations in sections 89 and 90, through its Declaration.
If you’re feeling confused, you’re not the only one. Planned Changes to the Condominium Act
Some of the many upcoming changes to the Condominium Act include changes to the repair and maintenance provisions, which will hopefully make things clearer:

The new section 89 will require Corporations to repair the common elements (with no specification about wear and tear versus after damage);
The new section 90 will require Corporations to maintain the common elements and unit owners to maintain their unit, and specifically states that this does not include the obligation to repair (whether after wear and tear, or damage);
The new section 91 will still allow Corporations to alter these obligations through their Declarations – ideally, Corporations (and the lawyers drafting the documents) will take care with the wording if and when they make these alterations, so that the obligations remain clear.

Overall, these changes mean that the obligation to repair is set out in section 89, and the obligation to maintain is set out in section 90, and there is no overlap unlike in the current provisions. Hopefully make things more clear for everyone.

At the end of the day, though, the important thing to remember is that the Board needs to be familiar with the Declaration that governs their Corporation, and needs to know and understand the provisions relating to repair and maintenance when considering who is responsible for repairing and maintaining which portions of the Corporation. If it is not clear, or if there is disagreement, it can be very helpful to get an opinion from engineers and lawyers, because they have expertise in interpreting the documents and will hopefully (although not always) be able to help to avoid disputes.