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Real Estate News: Condominium Policies Can Be Valid and Enforceable If They Are Reasonable

By Maria DurdanSimpsonWigle LAW LLP 

February 2021

 

According to section 119 of the Condominium Act, 1998, a condominium, and its directors, officers, employees, owners, occupiers of a unit and any person having an encumbrance against a unit – must comply not only with the Condominium Act but also with the Declaration, the By-Laws and the Rules and Regulations. In addition, the Condominium Act includes specific sections on the process by which a Declaration may be amended and how By-Laws and Rules and Regulations may be made, amended, or repealed.

 

The Condominium Act does not, however, make any reference to policies, whether it be the process to establish a policy, the authority of a condominium to make policies or the way policies are enforced. Despite this exclusion from the Condominium Act, many condominiums have established policies that provide guidance and define objectives with respect to specific subject matters. For example, many condominiums have policies that outline procedures and considerations relating to the hiring of employees such as superintendents, the submission and review of human right complaints and accommodation requests and the use, monitoring and access to the condominium’s surveillance system. The primary purpose of these types of policies is to establish a set of guidelines for the parties, including condominiums and owners, to follow to achieve a desired result.

 

Because the Condominium Act does not make any reference to policies, there has always been debate between lawyers representing condominiums and lawyers representing prospective purchasers, owners, and tenants, as to the right of a condominium to establish and enforce policies.

 

Until now.

 

In September of 2020, the Ontario Superior Court of Justice in Toronto Standard Condominium Corporation No. 1704 v. Fraser, 2020 ONSC 5430, upheld a condominium’s COVID-19 policy. The policy in this case prohibited anyone from completing non-essential unit renovations and repairs during the COVID-19 pandemic.

 

The importance of this case is twofold.

 

First, the case finally provides lawyers with clarity on the authority of a condominium to establish policies and the right to enforce policies. Secondly, condominiums now have a very practical tool when navigating timely and challenging issues such as the risks associated with the COVID-19 pandemic and the wellbeing of anyone attending a condominium.

 

In Fraser, an owner wanted to make repair damage that occurred because of a pre-COVID-19 pandemic flooding incident. The owners were unable to use the second bedroom or ensuite bathroom. The owners did have access to another bedroom and bathroom. The condominium passed a policy in May 2020 prohibiting non-essential unit renovations due to the COVID-19 pandemic. The owner refused to comply, which resulted in the condominium commencing an Application to stop the owner’s repairs. The owner challenged the authority of the condominium to establish the COVID-19 policy and the reasonableness of the COVID-19 policy when the province moved into Stage 1 on May 19, 2020.

 

The Court held that the COVID-19 policy was valid and enforceable. In coming to its decision, the Court relied on sections 58 and 117 of the Condominium Act. Section 58 relates to the authority to make Rules. Respectfully, I do not agree with the Court’s review and analysis of a condominium’s authority to make Rules under section 58 as being applicable to the COVID-19 policy (as the policy was not passed in the same manner as a Rule). I do, however, agree with the Court’s determination that the policy was valid and enforceable pursuant to section 117 of the Condominium Act, which prohibits any condition or activity to exist or be carried on at the property that is likely to cause injury.

 

The Court further held that the COVID-19 policy was well within the range of reasonable responses to the global pandemic and that it was reasonable for the COVID-19 policy to be maintained thereafter. The COVID-19 policy was not absolute, it could be repealed or amended, and the serious health risks of COVID-19 affected the reasonableness of the COVID-19 policy, which would change from time to time.

 

The Court is Fraser also held that, although the Province may authorize the reopening of certain services, this does not necessarily mean that the same guidelines must be followed by condominiums. Although this may sound like a minor statement, its effect on condominium communities is a great one. Throughout this year condominiums have faced many challenges, including ensuring that common element fees continue to be paid despite owners having lost their sources of income and completing major construction projects during lockdown. Some challenges have been more easily navigated than others, however, one challenge that has resulted in a lot of discontent, confusion and anger within condominium communities is the closure of condominium amenities, for example gyms, pools, meditation gardens. Unfortunately, I have not been allocated enough space to go into any detail about this issue, however, the Court in Fraser has provided us with some very solid guidance on this matter. Specially, if the Board of Directors acts honestly and in good faith and exercises the care, diligence, and skill that a reasonably prudent person would exercise in comparable circumstances, the Board has the right to decide whether to open its amenities, despite the province’s green light to do so.

 

 

Maria Durdan is a Partner at SimpsonWigle LAW LLP and the Chair of the Condominium Practice Group. Maria has also obtained her Associate of Canadian Condominium Institute (ACCI) designation in law, which recognizes that she has achieved a high level of knowledge and skill of condominium law. Maria is the President of the Canadian Condominium Institute – Golden Horseshoe Chapter and a Co-Chair of the Education Committee. Maria’s practice includes advising boards of directors, property managers and developers on all areas of condominium law.