Condo ADR - Part 1 - Introduction
Condominium ownership is becoming much more common all over North America. Nowhere is that more obvious than in the Greater Toronto Area where the changing skyline clearly confirms the fact that condominiums account for one of every three home sales.
Condo buyers range from first time home owners to experienced "downsizers" with a large range of sophistication and knowledge about condominiums. Many purchasers often lack information about the day to day realities of living in a condominium environment and as important how to deal with the inevitable conflicts that arise over time in what is, after all, a community in its own right.
There is constant pressure on real-estate lawyers to keep fees low. As a result often the declaration, bylaws and rules of the specific condominium corporation are not reviewed in any real detail with the purchasers. One experienced real estate lawyer recently estimated that to properly review the documents in connection with the purchase of a new condominium would cost between $3,000.00 and $5,000.00. Simply put, clients will not pay even remotely close to this amount as they see one real estate deal as the same as any other and want the lowest fees possible even in $1,000,000.00 purchases.
Because of this, most condo owners, and indeed many lawyers, are unaware of the impact of various rules and regulations on condominium ownership. They are also surprised to discover that alternative dispute resolution is mandated to deal with many disputes between unit owners and the condominium corporation.
Section 132 of The Condominium Act, 1998 requires that the parties begin dispute resolution with mediation. If the mediation is not successful then arbitration must take place. If a party does not comply with the arbitrator's award then a court order to enforce it must be obtained. Unfortunately, the Act does not set out the procedure to be followed but many condominium corporations have passed specific rules to deal with this oversight and the allocation of expenses connected with mediation and arbitration.
It is also important that lawyers advising clients over participation, or indeed non-participation in dispute resolution regarding compliance matters, be aware that condominium corporations can collect their legal and other costs associated with compliance by treating them as common expenses attributed to the unit and enforcing payment through the placement of a lien against the unit.
Although there is some confusion in the case law over whether certain categories of disputes fall under the section 132 or whether disputants can avoid the section and go straight to court, there is no doubt that a wide range of disputes must be mediated and/or arbitrated. Many fall into the categories of "people, pets or parking" problems! More recent disputes have included issues over satellite dishes, hot tubs and decks.
Many types of other condominium disputes are not part of the mandatory mediation and arbitration requirements although a condominium corporation may also use mediation or arbitration to deal with matters not covered by the Act by including provisions in contracts with its suppliers, or other condominiums that require mediation and/or arbitration of disputes instead of going to court.
In my next newsletter, I will look at condominium mediation in more detail. The main point I would like to make is that condominium dispute resolution is not the same as "ordinary" dispute resolution through the civil litigation process. It requires that counsel, mediators and arbitrators involved be aware of the unique dynamics involved and have specific expertise in the condominium field.