When the Condominium Act, 1998 (the “Act”) was under development, one of the many issues the government was asked to address by condominium corporations and unit owners alike was the general prohibition of changes to the common elements found in the previous Act. It was generally believed that the requirement for a vote of unit owners to give approval in all instances where improvements were proposed was too onerous. Something needed to be done to make it easier for unit owners to alter common areas for the benefit of their units. At the same time, the interests of the condominium corporation and other owners needed to be protected.

As a result, section 98 of the Condominium Act, 1998 allows owners to make alterations to the exclusive-use common element areas allocated to their unit as well as other common element areas. Each of these situations has different procedures that must be followed by both the condominium’s board of directors and the owner applying for consent before the alteration or improvement can be made.

Section 98 requires that for a unit owner to make any addition, alteration or improvement to the common elements, the improvement must be: approved by the condominium’s board of directors; consistent with the provisions of the Act and the declaration of the condominium; the subject of an agreement entered into by the condominium corporation and the unit owner; and the agreement must be registered on title to the owner’s unit. These are not optional conditions. The failure to comply with any one of them renders the unit owner’s improvement to the common elements illegal.

Once the agreement is registered on title to the owner’s unit, it becomes binding not only on the current unit owner but on all future owners of the unit. Any costs of default of such an agreement by the unit owner may become common expenses owed to the condominium corporation, and therefore could become the subject of a lien if unpaid.

While the Act does not dictate the specific contents of such an agreement, there are a few subjects it must cover, as set out in the Act and its Regulations. The agreement must:

  • allocate the cost of the improvement between the condominium corporation and the unit owner;
  • set out the respective duties of the condominium corporation and unit owners for the costs of:
    • repair after damage of the improvement; 
    • maintenance of the improvement; 
    • insuring the improvement; and
    • specify who owns the improvement.

The Act and its Regulations are silent about how each of the above listed matters should be dealt with. Therefore, either the condominium corporation or the unit owner may be responsible to maintain, insure, repair, own and/or pay the costs of the improvement. Provided the agreement includes some statements about these matters, the Act and its Regulations are satisfied. They are also otherwise silent as to any other terms that may be set out in such an agreement, providing significant flexibility to unit owners and condominium corporations to negotiate and determine the terms of such agreements.

 

Topics:  Common Elements, Condominium Act, Condominium Corporation, Maintenance, Property Improvements, Section 98 Agreements

Published In: Business Organization Updates, General Business Updates, Residential Real Estate Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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