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CONDOCENTRIC: Corporate Blue Jays Busting Urban Nests

The following excerpt is reprinted with permission of its author, John Sewell, former mayor of Toronto. The complete article first appeared in Eye Weekly Magazine on June 20, 2002, and addressed the increasing challenge of hotel-like businesses operating within residential condominiums. One of the many issues that this situation raises is: if a single company or individual purchases/controls a majority of the units with a view to carrying on a commercial business within a residential condominium, could any elected board be able to able to fulfill its duties without finding itself repeatedly in conflict of interest with the objects and duties set out in the Condominium Act?

It's a new style of block busting. Thirty years ago a developer could become entrenched in an area by purchasing and then running down houses so a neighbourhood became unattractive for others to buy into. Existing owners who decided to sell because the area was no longer pleasant quickly found the only buyer around was the developer. They were captives of the developer. Today it's condo busting, with slightly different techniques.

But that's not the way Skyline Properties sees what it is doing in Condo Corporation No. 1385, the apartment building at the corner of Front Street E. and Jarvis Street, across from the St. Lawrence Market's south building.

Ross Linden, chief executive officer of Skyline's parent company, says the business is not that of a hotel but the long-term rental of executive suites. "We provide a residential environment away from home," he says in an interview. "That's what extended stay is all about. Our current policy is a minimum stay of 30 days.

"We tend to be low-key," he continues. "We love to be in the building, and we think there's a way of living side by side with owners."

The long-term residents don't see it that way at all. After enduring the problems of short-term guests who thought they were staying in the hotel -- groups of young people running around the corridors from party to party -- and dealing with Skyline's cleaning staff and their hotel carts in the hallways, the duly elected condo board imposed a requirement that leases be for a minimum of six months, and all leases had to go through the board.

Skyline, which purchased 54 units and then sold them under a management lease back to investors from the Middle East, forced the board to hold several membership votes on the new rules. When it was unable to overturn the new rules, it went to the courts.

Skyline asked for an interim injunction against the six-month rule. In mid May a judge rejected the request, doubting that Skyline had any right to rent its units without restrictions.

"A number of cases before this court," wrote the judge, "have held that the rules adopted by condominium corporations to prevent the operation of what is effectively a hotel are reasonable." The court awarded legal costs against Skyline, but the company continues to seek the longer term injunction, as well as damages against board members.

With a condo board and its front-desk staff opposing it, Skyline found the only way it could get custodial staff in to clean the units was through a rear fire escape entrance, which it propped open. (Cleaning materials, sheets, towels, and other paraphernalia needed to service paying guests were stored in a commercial unit on Jarvis Street.)

Last month several units directly off this back stairway were broken into, although whether the open doorway was a proximate cause of these incidents or whether it was just a coincidence remains unclear.

Since that time, the condo board has imposed new security measures, including cameras as well as timed and electronic locks to prevent these entries.

Skyline has not relented. In late May it distributed a letter stating "a number of owners have had enough of this confrontational attitude and have approached Skyline and offered to sell us their units."

The letter warns that owners are "facing a protracted and expensive lawsuit" and disingenuously continues, "We seek to put an end to this confrontation and to settle this matter responsibly and in the best interests of all owners."

Skyline claims it now owns 69 units and manages a further 10. Linden wouldn't say whether Skyline was trying for majority control to depose the condo board and take over the building. Asked if Skyline's strategy is to force a vote during the summer when some owners opposing Skyline's operation would be away, Linden replied, "It isn't wise to speculate."

Skyline brought the same kind of court action on its adjacent and physically linked condo neighbour, Condo Corp. No. 1280.

After losing that court action last September, Skyline backed off No. 1280 to concentrate on No. 1385, and it is now offering to trade its remaining units in 1280 to owners in 1385. Skyline has a significant block of votes, whereas the residential owners all operate as individuals.

From “Common Elements” Summer 2002
By John Sewell
Former Mayor of Toronto



All of the information contained in this article is of a general nature for informational purposes only, and is not intended to represent the definitive opinion of the firm of Elia Associates on any particular matter. Although every effort is made to ensure that the information contained in this newsletter is accurate and up-to-date, the reader should not act upon it without obtaining appropriate professional advice and assistance.

www.elia.org

© Elia Associates Professional Corporation, All Rights Reserved.

 
CONDOCENTRIC: Smoke Detectors - Worth Restating

Responsibility for the installation and operation of smoke detectors in condominium units was clarified by the courts a few years ago, following two (2) separate fires in the same weekend in the same Etobicoke condominium corporation. While most condominium corporations take the responsibility of ensuring that smoke detectors are in place and functioning, it is still common to hear excuses (such as how difficult it is to gain access to units and how ominous the task would be given the size or nature of the particular condominium) when discussing responsibility for smoke detectors with Board members and property managers.

The tragic fire which claimed two young lives in a North York condominium earlier this month reminds us of this continued and ongoing responsibility. The evidence obtained from the fire investigation suggests that a smoke detector was not installed in the unit at that time even though the condominium records suggest that one had previously been installed.

Case law on this matter makes it clear that responsibility for the installation and operation of smoke detectors is joint, to be shared by the condominium corporation and the individual unit owner. The facts of this case should dispel any myths of hardship relating to smoke detectors. The condominium corporation in question contained 897 units (one of the largest condominium corporations in the country). The condominium corporation took steps to educate owners about fire safety and encouraged owners to install smoke detectors. The condominium corporation also arranged for the purchase of smoke detectors in bulk and made them available to unit owners at low prices.

Notwithstanding these actions, the condominium corporation was found to be at fault (with the unit owner). As the installation of smoke detectors is a public welfare concern, the court held that the condominium corporation had to show that it took all reasonable steps to avoid a particular result. The court also held that the reasonable steps had to have been carried out in relation to the particular unit where the fire occurred.

Case law does not clearly state what exactly must be done to satisfy its responsibilities regarding smoke detectors. As well, a unit inspection plan for one condominium corporation may not be suitable for another. Condominium corporations that have not already done so should develop a unit inspection plan, keep records particular to each unit and attempt to educate owners/residents of these, and similar life safety issues. Under the Condominium Act, condominium corporations have a right of entry into individual units. A unit where a smoke detector is found to be missing or not functioning should be treated similarly to a unit in need of maintenance and repair. Where necessary, appropriate enforcement under the Condominium Act should be taken.

From “Common Elements” Summer 2002
By Richard A. Elia
B. Comm. LL.B., LL.M. (ADR), A.C.C.I.


T:  416-446-0800 ext 801
F:  416-446-0804
E:  richard@elia.org
Toll-Free: 1-866-446-0811
 

All of the information contained in this article is of a general nature for informational purposes only, and is not intended to represent the definitive opinion of the firm of Elia Associates on any particular matter. Although every effort is made to ensure that the information contained in this newsletter is accurate and up-to-date, the reader should not act upon it without obtaining appropriate professional advice and assistance.

www.elia.org

© Elia Associates Professional Corporation, All Rights Reserved.

 
CONDOCENTRIC: Property Managers and Professional Advice

Imagine the following scenario: A Director is concerned about the actions being taken by the Board and by property management, particularly regarding the adamant refusal to retain the services of a lawyer from time to time. The cautious Director retains, at his own expense, a condominium lawyer to attend at the Annual General Meeting ("AGM"). The pre-circulated agenda for the AGM contains nothing out of the ordinary. However, upon arrival at the AGM, the property manager is in the process of handing out pre-printed ballots for a vote to remove this single Director, notwithstanding that the Condominium Act requires that notice of this vote be given prior to the meeting.

The Director, who was subject to the removal vote, originally became concerned as it was evident that the Corporation did not use a lawyer for any of its business notwithstanding that the Corporation was in fairly poor shape, physically and financially (account receivables were in excess of $140,000.00).

In the situation described above, the property manager had given legal advice to the other board members (which advice was clearly contrary to the Condominium Act) and the other board members had blindly accepted it, without making prior inquiry with the Corporation’s solicitor. This was the case notwithstanding that it obviously would have created the potential for legal conflict and the potential of personal liability for the board members.

The Law Society Act makes it an offence for any person, other than a member of the Law Society to act as a Barrister or Solicitor (i.e. only a lawyer can provide a legal opinion).

Board members and property managers alike should run, not walk, to avoid situations such as this. Under the Condominium Act, a director cannot be found in breach of his/her duties if the director has acted in good faith upon the opinion of a lawyer, public accountant, engineer, appraiser or other person whose profession lends credibility to the report or the opinion.

The key is to know how to prudently and effectively use and balance a condominium corporation’s financial resources against its need for professional advice. The writer had occasion recently to debate the duties and responsibilities of property manager with the president of a fairly well respected property management company, who, notwithstanding his familiarity with the Condominium Act, summed up his responsibility as being a "gatherer of information", rather than a provider of opinions. Opinions are to be provided by lawyers, engineers, accountants, and other qualified professionals based on the facts.

While condominium directors must be fiscally conscious, this does not eliminate the need for obtaining timely and appropriate professional advice to avoid costly mistakes.

From “Common Elements” Summer 2002
By Richard A. Elia
B. Comm. LL.B., LL.M. (ADR), A.C.C.I.


T:  416-446-0800 ext 801
F:  416-446-0804
E:  richard@elia.org
Toll-Free: 1-866-446-0811
 

All of the information contained in this article is of a general nature for informational purposes only, and is not intended to represent the definitive opinion of the firm of Elia Associates on any particular matter. Although every effort is made to ensure that the information contained in this newsletter is accurate and up-to-date, the reader should not act upon it without obtaining appropriate professional advice and assistance.

www.elia.org

© Elia Associates Professional Corporation, All Rights Reserved.

 
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 All of the information contained in this article is of a general nature for informational purposes only, and is not intended to represent the definitive opinion of the firm of Elia Associates on any particular matter. Although every effort is made to ensure that the information contained in this newsletter is accurate and up-to-date, the reader should not act upon it without obtaining appropriate professional advice and assistance.

www.elia.org  

© Elia Associates Professional Corporation, All Rights Reserved.