Bulk Section 98 Agreements

There is often much discussion in condominium corporations concerning alterations to the common elements by unit owners and the need to comply with the requirements of Section 98 of the Condominium Act, 1998 (the “Act”), including entering into and registering an agreement as between a unit owner wanting to carry out a change and the condominium corporation to clarify responsibility for the alteration. 

The challenge with an alteration carried out by another unit owner upon the common elements is not so much a question of what will be done, but rather the impact that such alteration could have on you, as well as, all other unit owners that have no interest in the alteration.  For example, if your neighbour desires to install a deck extension in his/her backyard, this deck extension should never give rise to any costs that would be directly or indirectly your responsibility.

A second challenge arises with respect to the costs of these agreements.  For example, if a separate individual agreement were to be entered into for each alteration carried out by each unit owner at any given time, the costs would be prohibitive.  A solution is presented in the form of a “bulk” or “multi-party” type Section 98 Agreement (the “Agreement”).   The Agreement would allow and encourage all unit owners to sign on regardless of whether alterations have been carried in the past or are intended to be carried out in the future.  The Agreement, once signed, is registered at the Land Registry Office to establish the required relationship to satisfy the Act.  Past alterations can be rectified accordingly.  If, at some point in the future, a specific alteration is considered, the unit owner need only seek written permission from the Board of Directors.¹ 

The “bulk” type Agreement is intended to benefit all unit owners:

• Past Alterations:  Those owners who have carried out alterations in the past need only request written approval from the Board.  On obtaining such approval, the registered Agreement confirms that the alterations are fully compliant with the requirement of Section 98 of the Act;
   
• Future Alterations:  Any unit owner wishing to carry out one or more of the alterations listed in the Agreement need only obtain written approval from the Board.  Registration of this Agreement otherwise satisfies all technical  requirement of Section 98 of the Act and opens the doors to allow unit owners to carry out alterations with minimal inconvenience, delay and cost;
   
• Sale of Unit:  When the Agreement is in place and written approval from the Board has been obtained, Section 98 of the Act provides that anyone to whom you sell your unit is able to rely on it.  Currently, without the Agreement in place, any Status Certificate issued must be qualified with respect to any alteration that otherwise does not satisfy the requirements of Section 98 of the Act; and
   
•  Insurance:  All unit owners should already have personal liability insurance in place.²  It is necessary to address insurance responsibility as alterations relate to the common elements.  A unit owner need only add the condominium corporation as a named insured to his/her policy, which change should not result in any additional cost or inconvenience.

As already expressed, this Agreement is intended to benefit to all unit owners within a condominium corporation.  Having the Agreement in place will serve each of you in terms of time, cost, and convenience.  As the cost of the Agreement is paid for through the condominium corporation, there is no “direct” cost to you upon signing.  However, it is entirely your responsibility to ensure that you sign onto this Agreement.  The Agreement can only be registered against those units that sign on, and ultimately, will only benefit those units against which it is registered.

NOTE:  At the time of signing, it is important that the unit owner provide a copy of the Transfer/Deed to his/her unit.  It is a requirement of registration that the owner(s) listed on the Agreement match exactly the owner(s) as set out in each Transfer/Deed.  Failure to ensure that your name is correct could result in additional costs being incurred and/or rejection by the Land Registry Office when the Agreement is presented for registration.

¹Currently, written permission alone does not satisfy the requirements of Section 98 of the Act.

² If you do not have your own personal insurance, it is highly advisable that you contact your insurance broker to arrange for same.  Not only is this insurance coverage highly desirable when living within any condominium corporation, but it is a criteria of the attached Agreement to permit alterations to be carried out.

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.

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