The Courts Give Greater Clarity To Status Certificates

I recently represented Muskoka Standard Condominium Corporation No. 54 (“MSCC 54”) in a dispute with a unit owner over the contents of a Status Certificate prepared and issued by property management. Specifically, the Status Certificate failed to include the monthly common expense amounts associated with two parking spots which the unit owner was acquiring in paragraph 4 therein.[1]

After closing, MSCC 54 acknowledged its error and, given the wording of the Status Certificate, stated that it was bound to it for the current fiscal year in which the Status Certificate was issued. However, upon the expiry of that fiscal year, and the passing of a new budget, MSCC 54 reassessed all unit owners with their common expenses contribution for the new fiscal year. For the unit in question, the reassessment included the two parking spots. The unit owner paid their common expenses in full for the first month of the new fiscal year. However, subsequently took the position that the Status Certificate bound MSCC 54 for as long as they owned the unit and that they were not required to pay common expenses associated for the two parking spaces. As such, the unit owner began paying their common expenses to MSCC 54 but withheld the $168.04 per month, which was the portion of common expenses attributable to the two parking spaces. MSCC 54 attempted to resolve the dispute; however, after several months of negotiations, the unit owner maintained the position that they would never be responsible for payment of common expenses associated with the two parking spaces for as long as they own the unit. Essentially, the unit owner took a narrow and restrictive reading of Section 76 of the Condominium Act, 1998 (the “Act”).

MSCC 54 was left with no other choice but to lien the unit. The unit owner took exception with the Condominium Lien and applied to court to have it declared invalid for two reasons:

1. The debt (in relation to the parking units only) originated more than three months prior to the registration of the lien and as such could not be secured as it violated subsection 85(2) of the Act; and
2. The Status Certificate which MSCC 54 issued prohibited MSCC 54 from collecting common expenses associated from the two parking spaces in perpetuity.

Both of the unit owner’s arguments were unsuccessful.

The Court applied the principles from the DCC No. 56 v. Stryk and YCC No. 483 v. Christiansen cases in ruling that MSCC 54 was allowed to apply payments received by the unit owner to its oldest debt to “advance” the default date and prolong its ability to register a Condominium Lien.

With MSCC 54, there was only a shortfall of $168.04 per month. Mathematically, the rational in the DCC 56 decision allowed the debt to accumulate for over one year before the arrears would increase greater than the equivalent of three full months of common expenses.

The Court held that the Status Certificate clearly stated in several paragraphs, including the paragraph specifically relied upon by the unit owner, that it bound MSCC 54 for the fiscal year in which it was issued. The Court recognized that MSCC 54 was not seeking to recover common expenses for the fiscal year in which it issued the Status Certificate. The Court also reaffirmed that the Condominium Corporation was able to reassess the common expenses for the unit in the subsequent fiscal year, which included the two parking spaces as they form part of the unit owner’s proportionate interest in the common elements.

The Court also accepted that the position advanced by the unit owner sought, indirectly, to amend MSCC 54’s Declaration by attempting to prohibit MSCC 54 from demanding payment of common expenses in the proportions described in Schedule “D” of the Declaration. The Court recognized that the unit owner’s reliance of the Status Certificate in isolation and beyond the current fiscal year was improper.

This case provides clarity with respect to any party’s ability to rely on the contents of a Status Certificate. The Court recognized that the position of a condominium corporation evolves from year to year and to bind a condominium corporation to the contents of the Status Certificate indefinitely would create great uncertainty and result, potentially, in absurd outcomes.

The case referred to in this article is 1716243 Ontario Inc. v. Muskoka Standard Condominium Corporation No. 54. 

[1] The “incorrect” amount stated conflicted with other information (Budget and Declaration) that, by necessity, forms part of any Status Certificate. 

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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