Category Archives: Real Estate

Legal comment, news and articles relating to recent important developments and Canadian court decisions relating to Real Estate Law.

Cooperatives Versus Condo Corporations: Liability of Owners

Cooperatives are not generally regulated like Condominium corporations governed by the Condominium Act which spells out the rights of condo owners who own a physical unit in the condominium property.  In contrast, in a Cooperative, the owner does not own a unit but rather a share in the Cooperative corporation, with an exclusive right to possession of a given unit.  The rights and obligations of the owners to each other is generally spelled out in a contract among owners and the Cooperative.  We were recently retained to advise on the rights of an individual owner who had refused at first to pay a disputed plumbing invoice, but later did, under protest.  The Cooperative Corporation, acting through a property manager and its lawyers, purported to lien the owner’s share for 100% of all legal costs incurred by the corporation in seeking the payment for the plumbing invoice, and to enforce that lien by seeking a Court order to sell the owner’s share (and effectively his residential unit).  The plumbing invoice, disputed but paid, was for about $1,700.  The corporation then spent approximately the $40,000 on legal costs (judging by cost summary presented to the Court as the hearing).  Those costs had become the real matter in dispute as the corporation appeared to operate on the basis that however much it spent on legal fees it could just pass them on to the owner by liening his share for the fees and then seeking to enforce the lien through forced sale.  The Court declined to grant the corporation any of the main relief it sought and in fact found that the unit owner had overpaid with respect to one invoice.  The Court did grant a declaration that the unit owner had committed an initial breach, but also declared that he had cured it.  Meanwhile, as a result of the Court decision, the other owners are left to bear the $40,000 in legal costs incurred by the lawyers retained by the property manager. This was a case where hindsight suggests that, if there had been a modest application of common sense by the board, the matter might have been practically resolved at an early stage.

Terminating the Nuisance Commercial Tenant

It is possible to terminate a commercial tenancy on the basis that the tenant creates a nuisance – whether through sound, unsightliness, smells, or general lack of care for the premises – depending on the terms of the lease and the degree of misconduct. The situation is more difficult where the tenant has been punctual on its rent payments. Unilateral termination may in such cases be imprudent due to the uncertainty inherent in the face of disputed evidence. Wrongful termination of a viable business may give rise to a claim for damages by the tenant. The landlord may invoke the Court’s assistance, seeking an order terminating the lease or declaring it validly terminated. These are the practical issues that arise on two of our recent mandates.

Professional Discipline

The firm was recently hired by a real estate firm to review the conduct of one of its agents who had run afoul of the Real Estate and Business Brokers Act and the Code of Ethics thereunder.  The original complainant was himself a real estate agent who alleged that the agent under review at RECO had wrongly held back commission that was properly payable to the other agent who had introduced his client to the property and who ultimately purchased it.  There was a listing agreement and there was a mistake in that agreement as to the percentage of commission that would be payable.  Despite the mistake, RECO took the view that it was wrong for the agent to have withheld commission from the innocent agent who had, based on the listing agreement, expected a higher commission.  Generally, these matters go a hearing, but a hearing was avoided by a resolution based on admitted facts and the applicable penalty.  Just what facts can be properly admitted in such a case is a matter for caution.  An agent understandably does not wish to admit to “facts” which are not true or which are over-stated or taken out of context and which, taken alone, threaten to undermine his reputation for integrity.  In some circumstances, it is important to stand firm and go to a hearing rather than admit, for reasons of convenience, to something that unduly slants matters against the agent.  In this case a resolution was finally reached without the necessity of the hearing.