Part 40 published on 01/11/12
Corporation properly mandated to repair and maintain unit exteriors, but could not establish a reserve fund for this purpose
In this bare land condominium, the developer had marketed the project as “care-free” living. A restrictive covenant had been registered stating that the condominium corporation had the exclusive right and obligation to maintain all areas of the project other than the interiors of the individual homes. This was also reflected in the corporation’s by-laws, but with some “tweaking” to allow for effective operation of the scheme. The Court held that the scheme reflected in the restrictive covenant and by-laws was valid; except that the condominium corporation could not pre-collect for the unit repairs by creating a parallel reserve fund for this purpose. The corporation could only establish a reserve fund for common property. The Court said:
…the applicants have the entitlement to have their exterior property maintained by the condominium corporation by virtue of the restrictive covenant and the actual by-laws that have been passed by (the condominium corporation). ….(The condominium corporation) must maintain the property but cannot pre-collect in any type of reserve fund for that objective. The condominium will have to create some solution where they have the resources to do the repairs and then charge back the owners their condominium fees share. The by-laws prescribe this to be a charge on a unit approach, not a direct cost approach. I accept that this is a bizarre outcome, but it flows from the fact that the reserve fund is established for the repair and maintenance of common property only, and there is no other pre-collection concept expressed in the (Condominium Property Act) to which my attention has been directed.