Part 44 published on 01/11/13
Condominium corporation cannot levy special assessment only against the developer’s unsold units (for amounts required to rectify alleged original building deficiencies)
In a receivership proceeding, the Court was asked to determine whether or not a condominium corporation could levy a special assessment only against the developer’s unsold units. The special assessment was required to rectify alleged original building defects.
The developer was insolvent, and had been placed into receivership by a creditor which held mortgages against the developer’s unsold units.
The condominium corporation applied for a Court order to lift a stay of proceedings in the receivership, so as to allow the condominium corporation (pursuant to the corporation’s by-laws) to proceed with the proposed special assessment against only the developer’s units. The creditor and receiver opposed the application, and were successful. The Court said:
- “I am simply not satisfied that the purpose of s.139(1)(c) of the Condominium Property Act is to enable the Condo Corporation to impose a disproportionate levy against the remaining Perera units, which would give them the right to become, in effect, a super-priority creditor over all secured creditors. For reasons basically set forth by the Court of Appeal in Fantasy Homes, I reject the Condo Corporation’s claim.”
- “The charge sought to be levied in this case is not related to Perera’s ownership of the condominium unit.”
- “There is no basis for surmising that the ‘the Legislature intended that a regime of disproportionate allocation of levies [would] apply to cases such as this.’”