Part 4 published on 01/11/03
Rebate of Condominium Fees not in Compliance with Act.
The condominium was created in 1982. It is a mixed use condominium with 209 residential high-rise units, two ground floor commercial units, and ten townhouse units. Until 1994, all of the units were under single ownership and the complex was operated as a rental apartment building. In 1994, the then owner of all of the units marketed and sold the units to the public.
Prior to the sale of the units, the vendor concluded that the unit factors applicable to the townhouse units resulted in unfair common fees for those units. Therefore, while in control of the condominium corporation, the vendor purported to pass a rebate by-law and to enter into rebate agreements with each purchaser. Both the by-law and the rebate agreements provided for a rebate to the townhouse owners of 65% of the fees payable on the basis of unit factors for those units.
At trial, these rebate arrangements (the by-law and rebate agreements) were held to be valid and enforceable. The trial judge held that the purchasers of the units were aware of the rebates before they bought, and that it would be unfair to permit the owners of the high-rise units to receive a benefit at the expense of the townhouse owners. The trial judge held that the condominium corporation was entitled to arrange rebates by virtue of its general powers to manage the business of the corporation.
On appeal to the Alberta Court of Appeal, the trial decision was overturned. The Appeal Court said that the by-law and the rebate scheme both fell outside the powers of the condominium corporation. In short, the condominium corporation was required by the Condominium Property Act to collect fees on the basis of the unit factors. The rebate arrangement was held to be contrary to this requirement.
[Note: In 1996, the province of Alberta passed the Condominium Property Amendment Act, 1996 which introduced procedures by which condominium corporations could assess fees on a basis other than unit factors. That amendment was proclaimed in force on September 1, 2000. Thereafter, the board of the condominium took steps to authorize a rebate to the townhouse owners of 40% of their fees. The validity of this 40% rebate arrangement was not challenged. The question in this case concerned the validity of the previous 65% rebate arrangement.]