18/05/2023 – Jurisdiction Ontario
Part 82 published on 01/06/2023
Status certificate failed to disclose potential increase
The Plaintiff is an owner who purchased a unit in the condominium in 2021. Prior to the purchase, the Plaintiff instructed his realtor to obtain a status certificate from the condominium corporation. Paragraph 12 of the status certificate made no reference to a potential increase or special assessment due to anticipated water main repairs. However, the auditors report, which was attached to the status certificate, included the following:
…The Corporation has tendered the water main repairs. It was unknown at the time of the audit the cost of this project, but it is estimated to be significant. The work is expected to commence and be completed in the following fiscal year. To fund this project, there is a possibility of a special assessment to the unit owners and/or an application for a loan.
The Court held that Paragraph 12 of the status certificate had assured the owner that the corporation was not aware of any potential increase due to the required water main repairs. The Plaintiff purchaser was therefore entitled to avoid the resulting special assessment or loan, required when the water main repairs were subsequently completed. The Court said:
Pursuant to s. 76(6) (of the Condominium Act), the status certificate binds the corporation as of the date it is given, and with respect to the information it contains, as against a purchaser or mortgagee of a unit who relies on the certificate. Therefore, a corporation is prohibited from claiming as against a unit owner payment for an expenditure that the corporation was negligent in failing to disclose in the status certificate.
Given my finding with respect to Issue 1, Bruce should be entitled to an exemption from the special assessment or loan, for the period he owns the Unit. However, there is some merit to the Respondent’s submission that to extend such an exemption to the Unit indefinitely, regardless of whomever owns it at a given time, could provide an unwarranted windfall to a subsequent purchaser, the cost of which would ultimately have to be shared amongst all the other owners. Bruce relied on the deficient status certificate. That is why it would not be fair to require him to pay the special assessment or loan. But presumably any potential future purchaser of the Unit could and would be advised through a status certificate that a pro-rated share of the common expenses associated with the project (that is, the remaining number of years out of the 25-year amortization period of the loan) would attach to the Unit.
I therefore find that Bruce’s Unit is entitled to an exemption from the special assessment or loan, for the period of time that he continues to own the Unit. However, this exemption should cease if and when he sells the Unit to someone else. That purchaser should be subject to a pro-rated portion of the special assessment, or the remaining portion of the 25-year loan period, at their choice. Any such prospective purchaser must be advised by Bruce, and by the Corporation through a status certificate, of this amount.
Bruce v Waterloo North Condominium Corporation No. 26, 2023 ONSC 2995