Saturday, February 1, 2014

Trouble with Condo Tenant Demands Fast Action

As of this past November I am now a condo dweller, but that's not what got me thinking about this new post.  I have a lot of clients who are owners of condos, bought for investment purposes, who run into trouble with tenant conduct issues, usually noise, drunken parties, prostitution etc.  Certainly a big part of the problem stems from the the fact that too many condo investors think of themselves only as investors and not as business owners.  They are both; and they neglect the latter at their peril.

The Condominium Act prescribes obligations on unit owners (the landlord) with respect to their tenants.  Owners must make sure tenants receive a copy of the Rules, Declaration and Bylaws of the Corporation, and must make sure the tenants know they are responsible to abide by them.  The lease signed by the tenant should have a clause wherein they acknokwlege that they have received and will comply with same.

Most condo Declarations and Rules have carefully drafted wording such as:  
The owner of each unit shall comply and shall require all residents and visitors to comply with the Act, the Declaration, the By-Laws and the Rules.
Each owner and resident of the Condominium shall be responsible for the acts and omissions of their family members, tenants, guests, licensees and invitees.
No owner or resident shall create or permit the creation or continuation of any noise or nuisance (wither within a unit or on the common elements) which, in the opinion of the board or property manager, may or does disturb the comfort or quiet enjoyment of the units or common elements by the owners or their family members, tenants, guests, licensees and invitees.
When the day comes when the management company calls and writes the owner advising them that there are noise or other conduct issues caused by their tenants, most owners don't act quickly enough.  Usually they call their Realtor who sold them the unit and yell at them. Not too effective.

Even a warning by condominium's management that the Corporation's solicitor may be retained to force compliance through the Condominium Act usually is met with a shrug of the shoulders.  Section 134 of the Act permits a corporation to make application to the Superior Court for a compliance order against the owner and tenant.  Legal costs in obtaining same may be as high as $20,000, even higher if the issues are complicated and respondents contest the application.  Whatever costs or damages are assessed against the owner get tacked on to their common expenses. 

Addition to common expenses
134(5)  If a corporation obtains an award of damages or costs in an order made against an owner or occupier of a unit, the damages or costs, together with any additional actual costs to the corporation in obtaining the order, shall be added to the common expenses for the unit and the corporation may specify a time for payment by the owner of the unit. 1998, c. 19, s. 134 (5).

And not only that, a statutory lien is created in priority to almost every registered encumbrance.The Corporation could even sell the unit to satisfy payment.

Lien upon default
85.  (1)  If an owner defaults in the obligation to contribute to the common expenses, the corporation has a lien against the owner’s unit and its appurtenant common interest for the unpaid amount together with all interest owing and all reasonable legal costs and reasonable expenses incurred by the corporation in connection with the collection or attempted collection of the unpaid amount. 1998, c. 19, s. 85 (1).

Owners need to take tenant conduct issues seriously.  A discussion with the tenants followed up with a letter might be appropriate the first time, but at the second complaint by the management company, the owner needs to serve the appropriate Landlord and Tenant Board notice(s) seeking termination of the tenancy.  Only by immediately taking all reasonable steps through the Residential Tenancies Act does the owner protect themselves against a Compliance Order under the Condominium Act.

Property management companies must be forthcoming with dates, times and specifics, even video recordings, both for the purpose of the statutory notices, and evidence at a hearing.  Witnesses, in particular security staff, should be made available and summonsed to the Landlord and Tenant Board hearing. 

Often by the time I'm retained, the unit owner and tenant have already received the first warning letter from the Corporation's solicitors, at a cost of about $400 tacked on to their common element costs.  The first thing I do is write the Corporation's counsel, advise them that I've been retained to commence proceedings at the Landlord and Tenant Board, and ask them to forebear until such time as the proceeding has concluded.

Usually an N5 notice is drafted and served.  If the tenants correct their offending behaviour within the 7 days following service, the notice becomes void and you cannot file an application to the LTB.  The Corporation may wonder why you haven't moved on with an eviction application.  It's up to the paralegal to explain to the corporation and their solicitors what the Landlord and Tenant Board process entails.

What if after a hearing, the Landlord and Tenant Board decides not to evict?  Assuming that the paralegal retained for the LTB proceeding has acted properly and the Board still chose not to evict, it's likely that by simply making a good faith attempt to evict the tenant based on their conduct,this will protect the owner against the costs of a compliance order.  I've noticed in a lot of the condo cases recently based on s.134 applications, the Courts are wary of the high costs charged to the corporation (which flow through to the unit owner) as there is really no incentive for the law firm or condo corporation to keep costs down. There is a trend towards condo corporations pulling the s.134 trigger too quickly.  As a paralegal, you need to give these types of retainers top priority to prevent a costly outcome for the client.


CondoMadness said...

Condo owners who rent their units can be liable for huge costs if the renter runs a grow-up or a meth lab in the unit. Even something as simple as noisy parties can cost the owner thousands in legal fees and other costs.

A not so carefree way of investing as many think.

David Pylyp said...

Excellent information!

Can I repost this?

alok singh said...

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Jack Willem said...

Excellent blog! I am satisfied that you simply shared this useful information with us.
Landlord and Tenant Act Toronto

Susan Slick said...

No avoid those unexpected circumstances, it is important to have full details of tenants and if possible, definitely make tenant screening from a reliable source.

Sandy Parker said...

We can't avoid it but what we can do is to ask them why and for what. Maybe it will help. Anyway, thanks for sharing, it will help when I'm ready to by a condo at Admiral Baysuites.

SolomonJohnson said...

On his place, I would better read this typical landlord's mistakes list

Nancy Summer Marine said...

Though condo tenants are proud owners of their unit, abiding the rules should still be practiced. It's not like they're the only ones living in the place. Also, if you wanted to be as loud as you want you should first check the walls of a unit of the sounds from the inside is not being heard on the outside and vice versa just so you could avoid such issues. If you wanted class and good unit finish just visit this condo unit in Greenhills San Juan and have the home you deserve.