Legal

January 19, 2018 Published by Toronto and Area Chapter - By Ernie Nyitrai

Do You Really Own Your Gatehouse?

From the Winter 2017 issue of the CCI Toronto Condovoice Magazine.

This is not a facetious question. This can be a real problem for your condo, much like it was for ours. Although the focus of this article is about a gatehouse, this question could easily also apply to your community centre (if you have one for your exclusive use), an off-site parking location (if exclusively for the use of the condo), a parking garage (if built for the exclusive use of the condo, an outdoor swimming pool (if the pool is identified as a lot on the corporation's plan of survey), etc. Issues arise when a condo's builder/developer fails to assign any one of these common elements over to your corporation during the turnover process. This happened to us.

A Little Background First

Our condo shares a common gatehouse, driveway, and a number of garden beds with our sister condo. The costs for these common elements are shared 50/50 between the condos. Our sister condo was built around 30 years ago and our building 2 years later. We have been sharing these costs ever since our condo was built. Although we do not have a formal shared facilities committee, both boards meet at least 4 times a year to discuss issues concerning these shared common elements. This procedure has worked very well for both boards.

This article outlines how we found out the gatehouse shared by the two condos for 30 years was not owned by either of the condos.

During one of our joint facilities meetings we discussed the upcoming renewal of our corporation insurance coverage. We noted that if one of the many delivery and/or moving trucks entering our property hit the gatehouse requiring our corporations to replace/repair it, we would probably have to pay for these repairs or replacement ourselves since our insurance deductible is quite high. Therefore we wondered if we might be able to get a separate insurance policy for the gatehouse and have our insurance carrier pay for these damages, less the deductible. We thought that this separate coverage would carry its own deductible which presumably would be lower than the combined deductibles for our two condos.

In the process of collecting all the pertinent information for our insurer, we reviewed the plan of survey to see how the gatehouse was identified on this plan. We then went to the registry office and were informed that the gatehouse was not identified as being owned by our condo corporation.

Since our sister building was built first, we thought that it might be owned by them. It was not. Therefore neither of us owned the gatehouse. The gatehouse was still owned by the original builder of the condos. This was even though our two condos were using it – and paying the costs of operating it for nearly 30 years.

To further complicate matters, we found that the builder was no longer in business.

Now What Do We Do?

We contacted our corporations' lawyers who advised to us that in situations like this, where property is missed during the turnover procedures, the property missed is deeded to the Province of Ontario. To get the ownership transferred to our condos, we needed to petition the Province. The Province required a series of legal documents to be filed along with proof that the gatehouse indeed belongs to the condos.

Fortunately, the Province did not want to own property where the rightful owner could be identified. They will work with the rightful owner's lawyers to ensure that a smooth transfer occurs. This is what happened in our case.

How could this situation happen and how could property rightfully owned by condos be missed during the turnover process? As inconceivable as this seems, our lawyers advised that this happens all the time.

Such errors usually happen in situations where the builder does not receive any money for common element items identified in the plan of survey, such as gatehouses, community centres, outdoor swimming pools, etc. These items are usually built by the builder, as an enticement for people to buy units in the condo. While individual suites that are sold generate revenue for the builder, the common elements, used to entice a purchasers, do not. Therefore, this kind of thing that can easily be overlooked during the turnover process.

The lesson learned, through our experience, is to ensure that all common elements, particularly those that have been identified on your plan of survey, are properly transferred to the condo during the turnover process. It is easier to do this while the builder is still around.

Regardless of when the turnover process occurred, it is still prudent for condos to check their records to ensure that all common elements, specifically those identified on the plan of survey of the corporation, are indeed owned by the corporation. Look specifically at the following common elements, such as the gatehouse whether owned individually or shared with another corporation, stand-alone community centers, off-site parking used exclusively by the corporation, etc. This could even apply to an outside swimming pool, or tennis court(s), etc., if they are identified as a separate entity in your plan of survey.

This article is not meant to scare condo boards, but to give them a heads up. We hope your condo does not experience what we did.