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Condo owner on the hook for inaccurate ‘clean’ status certificate

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What happens when an owner receives an incorrect status certificate issued by a condominium corporation?

That was the issue in a case before the Ontario Court of Appeal earlier this year.

A bedroom added without consent from the condominium’s board created an inaccurate status certificate for a new owner.
A bedroom added without consent from the condominium’s board created an inaccurate status certificate for a new owner.  (Dreamstime)

Back in 2013, Dante Reino purchased a condo unit from his mother in a downtown highrise on Bay St. known as Metropolitan Toronto Condominium Corporation 723. He requested a status certificate and was issued a “clean” certificate by the condo corp. The prior owner purchased the unit in 2004 and was also issued a “clean” certificate — one that did not disclose problems.

When Reino decided to sell the unit in 2016, he obtained a new status certificate that stated that the unit was in breach of the condominium declaration.

Before Reino’s purchase, a second bedroom was added to the unit and the kitchen was relocated without the required consent of MTCC 723’s board of directors.

As a result, the new certificate warned that MTCC 723 might take steps to remove the alteration and restore it to its original layout, with the costs being added to the common expenses for the unit.

The Condominium Act says that a status certificate’s information is binding to the corporation, as of the date it is given.

On an application by Reino, the judge ruled that MTCC 723 was bound by its earlier “clean” certificates and had to issue a new certificate without the notation about the unauthorized renovations.

MTCC 723 appealed the judge’s ruling, and a three-judge panel of the Ontario Court of Appeal reversed the lower court’s decision earlier this year.

The Condominium Act, the Appeal Court wrote, “is, among other things, consumer-protection legislation. The purpose of a status certificate is obvious: it is to bring to the attention of a prospective purchaser or mortgagee matters which may be of concern to them when contemplating the purchase of a unit.”

The court noted, “We agree that the condominium corporation is bound vis-à-vis … Mr. Reino by the clean certificate it provided to him when he acquired the unit from his mother in 2013. That said, it does not follow that the condominium corporation is thereafter estopped from issuing anything but a ‘clean certificate’ in relation to a unit where it has previously provided a clean certificate.”

If a condominium corporation becomes aware, after issuing a clean certificate, of a circumstance that it is required to disclose, the “new” information must be included the next time it issues a certificate.

This does not change the fact that it will still be bound by its earlier certificate, but to omit the new information, the court said, would be misleading to a prospective purchaser.

The court added that Reino could always sue the condominium corporation if it was negligent in issuing a clean status certificate to him.

He was ordered to pay $31,625 in court costs for the initial hearing and the appeal.

While the court said the Condominium Act is consumer protection legislation, it did not offer any kind of protection for Reino in its decision and the punitive costs award. To force him into another lawsuit to recover his damages is manifestly unfair.

Bob Aaron is a Toronto real estate lawyer. He can be reached at bob@aaron.ca or on Twitter: @bobaaron2

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Victoria real estate agent disciplined for false advertising, encouraging cash deal to avoid taxes

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A Victoria real estate agent is facing $9,000 in fines and a 60-day licence suspension after breaking several professional rules during the sale of her father’s half-million-dollar property, according to a decision by the Real Estate Council of B.C. 

Whitney Garside’s missteps — outlined this week in a disciplinary decision posted on the council’s website — included falsely advertising the property as being almost twice its actual size and advising the buyer they could avoid the property transfer tax if they paid cash directly to the seller.

The property on Burnett Road in Victoria was being sold in 2016 by the real estate agent’s father. That relationship was disclosed and isn’t among the reasons she has been disciplined.

According to the disciplinary consent order, Garside told the buyer — whose name is redacted — that by paying $42,000 cash on the side, the value of the property could be reduced to avoid paying the property transfer tax.

That cash arrangement was not shared with Garside’s brokerage, Re/Max Camosun, a failure that contravened the Real Estate Services Act.

The council also ruled that she “failed to act honestly and with reasonable care and skill” when she advised the buyer the property transfer tax could be avoided by paying cash directly to the seller. 

The council’s discipline committee also found that Garside committed professional misconduct when she failed to recommend the seller and buyer seek independent legal advice, specifically regarding the property transfer tax and the cash agreement.

Another issue the council considered professional misconduct involved the size of the property in question.

The council ruled that Garside published false and misleading advertising and failed to act with reasonable care and skill when the property was advertised as 8,712 square feet, when in fact a portion of the lot belonged to the Ministry of Transportation, and the actual size was just 4,711 square feet.

The discipline committee ordered Garside’s licence be suspended for 60 days, which will be completed Jan. 3, 2021.

She has also been ordered to complete real estate ethics and remedial classes at her own expense.

Garside was also fined $7,500 as a disciplinary penalty and $1,500 in enforcement expenses.

She agreed to waive her right to appeal the council’s discipline committee’s decision in September.

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Frisco apartment community sells to Canadian investor

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A Canada-based investor has purchased a Frisco apartment community as part of a larger Texas deal.

The 330-unit Satori Frisco apartments opened last year on Research Road in Frisco.

BSR Real Estate Investment Trust bought the four-story rental community that was built by Atlanta-based Davis Development.

Satori Frisco was more than 90% leased at the time of sale. The property includes a two-story fitness center, a car care center, a dog park and a resort-style swimming pool.

The Frisco property sold along with Houston’s Vale luxury apartments in a deal valued at $129 million.

“BSR recently exited the smaller Beaumont and Longview, Texas, markets and also sold noncore properties in other markets,” John Bailey, BSR’s chief executive officer, said in a statement. “We are now using our strong liquidity position to invest in Vale and Satori Frisco, modern communities in core growth markets with the amenities our residents desire.”

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House prices on Prince Edward Island continue steady climb

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Residential real estate prices on Prince Edward Island continue to climb at a rate higher than the national average, according to the latest report from a national organization. 

The Canadian Real Estate Association released monthly figures for November 2020 on Tuesday.

They show that the average price for a resale home on P.E.I. is about 21 per cent higher than it was a year earlier. 

Only Quebec had a bigger year-over-year increase, at about 23 per cent. Overall across Canada, prices were up 13.8 per cent year over year in the ninth month of the COVID-19 pandemic.

“For the fifth straight month, year-over-year sales activity was up in almost all Canadian housing markets compared to the same month in 2019,” the report noted.

“Meanwhile, an ongoing shortage of supply of homes available for purchase across most of Ontario, Quebec and the Maritime provinces means sellers there hold the upper hand in sales negotiations.”

That lack of houses coming onto the market compared to the demand means that in those provinces, there is “increased competition among buyers for listings and … fertile ground for price gains.”

There have been anecdotal reports for months that Prince Edward Island’s low rate of COVID-19 infection and looser rules around social activities have been encouraging people to buy homes on the Island. 

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