A recent Ontario Court of Appeal decision, highlights the importance of issuing accurate status certificates even if prior status certificates may have failed to do so.
The main issue in the appeal was whether a condominium corporation that previously issued a “clean” status certificate for a unit, is barred from preparing future status certificates for that unit which would note noncompliance for alterations which were carried out prior to the issuance of the clean status certificate.
In this case, a unit owner (the “Owner“) brought an application against Metropolitan Toronto Condominium Corporation No. 723 (“MTCC 723“), claiming that MTCC 723 was required to issue a clean status certificate for his unit.
The Owner purchased his unit in 2013 from his mother and received a “clean” status certificate at that time. The previous owner purchased the unit in 2004 and also received a “clean” status certificate.
When the Owner decided to sell his unit in 2016 he obtained a status certificate for the purposes of marketing the unit. This 2016 status certificate noted that the unit was in breach of the MTCC 723’s Declaration. At some point in time, a bedroom was added to the unit and the kitchen was relocated. The status certificate noted these alterations were performed without the prior consent of MTCC 723’s board of directors, which was required under the Declaration. As a result, the status certificate noted that this could result in MTCC 723 taking steps to remove the alterations and restore it to its original configuration, the costs for which would be added to the common expenses for the unit.
The Owner argued that neither he nor his mother carried out the alterations described in the status certificate, so, they must have been carried out prior to their occupancy. Representatives of MTCC 723 apparently entered the Owner’s unit a number of times between 2013 and 2016, but the unit’s alteration was never mentioned.
The application judge decided in favour of the Owner and declared the statements on the 2016 status certificate relating to unauthorized alterations should be removed, did not bind the unit, and directed MTCC 723 to issue a status certificate clear of these statements.
MTCC 723 appealed the application judge’s decision to the Ontario Court of Appeal. The Court of Appeal granted the appeal and set aside the application judge’s decision.
In it’s reasons, released orally, the Court of Appeal noted:
“…the condominium corporation is bound vis-a-vis the respondent Mr Reino [the Owner] by the clean certificate it provided 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 when it has previously provided a clean certificate.” (emphasis added)
The court noted that if a condominium corporation becomes aware, after issuing a status certificate, of circumstances that must be disclosed under Section 76 of the Condominium Act, it must include this information in the next status certificate. This means that at the time the condominium corporation discovered the unit had been altered in contravention of the Declaration, it had an obligation to include this information on the next status certificate it prepared.
The Court of Appeal also noted that “this does not change the fact that it [the condominium corporation] will still be bound by its earlier certificate…”
Surprisingly, the Court of Appeal went on to note that the Owner has a remedy if the condominium corporation negligently issued the clean status certificate to him in 2013 – he could sue MTCC 723 for “any diminution in value of his unit by reason of any improper disclosure that may have occurred.” No further observations were made on whether MTCC 723 had in fact inspected the unit in 2013 prior to issuing the status certificate.
What the court did not comment on is the fact that the Condominium Act does not require a corporation to inspect a unit prior to issuing a status certificate. Indeed, because of potential liability, we generally do not recommend that condominium corporations do this or make any representations that they have inspected the unit.