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May 2020

Section 98 Agreements in Condominiums

By Slonee Malhotra

Has a unit owner reached out to you for consent to make an addition, alteration or improvement to their unit?  Examples of such improvements include, among other things, installing new flooring within the unit, installing a kitchen sink, adding onto exterior exclusive use areas such as upgrading patios or installing a pool. If such renovations are approved, the Condominium Corporation must enter into a Section 98 Agreement, mandated by the Condominium Act, 1998 (the “Act”).

A Section 98 Agreement, also known as an “indemnity agreement” or an “alteration agreement”, is required in all situations where a unit owner proposes to make an addition, alteration or improvement (collectively, the “Improvement”) to the common elements of a condominium. Condominium Corporations must exercise caution to ensure compliance with the Act.

A Section 98 Agreement sets out the obligations of the unit owner and the Condominium Corporation with respect to the proposed Improvement and is registered on title to the unit prior to the unit owner commencing construction. The Act allows a unit owner to make an Improvement to the common elements only if:

  1. the Condominium’s board has first approved the proposed Improvement (i.e. by resolution in writing at a regularly scheduled board meeting);
  2. the unit owner and the Condominium Corporation have entered into a written agreement (the Section 98 Agreement); and
  3. the Condominium board is satisfied that the proposed Improvement will not have an adverse effect on units owned by other owners, will not give rise to any additional expense to the Condominium Corporation, will not detract from the appearance of the property, will not affect the structural integrity of the property and will not contravene the Condominium’s declaration.

As specified under the Act, the Section 98 Agreement must:

  1. allocate the cost of the proposed Improvement between the Condominium Corporation and the unit owner;
  2. set out the duties and responsibilities for each party, including the responsibilities and cost for repair after damage, maintenance and insurance; and
  3. set out any additional matters required under the Act.

While Condominium Corporations are given considerable latitude in creating such agreements, there is an obligation to act reasonably in imposing a Section 98 Agreement upon a unit owner. Condominium Corporations may not refuse to approve additions, alterations or improvements which are of a minor nature and which have no financial impact on the Condominium Corporation. Further, the form of agreement used should be consistent for all unit owners.

 

SorbaraLAW offers fixed rates on preparation of Section 98 Agreements. Contact one of our associates today to obtain a quote.

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