Recent case law reinforces the importance of a Section 98 Agreement

By David Young

In Waterloo Standard Condominium Corporation No. 399 v. Lee et al., 2003 ONSC 3807, Ms. Yi Juan Lee and her son, Mr. Tzu Archie Yu, owned a condominium unit that they purchased in 2009. They made extensive modifications to the unit without obtaining written consent from the condominium board, which was a violation of the Condominium Declaration. Waterloo Standard Condominium Corporation No. 399 (“WSCC No. 399”), the condominium responsible for managing the residential complex, brought an application to return the unit to its original configuration or to bring the modifications into compliance with the Ontario Building Code. The condominium argued that the modifications pose a serious risk to the property and its occupants, which is a breach of Section 117 of the Condominium Act, 1998 (“The Act”).

The issues raised in this case were as follows:

A. Did the court have jurisdiction to hear the application without arbitration;

B. Was the application barred by statute or equitable estoppel;

C. Were the respondents in breach of their obligations under section 117 of the Condominium Act; and

D. What was the appropriate remedy?

The court found that the application was within its jurisdiction as it involved a breach of section 117 of The Act, which does not require arbitration. The application was not statute-barred or barred by equitable estoppel. The court determined that the respondents were indeed in breach of their obligations under section 117 as the modifications did not comply with the Building Code and caused potential damage and risks. The appropriate remedy was to order the respondents to correct the Building Code deficiencies or remove the added bathroom. If they fail to do so, the Corporation could complete the work at the unit owner’s cost.

In the background, it is stated that the unit owners received a copy of the Declaration before purchasing the unit, and although they claimed to have received verbal permission from the selling agent for the Developer/Builder for the modifications, this was not in writing. The modifications were completed in 2009, and the condominium became aware of them during a routine fire inspection in 2017. Mediation took place in 2018 but did not resolve the dispute. Various reports confirmed non-compliance with the Building Code and water damage caused by the modifications.

Overall, the court found the Unit owners in breach of their obligations, ordered them to correct the deficiencies or remove the added bathroom, and clarified the court's jurisdiction to hear the application.

This case shows that if you have plans to renovate or improve a condo unit, then it is very important that you bring it to the attention of your lawyer during the Status Certificate Review. You should ask them to bring to your attention the renovation/repair section of the Declaration/Rules, and advise you if a Section 98 Agreement is required.

As per our previous article on Section 98 Agreements in Condominiums, a Section 98 Agreement is required to make changes to a unit that impacts the common elements of the Condominium Corporation. In WSCC No. 399 v. Lee et al here, it is shown that even modifications that encroach on the common elements must obtain written consent of the Board, and result in a fully executed and registered Section 98 Agreement prior to the unit owner commencing construction.

If you have any questions about this article, please reach out to one of our qualified Real Estate lawyers such as David Young (dyoung@sorbaralaw.com).