When buying real property, a potential purchaser should always have an eye to the future resale of the property. While resale value is the obvious concern, purchasers should also be mindful of any possible barriers to resale that maybe be encountered.
In a recent Ottawa court matter, Grigoriu v. Ottawa-Carleton Standard Condominium Corporation No. 706, 2014 ONSC 2885 (CanLII), court intervention was required in order for an owner to overcome such an obstacle.
The Grigorius had purchased a condo unit that came with neither a parking spot nor a storage locker. This was not by choice; the building’s inventory was gone by the time they made their purchase. Luckily, the condo developer had a sister building next door which still had inventory so they bought a spot and locker next door. A little under five years after the Grigorius’ purchase, the condominium corporation at the building where they had their parking spot and storage locker amended its Declaration to prevent the use of parking spots and storage lockers by non-residents. Effectively, this amendment prohibited the sale or transfer of parking spots and storage lockers to non-owners of residential units in that building. Technically, it also barred the Grigorius from even using their parking spot or storage unit, however the Condominium Corporation did not enforce the provision against them and offered to grandfather their continued use of the parking and storage so long as they owned their residential unit. This was a fine arrangement while the Grigorius lived next door but as the family grew, a need to move arose and their ability to be able to sell their condo with parking and storage became a significant issue.
The Grigorius and the condo board in the building housing their parking spot and locker negotiated a further amendment to the Declaration that would have allowed them to sell their unit along with the spot and storage space. However the board was not able to secure the required amount of votes from the members of the condominium corporation. That left the Grigorius with no option but to seek the Court’s intervention. At the direction of the Court, the family spent nearly two years trying to sell the property, listing both with and without the parking and locker. Their unit attracted virtually no interest when it was offered alone. When listed with the parking and locker, they received a number of conditional offers, the condition being that a further amendment could be obtained allowing for non-resident ownership of the parking unit. They were of course unable to meet this condition.
The Grigorius brought an application seeking a finding that the Declaration of the condo corporation was oppressive or unfairly prejudicial to them and their interests and that the Declaration be amended. The Court found that the amended Declaration was oppressive to the Grigorius and that there be a further amendment to the Declaration allowing the Grigorius to sell their unit along with the parking spot and storage locker. The Court found that the unit was virtually unsellable without parking and that the conduct of the Board and condo Corporation had the effect of undermining the reasonable expectations of the Grigorius and unfairly disregarded their interests. The oppression remedy employed herein is a concept that comes from corporate law, its purpose being to provide minority owners/shareholders with the ability to protect their rights where the actions of the majority are oppressive or unfairly prejudicial. In this case, the Grigorius were the only parties affected by the amendment to the Declaration, the net result being that they were unable to sell their property. Their reasonable expectation at the time of purchase was that when it came time to re-sell their unit, they would be able to sell it with the parking spot and storage unit. Had they been advised otherwise at the time of purchase, they never would have entered into the deal.
There is a takeaway for both prospective condo owners and condo corporations from this case. For prospective owners, this highlights a possible complication to consider when purchasing a unit in one building and a parking spot and or locker in another building in the same project. Keep in mind that different buildings typically have different condo corporations made up of residents with concerns unique to their building. For condo corporations, this is a reminder to carefully consider proposed amendments to declarations that in practice single out specific owners.