Leaky Condo, Special Assessment, Approval by Ordinary Resolution Sufficient - but No Authority to Collect Lump-Sum Payment #310

Oct 01, 1999

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By Gerry Neely
B.A., LL.B.

Following upon the leaky condo case discussed in Column 304 of an owner’s refusal to pay a special assessment, is another case in which the developer, as the holder of 24 units in a 194 unit condominium development, challenged the validity of an ordinary resolution approving an assessment of $2,467,000 to be paid in one lump-sum.

There was no doubt about the need for repairs because two engineering reports confirmed not only the deterioration of sheathing and framing, but also the deterioration of structural members such as balcony joists which threatened the safety of the occupants.

Two successive extra-ordinary general meetings were called but in each the special resolution to approve the assessment failed to obtain the required 75 per cent majority. The strata council then called an annual general meeting at which a third special resolution was also defeated. Following that, the strata council put forward an ordinary resolution to approve the assessment as part of the 1999/2000 budget, which was approved.

The developer challenged the validity of the budget resolution on two grounds. The first was that these repairs were "unusual and extraordinary expenses" which could only be approved by special resolution under Section 49 of the Condominium Act, or by payments out of the contingency reserve fund.

The position of the strata corporation was that these were the type of repairs that would normally be included in the annual budgets of a strata corporation as general cost items. The nature of the repairs rather than their extraordinary cost determined whether they were normal or unusual or extraordinary.

The Condominium Act imposes an obligation upon the strata corporation to maintain and repair assets of a strata corporation. Section 35 gives the strata corporation the power to establish a fund for administrative expenses and for the discharge of other obligations of the strata corporation. The judge said that repairs to the waterproof envelope of the building fell within the category of other obligations of the strata corporation which it had a responsibility to discharge. In addition, the purpose of the contingency reserve fund is to pay unusual or extra-ordinary future expenses while the repairs which created the expenses for which the assessment was approved, were urgently needed now.

The approval by ordinary resolution of this budget item at the annual general meeting was valid.

The developer’s second ground was Section 35 (4), which states that budget items approved by the members at the annual general meeting become due and payable only on the first day of each month. The judge accepted the argument that the strata council could not force a lump-sum payment. However, instead of invalidating the resolution the judge rectified it by directing that the assessment be paid monthly by the owners.

Strata corporations must amend their bylaws to obtain the authority to have special assessments paid in lump sums or for periods other than monthly.1

* * *

Column 307 discussed an unsuccessful claim for commission by an agent whose client’s offer was rejected by the seller who had already accepted an offer. The first offer was subject to financing, the second offer was unconditional, but otherwise both offers met the seller’s terms set out in the MLS® Contract. What wasn’t clear from the reasons for judgment was that the first offer was not accepted in writing, but only orally. It was the absence of a written, binding contract, albeit conditional, that led the agent to sue for the share of commission offered to co-operating agents.

  1. Marco Polo Properties Ltd. v. The Owners, Strata Plan LMS1328, Reasons for Judgment, August 5, 1999, CBC, Vancouver.

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