Disclosure Document Reviews are a MUST in new Condos
Realtors – get your clients to read disclosure packages on new condos. Even better, get their lawyers to read it for them and advise them. A recent case out of Ontario highlights the need for such an exercise. Many thanks to the folks out at www.condoreporter.comfor highlighting the decision in their regular condominium blog.
The case is Simcoe Vacant Land Condo. Corp. No. 272 v. Blue Shores Developments Ltd., 2014 ONSC 187 and can be located here:
The case is relatively simple. The condominium documents said that the developer would not transfer the title to a community clubhouse to the condominium corporation until such time that all of the units were sold, and all surrounding aspects of the development were sold as well. This included a marina, some dock slips and some future development land. (Trust a prairie boy to have to google what a dock slip was…but I digress.)
The completion of the development has been delayed. From the decision, it does not appear to be that out of line with surrounding developments, but in excess of 7 -10 years have passed from its commencement depending on what you use as a start date. The developer made every assertion that they intend on conveying title to the clubhouse in the future, but that contractually they have no obligation to do so now.
In the meantime, they have placed a mortgage on the land involving the clubhouse, and are collecting membership fees to the clubhouse. It appears from the decision, that they are doing so in a profitable basis. There is not any real end in sight either, as the time required to develop the future development land and sell it off is likely a big question mark. There was some discussion of the reasonableness of position that the developer would need to take in meeting its obligations, but this condominium may be in for a lengthy connection to their developer.
Back to Saskatchewan condominium purchasers – I think the inclination of purchasers is to ignore the detailed and cumbersome documents that are presented by their developers. When purchasers get fixated on “the one”, the ideal property, they tend to minimize the importance of items that could detract from that view. Those disclosure documents could have extremely important effect on your enjoyment of the investment that you are making. Additionally, the recent changes to the Condomium Property Act have enhanced the disclosure that clients are to receive…but they only work if the documents are read!
Happy house hunting!
