Suing a Condo Corporation Board
Published on 29 August 2022, 07:22:56 AM
Irate owners intent on suing condo boards may want to bide their time. Taking legal action against a condo corporation can be onerous and expensive.
Tread carefully in condo corporation legal waters. Suing condo board members individually can leave you holding the bag for their lawyer’s fees.
A case in point is a recent failed attempt at suing condo board members personally for breach of statutory duty, negligent misrepresentation, and negligence (Matlock v Ottawa-Carleton Standard Condominium Corporation, 2021 ONSC 390).
The distressed Ottawa condo owner claimed board members were individually negligent for failing to repair deficiencies with the elevators, heat, fire systems, masonry, cleaning services, and problems with flooding and sewer gas.
What to ask the condo board before you buy.
No Proof, No Case — Suing Condo Boards
Suing condo corporations can be successful, but proving liability against individual board members is usually doomed to fail. Matlock stalled over lack of evidence the condo board members’ personal conduct was at fault.
Had the Ottawa complainant pitched a case against the condo corporation, he may have had a reasonable prospect of success. By suing condo board members, he raised the bar too high. Seeking legal counsel beforehand would have confirmed that.
Red flags when buying a condo.
To win, the condo owner had to:
- Include specific facts.
- Show individual board members exhibited fraud, deceit, dishonesty, or acted without authority.
- Find directors acted out of their own interests, not the condo corporation’s.
- Convince the court an individual director or officer did something negligent that harmed him.
Otherwise, as Matlock learned, suing condo board members ultimately falters because board members are only a condo corporation’s directing mind. While they are responsible for the corporation’s decision making, directors and officers are rarely personally liable for it.
When Suing Condo Boards “Succeeds”
Courts recognize being on a condo board is a volunteer position. As the Boily appeal shows, judges tend to go lightly on directors who err while executing board duties (Boily v Carleton Condominium Corporation 145 (Ontario Superior Court)).
Boily went to court in 2011 when a condo board redesigned an interior courtyard in defiance of the owners’ wishes. Ignoring a court order to restore the courtyard to its original state got individual board members a costly $459,000 personal bill for repairs, legal fees, and court costs.
Can I sue my condo board?
Citing the board for contempt, the judge ruled members should pay the judgment from their own pockets for failing to act “neither honestly and in good faith, nor as a reasonably prudent person” (required by board members under section 37 of Ontario’s Condominium Act, 1998).
The board won a partial victory when the penalty was reduced to a $7,500 fine each, plus $35,000 in shared fees and costs. Pointedly, as in Matlock, the appeal court ruled while board members overrode the owners’ wishes, they weren’t motivated by personal gain or vengeance. Unfortunately for the owners, that tagged them with the redesign expenses, repairs, and court fees.
As Boily emphasizes, suing condo boards can be treacherous, even when you’re technically in the right.
Why You Need a Real Estate Lawyer
Buying or selling a condo goes easier when you hire Axess Law. Our licensed real estate lawyers look over your agreement of purchase and sale for clauses that may cause problems closer to closing time. We examine subject-to conditions and suggest essential clauses you could include, like agreeing to cancel a deal by mutual consent.
Asking a condo corporation for a status certificate costs could save you from buying into a building with an inadequate reserve fund, or major structural problems that require costly repairs. Your Axess Law lawyer checks for the mandatory condo fire insurance binder you need to conclude any purchase.
Get mandatory fire insurance for condos.
We point out potential delays that may require your offer to purchase to be amended, like looming deadlines you may have difficulty meeting. Our legal team negotiates with the seller’s lawyer to see if they will agree to give you more time to find mortgage financing, or close the sale of your own home.
Ensure your condo is lien free before you buy.
Title transfers can hold up your closing date if the seller has neglected to deal with construction liens or other financial encumbrances. Our Greater Toronto Area and Ottawa real estate lawyers search property titles, and then register your new property deed at a local land titles office.
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