Clear and Current Disclosure
In Toronto Standard Condominium Corporation No. 2051 v Georgian Clairlea Inc. (“Georgian”) the Ontario Court of Appeal affirmed the findings of the motion judge with respect to a declarant’s disclosure obligations as set out in the Condominium Act, 1998 (“Act”). Subsection 72(1) of the Act provides that “the declarant shall deliver to every person who purchases a unit or a proposed unit from the declarant a copy of the current disclosure statement made by the declarant for the corporation of which the unit or proposed unit forms part” (emphasis added). The obligation to provide the current disclosure statement demonstrates that the Act intends for the declarant’s disclosure obligations to continue as the project changes between inception and final closing. This intention of continuous disclosure is further codified in Subsection 74(1) of the Act where it is prescribed that a declarant is required to provide a purchaser of a unit or proposed unit with a revised disclosure statement or notice with respect to a “material change in the information contained in or required to be contained in a disclosure statement. The disclosure issue in Georgian arose because of 2 vendor take back (“VTB”) mortgages given by the newly formed condominium corporation to the declarant while the declarant maintained control of the board of directors of the condominium corporation. A VTB mortgage was provided in the amount of :
- $2,228,100.00 for HVAC equipment the declarant had previously disclosed would be leased by a third party to purchasers; and
- $1,026,000.00 for 32 parking units, 16 storage units, and 2 combination parking and storage units the declarant was unable to sell to purchasers.