Sharing Facilities and Services with Neighbours
As demonstrated by our last post about the condo in a condo concept, condominiums are being used in more unique and complex ways than in the past. It is becoming very common for condominiums to share services, like underground services for utilities, and facilities, like roads or amenities, with neighbouring property owners. Most of the time the developer has created an agreement that explains the rights and obligations of the parties for the shared services and facilities. These agreements are typically called “Shared Facilities Agreements”, “Mutual Use Agreements”, or “Cost Sharing Agreements”, but there are a few other names for them.
A proposed amendment to the Condominium Act, 1998 (the “Act”), will require an agreement if there is shared land, property, assets, facilities, or services involving a condominium (called “shared facilities” here for convenience). It is unclear if this amendment will ever come into force as it was originally proposed in 2015. Even if not legally required, it is advisable for the parties to have an agreement setting out their respective rights and obligations to (hopefully) minimize the number and complexity of disputes between the parties.
Even where an agreement exists, the parties may still have disputes about their rights and obligations regarding the shared facilities. It can be difficult to read these agreements because the documents contain confusing language and legalese. Sometimes the documents are lengthy. Sometimes there are multiple agreements for the same property. For example, a four-condominium project may have one agreement that applies to all four condominiums, but additional agreements involving less than all four of the condominiums (i.e. an agreement for a parking garage shared by condominiums A & B only). Sometimes one or more of the parties refuses to participate in decisions or pay their fair share of expenses. Sometimes the agreement is ignored by the parties completely; sometimes they don't even know it exists!
Most shared facilities disputes are resolved using mediation, and if necessary, arbitration. There are a few reasons for this. Most agreements require arbitration of disputes related to the agreement. Section 132 of the Act requires mediation and arbitration of disputes related to agreements between two or more condominiums, such as shared facilities agreements. Sometimes the parties elect to participate in mediation (and to a lesser extent arbitration) even when the process is not required because of its advantages over court: it is generally quicker, usually more cost-effective (at least for mediation; less so for arbitration), and the parties retain more control over the process. Unfortunately, in some cases a court proceeding may be the best option.
Minor disagreements are perfectly acceptable, and studies show that disagreements can actually result in better decisions. However, when the disagreement leads to heated arguments, dysfunction, indecisiveness, delay, or extraordinary costs, it is not healthy. Try these tips to avoid major disagreements:
- Read the agreement! Often a disagreement arises because one of the parties is familiar with the terms of the agreement and another is not. It is hard to have a meaningful conversation about the agreement without having at least a basic level of knowledge of its terms. In my experience, not reading the agreement is the most common reason for shared facilities disputes. This is not hyperbole. I recently participated in a mediation where it was obvious one of the condominiums misunderstood the basic features of the agreement until it retained its own lawyer (who presumably reviewed the agreement and explained it to them). If they had read the agreement sooner, they might have avoided a costly dispute.
- Communicate. Even if the agreement gives all decision-making authority to one of the parties, that party should not make decisions without at least notifying the other parties. The other party may have information that is relevant to the decision, or a creative solution to the problem. Discuss issues freely and openly; don't withhold vital information from the other parties unless necessary (i.e. privileged).
- Work together. Meet regularly and at least as often as required by the agreement. Even if there is a property manager for the shared facilities, keep the managers for the individual parties informed of decisions made. Make decisions after careful consideration; not based on an "us vs. them" mentality. Ensure that the shared facilities representatives for the parties can work together; if possible, avoid having a committee with people who cannot stand each other.
- Seek advice. If the agreement is causing a dispute because it is unclear, or confusing, ask a condominium lawyer to review it and provide an opinion. I have done a number of these reviews in recent months. A diagram highlighting the easements or shared areas or a chart summarizing the obligations can be a handy tool for existing or new board members. It might be helpful to involve other professionals as well, like an engineer or reserve fund study planner, land surveyor, or accountant.