Status Certificate Error Costs Condo, Lawyer, and Others
The Court of Appeal has released its decision in Orr v. Metropolitan Toronto Condominium Corporation No. 1056. I encourage a full reading of the case, but here is a summary of the important facts and findings. The condominium was developed in the late 80s and registered in 1993. One of the principals of the developer purchased a unit and built a third floor in the common element attic space above his unit. The third floor held a large family room, bedroom, ensuite, storage area and small furnace room. The condominium documents showed the unit as a two-storey unit. The principal was the president of the condo until 1997 when he sold the unit. The purchaser obtained two estoppel certificates (now called status certificates). Neither certificate mentioned the third floor issue. The purchaser bought the unit. During renovations of the unit the new owner discovered construction defects. She had her lawyer write to the condominium and property manager, who responded by demanding that she stop immediately. The condominium's engineer investigated the defects and noticed the third floor. The condominium brought an application against the owner for the third floor changes. The owner commenced an action against the former owner of her unit (who was also the former president of the condominium and principal of the developer), the City of Toronto, and the real estate agents. The owner started another action against her former law firm, the condominium, the property manager, and a number of individuals. At trial, the judge found the condominium, lawyers, and seller/director liable for damages. The owner was ordered to close up the third floor and pay the condominium rent for her use of the third floor. The owner appealed. The seller/director, lawyer, and condominium all cross-appealed The Court of Appeal made the following findings and comments: 1) Owner's Claim against the Condo The Court of Appeal determined that the condominium was liable for negligent misstatement in regard to the certificate that indicated that there were no breaches of the Act, declaration, by-laws or rules. In doing so, the Court made the following findings:
- The condominium owed the purchaser a duty of care in the preparation of the status certificate. The condominium could not escape its duty by contracting out or delegating the completion of the certificates to the property manager.
- The condominium and property manager should have been more vigilant and diligent in preparing the certificate when they knew the records transferred from the previous manager were "in dribs and drabs".
- The failure of the property manager to make any inquiries into the issue with the third floor prior to completing the certificate was "not reasonable or prudent in the circumstances."
- from the condominium - $41,681.00 for repairs to the common elements she made;
- from the real estate law firm - $28,379.02 for the amount she paid them;
- from the condominium and law firm (jointly and severally) - the difference between the value of the townhouse as a renovated three-storey unit and a two-storey unit.
- from the seller/director - $50,000.00 for punitive damages;
- from the management company - the amount it owes to the owner for negligent misrepresentation (in the certificate).