What is a Section 98 Agreement?

In my last post, I wrote about section 98 of the Condominium Act, 1998, which permits owners to make changes to the common elements if: the board approves the proposed change; they enter into an agreement with the corporation; and notice is provided to all owners (if applicable). Today I'll discuss the agreement in more detail. Section 98 of the Act requires an owner to enter into an agreement with the corporation before making any changes to the common elements. The agreement must, at a minimum, do the following:

1. Allocate the cost of the proposed change between the owner and the corporation;
2. Set out the responsibilities for maintenance, repair after damage, and insurance of the proposed change; and
3. Set out other matters required by the regulations, which currently adds a requirement that the agreement state who owns the change.

The agreement may be referred to as a "section 98 agreement", "indemnity agreement", or "alteration agreement". The term used is not important; it is simply a preference of the lawyers and managers in the area. For instance, in Waterloo and surrounding areas the term "indemnity agreement" is often used, whereas toward London the term "alteration agreement" is more common. In addition to the above, the agreement will normally include notice requirements for both the owner and the corporation, indemnification clauses, and a variety of legal terms required to make the agreement legally binding on the parties. There are two different options when it comes to section 98 agreements. In some instances, a single unit owner may enter into an agreement with the corporation. Sometimes the agreement will cover a specific proposed change, like installing a ramp or pool, while other times the agreement will cover any changes made by the owner as long as the terms of section 98 are met (i.e. board approval). The main advantage of these agreements is that they can be tailored to the circumstances. For instance, drawings or specifications can be attached to the agreement so the proposed change and any obligations arising from it are clearly described. The other option is a "bulk" or "group" agreement.  In this type of agreement, multiple owners enter into a single agreement with the corporation. The main advantage of these agreements is that they allow a group of owners to share the costs for preparing and registering the agreement so the cost per unit is significantly less than preparing single unit agreements for the same number of units. These agreements are also easier for managers as the terms are the same for every participating owner; there are not multiple agreements with different terms and obligations to remember. Many firms offer bulk rates or flat fees for section 98 agreements. For more information on our firm's rates please contact us or review our 2017 Services & Fees Package. Please feel free to share our firm's tip sheet on section-98-agreements.