Condo Questions: Owners Should Insure Against Loss of Rental Income
September 28, 2024
Robert Noce
Edmonton Journal
Published on: September 23, 2016
Q: My condo unit has been under repair for the past two months due to water seepage. During this time, my tenant has been unable live in the bedroom due to the mould, repairs and cleaning, so I have suffered loss of rental income. I understand that the board is directly covering the cost of the repairs, as water seepage is not covered by the condo’s insurance. Since the board is responsible for keeping the common property in good repair to prevent these kinds of events, I am requesting that my loss of income be reimbursed ($900 per month, prorated for the duration of the bedroom being uninhabitable). I have personally insured my condo for loss-of-income but water seepage is an uninsurable loss, so my only recourse is to seek these costs through the board. What do you think?
A: I think your chances of getting reimbursed are very low. The issue of loss of income is between you, as owner, and your renter. This is not the responsibility of the condominium corporation. As long as the condominium corporation has acted diligently and dealt with the problem on a timely basis, I think expecting the condominium corporation to reimburse you for your loss of income is very remote.
Helpful Hint: Owners should seek the right type of insurance to minimize their loss of income in the event of situations like these.
Q: I recently received the advertised fine of $150 for failing to remove my vehicle from my condominium parkade during cleaning. Checking to make sure the board had the authority to issue fines, I noticed that my fine was outside the monetary range laid out in the bylaws. In fact, it was less. The bylaws state that “the sanction imposed shall be between $500 and $1000.” I assume that when it came time to enforce the bylaws, the board realized that the amount laid out in them was quite unreasonable and simply decided to charge something else. There is also a section in the bylaws that states that prior to a sanction being imposed, the owner shall be permitted to explain the act or omission, with the board considering this before passing a resolution to impose sanctions. This did not happen in my case, as the fine notice was simply delivered to me. Do you think a fine like this is acceptable?
A: It is odd that the board would issue a fine amount less than what the bylaws set out. Obviously, for me to give you a definitive answer would require me to fully review your bylaws. However, if your bylaws do allow you an opportunity to be heard and the board has failed in that regard, I think you could make a legitimate argument to indicate that your fine should be withdrawn or cancelled. Unfortunately, the only process available to you, unless you can get agreement from the board to cancel your fine, is to take them to court. The amount obviously does not warrant that.
Helpful Hint: When boards issue fines, they have to follow the law. However, a recent decision by our Alberta courts stated that bylaws should not be treated as a version of legislated inhumanity.
Q: Our condominium board has levied a deposit amount on all units that have been rented out by owners in our condo complex. The amount is a flat $1,000, but the board has had resistance by some owners who state that they are not charging rent, as their child lives there while attending university/college, therefore they are exempt from paying anything since the adult child is not paying them. How do we handle this? The Condominium Property Act (“the Act”) states that we cannot levy any more than the monthly rental amount, but our bylaws do not address this issue. Is this just a way of avoiding paying the security deposit?
A: This is a great way for owners to avoid paying a security deposit. Since the amount your board is issuing is a flat $1,000, if some owners are renting out their unit for less then they are entitled to pay whatever the lower amount is. There is nothing in the Act that would indicate that the owners, who are also parents, are doing anything incorrectly. Therefore, the board may be hooped.
Helpful Hint: If an owner is truthfully renting out a unit for free, then pursuant to the Act, the board would not be entitled to collect a security deposit. However, you are still entitled to know the full name of the tenant renting the unit. This will help in verifying the status of the renter.
Q: Our multi-storey condominium is currently undergoing extensive renovations to our common property hallways. However, one hallway is now totally different from all the other floors (different light fixtures, baseboards, etc.) and when management was asked why, the answer was that the owners on that floor “paid for the differences themselves.” Is this allowed?
A: Probably. There is nothing preventing owners from putting more money into the budget on their own to improve something on their floor. This is unusual, and I have never encountered such a situation. This may cause more problems in the future for all owners. I just hope that all of the owners were given that same opportunity to have similar enhancements on their respective floors.
Helpful Hint: There is some value in having a consistent look on all of the floors. Your question demonstrates that maybe there would have been interest from other owners to get a new look, and that perhaps better consultation was required. Now this raises issues, including whether the condo units on the floor with the better hallway will have a higher resale value and who has to pay for maintenance of the enhancements.
Q: Last year, I entered into an initial purchase agreement with a developer for a condo for my own use as a first owner. I was told that the possession would be available in spring 2016. The possession was delayed, and may be available sometime near the end of the year. My plan was to live in the unit, which may now change due to my job transfer out of town. What do I do?
A: This is a tough question to answer because I need more facts. However, here are some options: (1) if you want out of the deal, review your purchase agreement and try to determine what remedies are available to you; (2) you could maintain ownership of the unit and rent it out; or (3) if permitted under the purchase agreement, try to sell your unit.
Helpful Hint: Given the fact that you are dealing with an asset of value, you should contact your lawyer that assisted you on the purchase of the unit and ask the lawyer to provide you with a detailed list of options, with pros and cons for all options.
Robert Noce, Q.C. is a partner with Miller Thomson LLP in both the Edmonton and Calgary offices.