Bob Aaron in Condo Buying, Legal
A Superior Court decision released last month underscores the importance of reviewing condominium floor plans before completing the purchase of a unit.
The trial of the action took 42 court days and involved nine lawyers representing the parties. I was one of the many expert witnesses called to testify about some of the legal issues in the dispute.
Back in September 1997, Kelly Jean Rainville signed an agreement of purchase and sale to buy one of 39 condominium townhouses in the Grand Harbour complex on Lake Shore Blvd. W. in Toronto.
Richard Weldon was one of the developers of the project. He bought one of the townhouse units for $402,366.09 from the court-appointed official receiver when the development ran into financial difficulties. Weldon’s unit was finished as a two-storey unit, with common element attic space above the second floor and a basement below the main floor.
The following spring, Weldon began construction to expand the unit into the attic. The added third-floor area consisted of a new set of stairs, new windows and skylights, a bathroom, sitting area and bedroom, totalling 862.2 square feet.
When the condominium corporation was registered in 1993, the surveyor’s floor plans filed in the Land Registry Office did not account for the finished attic space. The plans showed that the upper boundary of the townhouse was the second floor ceiling. No steps were ever taken to amend the condominium declaration, and plans to legalize the third-floor attic build-out, which would have converted it from common elements to a part of the unit below.
Four years after moving in, Weldon sold the unit to Rainville for $975,000. The certificate she obtained from the property managers as part of the purchase stated that there were no continuing violations of the condominium declaration, bylaws or rules.
In January, 1998, Rainville went to her lawyer’s office and met with a law clerk to review and sign the closing documents. Although she was under the impression that she owned from the ceiling of the third floor right down to the basement, she was not shown any condominium plans.
Before moving in, Rainville began a $700,000 renovation to the townhouse. During construction, it was discovered that there was mould in the third floor due to water leaking through the roof. The condominium board and property managers became involved to resolve the water issues, and it was soon revealed that the third floor of the townhouse had been built into the attic space without permission of the condominium corporation.
In 2001, Rainville sued her lawyer, the condominium corporation, the property manager and two of its employees, as well as a number of individuals who were condominium board members at various times.
In her claim, Rainville asked for the attic to be legalized as part of her unit, approval of the work she had done, and extensive damages for the cost of renovating and repairing the unit.
The trial took place before Madam Justice Darla A. Wilson in late 2009 and early 2010. I was one of the expert witnesses called to testify as to whether Rainville’s lawyer was negligent in failing to show her the horizontal and vertical plans, which would have revealed that the third floor was not part of the townhouse.
It was my opinion that Rainville’s lawyer’s clerk was negligent in failing to show the purchaser both the horizontal and vertical floor plans on the townhouse. In a detailed 69-page decision, Wilson agreed with my opinion and ruled that the law firm had indeed been negligent.
The judge, however, dismissed Rainville’s claim to have the third floor legalized. She was ordered to close up the third floor and restore it to attic space.
The law firm was ordered to pay Rainville almost $300,000 in damages, plus close-up costs and renovation costs to the third floor.
Sadly, the legal costs of having nine lawyers involved in a 42-day trial far exceeded the damages awarded. My guess is that the combined legal bills were several million dollars.
Sometimes in litigation, nobody wins.
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Bob Aaron is a sole practitioner at the law firm of Aaron & Aaron in Toronto and a board member of the Tarion Warranty Corp. Bob specializes in the areas of real estate, corporate and commercial law, estates and wills and landlord/tenant law. His Title Page column appears Saturdays in The Toronto Star and weekly on Move Smartly. E-mail firstname.lastname@example.org