At Field Law we do more than just real estate. For instance, condominium issues are numerous and varied. Thanks to my colleagues Erin Berney and John Gilbert for their comments on terminating a condominium. Erin and John are available to assist with any condominium law issues you or your clients might be facing.

As real estate professionals, it is important to be knowledgeable about the complexities of condominium ownership. One such complexity is the possibility of a condominium terminating, which can happen for a variety of reasons. In this email, we will discuss why a condominium might choose to terminate and what happens when it does.

Why might a condominium decide to terminate?

Large cost associated with repair and maintenance: Condo boards have a duty to maintain and repair the property. Where there is a large repair required but the owner’s might not be able to afford the repair, a condo might consider termination as an alternative to the repair. Termination is a last resort for a condo that cannot reasonably engage in repairs.

Increase in land value: The value of land might increase over time, and it may be a desirable location for developers. In some cases, owners might look at terminating the condominium and selling to a developer.  

What happens when a condominium is terminated?

Termination means that the condo plan that was registered, ceases to exist. Generally, the effect of termination creates a single parcel of land that reverts to the original lot, block and plan. The single parcel of land is owned by all former unit owners as tenants in common.

How is a condominium corporation terminated?

There are two methods to terminate a condo:

1. Special Resolution: A condo corporation can be terminated by passing a special resolution, requiring 75% approval. 
2. Court Order: An application to terminate the condo can be made to the court. The court will make a decision based on the best interest of the corporation as a whole, and they will look at both economic and non-economic factors. The legal test that will be applied is whether it is “just and equitable” that the condo status be terminated in light of the rights and interests of the owners. 

A word of caution to condo managers dealing with difficult Boards…

If a manager is dealing with a “rogue Board” that is ignoring their statutory obligation to maintain and repair the property – perhaps because it is too expensive – the manager must take steps to protect themselves, one method is to expressly advise the Board of their duties in writing. In extreme cases, a Manager might consider terminating the management agreement. If the appropriate steps are not taken, the manager’s licensing may be in jeopardy.

Protect yourself.

Cheers,

Barry, Erin + John