When You Buy A Condo You Had Better At Least Read The Rules

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I’ve known condo buyers that never look at the documents that come with the Agreement of Purchase and Sale.

There are others to leave that sort of thing to their lawyer and there are others who try not to even use a lawyer at all!

Developers require that you use a lawyer and I can tell you that it is money well spent, but not all lawyers are the same, so shop around, interview a few and ask questions before concluding on one to use.

I’ve used Myles Waxman of Lipman, Zener and Waxman for years and have had literally hundreds of my clients use him and I have never had a dissatisfied client with either my service or his.

He doesn’t pay me to endorse him (no-one does and I’ve never allowed advertising on my web site, app or blog).  I recommend him because even a chimpanzee in a suit would see that he is your “quintessential professional lawyer” and like Realtors that can be hard to find.

I bought one investment unit at the Met and the developer had screwed up the documents relating to the lockers and he was the only lawyer that I have heard of the caught the mistake before it affected my purchase.

Many people “shop around” for the least expensive lawyer and there are flat rate shops out there that will take minimum fees but deliver minimum services, like actually reading the documents.

More significantly, the best advice that I can give you is to learn to read the documents yourself and have your lawyer go over them with you.

Oh, I know that ‘legalese’ used in Disclosure Statements and the like is cumbersome and not the easiest or most entertaining read that you can find.  And it is not required that you develop legal skills (after all that’s what lawyers are for) but knowledge is a big asset when investing and your lawyer should have it and share it with you so you understand what you are getting in to.

Reading the disclosure statement is best left to a lawyer, but reading the Rules and Regulations and the By-Laws is something that I stingily recommend every buyer develop the ability to understand.

There is a difference between the Bylaws and the Rules and Regulations.

What constitutes a “rule” and what constitutes a “by-law” is somewhat of a grey area, and this is the area that I say you must familiarize yourself with.

The Declaration is essentially the “Constitution” of the condo.  It defines and describes in detail every unit in the building and the proportion of expense that each unit carries.

Then you will find the Bylaws, which are legally binging documents written by the developer and included what is frequently referred to as the “Disclosure Statement“.  Bylaws complement the declaration and address or clarify things that possibly weren’t fully specified in the declaration.  For example they may show how the condo corporation can spend money, for example and/or how the board of directors is set up and operates.

Then you will come across the Rules and Regulations which will address everything from what time the amenities operate to the number or size of pet you are allowed to have.

There is frequently confusion around what are Rules and what are By-laws and today’s blog does not want to get bogged down with academics because, as the heading suggests, I’m telling you to learn to read them and why.

Let it suffice to say that Bylaws, to be changed require 50% of the owners to vote whereas Rules can be changed by a simple vote of the board of directors.

Anything set out in the declaration requires a vote of 80% of the owners to be changed.

Rules however don’t require a vote of owners.  The board of directors can add to, take away or change Rules at their discretion (usually pet policies are set out in the By-Laws).

One constant issue in condos is pet policies.  Frequently these are set out in the By-laws but some times boards will pass Rules relating to pets so you will want to be familiar with both if you have pets, or even if you don’t if pets bother you.

Either way, when buying a condo you want to be thoroughly familiar with the pet policies before you buy, especially when buying into a pre-sale or pre-construction condo.

I met with someone the other day who bought a unit in Imperial Plaza on St. Clair Avenue here in Toronto.

He has two dogs, one large very docile and friendly Golden Retriever and a small very well trained and behaved dog (I didn’t find out the breed).

So, he bought his unit (at over $700 per square foot!) and is about to move in as “Occupancy” starts in about 2 weeks.

He has just recently discovered that the pet policy, which allows only one pet and it must be under 25 pounds in weight, which doesn’t exactly meet his life circumstance!

He was asking me how rigid pet policies are in Toronto and I unfortunately had to tell him that law is law and if this was set out in the By-Laws, the condo corporation could insist that he either get rid of the big retriever or move.

He was shocked.

I asked him if he had not read the Disclosure Statement which included the Declaration, By-Laws and Rules and Regulations, and I was surprised to hear him tell me that he “not received them despite have requested them a number of times“.

This is, if his reply was accurate, contradictory to the Condo Act (and applicable law I would say!) as when you buy pre-sale, the Condo Act prescribes that you sign for receipt of them which then activates your “Ten Day Rescission Period” (under the Condo Act in Ontario you have 10 days to read these documents and cancel your purchase and sale agreement if you are not happy with their content, without penalty).

I asked him if he was sure that he had not signed the Acknowledgment of Receipt of these documents as it is usually a Schedule attached to and forming a part of the Agreement of Purchase and Sale.

He assured me that he had not, and that he had asked repeatedly for them!

My lay-man’s legal perspective on this suggests to me that he can still withdraw from the transaction as the developer and/or their agent have not fulfilled their legal obligations under the Condo Act.

But, with “Occupancy” just days away, who could adjust to this option?  I told him that there is very little that he can do other than to get his hands on the By-laws and Rules.

He told me that he has had a number of conversations with the sales rep on site but I can tell you that nothing that a sales agent says is considered valid.  Unless it is written in the contract it does not exist no matter what has been told to you!

If yo’ve been reading my blogs over the past decade and a half you will know my number one punch line when it comes to buying condos:  “believe nothing that you hear and half of what you see“.

This is a high density, (and high priced) high rise condo and it is reasonable that there would be a rigid pet policy as you can imagine hundreds of people using the elevators and if many owners and residents had a couple Great Danes (for example) life there might prove intolerable for those owners/residents who don’t have or care for dogs.

This is why I emphasize that all buyers at minimum invest the time and energy to read at least the Rules of a condo that they are buying in, before you commit to buying and allow the deal to go “firm“.

When buying a resale condo you always insert the condition on “Status Certificate” where a condo board member signs a check off list on the financial strength of the condo corporation (no-one suing to condo corp., number of rental units in the building, amount of money in the reserve fund, etc.).

The Status Certificate includes a copy of the declaration, Rules and By-Laws.  Leave the declaration and By-Laws (if you like) to your lawyer  but read the rules yourself to make sure that there aren’t rules that you are uncomfortable with or can’t live with.

You can’t leave the reading of this critically important document to your lawyer without your input as he/she may not even know that you have pets, won’t know the nuances of your lifestyle that rules may impose on, etc.

Reading these documents will give you the protection that you need and for the fifteen minutes that it takes, it’s probably the best insurance policy that you can get.

Rules are a good thing!  That’s why I live in a condo and always have.  I want the protection against some Beverley Hills type “Jed Clampett” deciding to make his property just as homey as the trailer park they moved out of.

I’m Charles

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