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In a Toronto townhouse development, 22 unit owners are living in condos registered to someone else — their real estate lawyers were not showing due diligence.
How is it that 22 condominium owners in a north Toronto project do not own the units they are living in?
This is the case at Liberty Walk Condominiums, an attractive stacked townhouse development. It was completed in March 2003 after a disastrous fire two years earlier destroyed the entire project during the course of construction.
In a letter to unit owners last month, the property manager reported that the condominium corporation has been made aware that the location of and registered title to a number of townhouses in the project do not match the physical units in which the owners are residing.
The affected project is Toronto Standard Condominium Corporation No. 1513. To date, the corporation is aware that 22 unit owners are living in townhouses that someone else in the complex owns.
Back in 2014, two owners in the project discovered that they owned each other’s units and exchanged deeds with the help of their lawyers.
In addition to the 22 affected townhouses, the same issue may affect other blocks of townhouses and some of the parking units may have been transferred to the incorrect unit owners. The number of affected units is currently unknown.
This situation did not suddenly arise. In the 15 years since the creation of the condominium, many of these units have changed hands four, five and even six times – and at no point was the discrepancy discovered. That means that in more than 80 or 100 transactions, the purchasers were probably not shown the floor plans of the condominium to verify the location of their units.
How did this happen? In my view, it is the obligation of the real estate lawyer and perhaps even the real estate agent, to obtain a copy of the condominium plans and review them with the buyers to make sure they are buying the correct unit. Unfortunately some real estate lawyers are not doing so.
Back in 2011, in a court case in which I was an expert witness, Justice Darla Wilson wrote in her decision, “I agree with the opinion expressed by Aaron that it is the lawyer’s responsibility when acting for a purchaser of a condominium unit to ensure that the client is getting title to what they believe they have transacted for. In order to confirm this, the client must be shown the plans to ensure that their unit is the one identified, in the correct location, the size, whether it has a terrace which might be an exclusive use common element, whether it is a single storey unit or multi-level.”
That decision, and my opinion, was upheld by the Court of Appeal.
Lawyers for purchasers can obtain copies of condominium plans to review with their clients for $15. Despite this nominal cost, it appears from the Liberty Walk situation that some real estate lawyers may not be spending the money or taking the time to ensure their clients are buying the correct dwelling, parking and locker units.
Who is going to pay for correcting the titles? The Liberty Walk condominium corporation has reviewed the problem with its lawyers and, despite the contents of hundreds of status certificates issued over the years, has denied any responsibility.
The property manager’s letter to unit owners says that this is a matter that “unit owners’ real estate lawyers (should) review in any purchase or sale of condominium units.”
A notation of this issue has been added to future status certificates issued by the corporation.
Ultimately, the title insurers for the buyers will have to spend the tens of thousands of dollars necessary to exchange all 22 deeds, and discharge and re-register the mortgages on each unit.
Written by Toronto real estate lawyer Bob Aaron, a frequent speaker to groups of home buyers and real estate agents.
He can be reached by email at email@example.com, phone 416-364-9366 or fax 416-364-3818.