Every so often I run into property managers who tout the benefits of a condominium corporation registering a blanket alteration agreement on title to the units which contains a list of pre-approved alterations that the unit owners are permitted to do to the common elements. For example, within a townhouse complex, the agreement would set out a list of typical alterations that the board is prepared to approve in advance (such as deck installations and extensions, tree planting and other landscaping) complete with descriptions and specifications. The agreement would be executed by the corporation and all the unit owners and then registered on title to all the units.
The idea is that a blanket alteration agreement is convenient and saves costs. It is convenient because the owners would not be required to enter into an individual alteration agreement with respect to each and every specific alteration that they may wish to make from time to time. The blanket agreement would also clearly save costs because it is prepared only once and there is only one registration charge with respect to the registration of the agreement on title to all the units.
This is all good. The problem is that these advantages are outweighed by a host of disadvantages. The most fundamental problem is that these types of agreements are probably not in compliance with Section 98 of the Condominium Act, 1998, and therefore, if challenged by any unit owner at a later date, may be found to be invalid. Specifically, the wording of Section 98 does not appear to contemplate the board approving in advance certain types of alterations which an owner has not yet proposed and may never make.
If the blanket alteration agreement is challenged and if it is determined not to be valid, then the corporation would have a bit of a nightmare on its hands. Firstly, the corporation would likely have to absorb both its legal cost to defend the challenge and the legal costs of the owner who challenged the alteration agreement. Secondly, since such challenge would probably come within the context of the owner challenging the corporation's right to lien for the costs that the corporation added to the common expenses payable by his or her unit under Section 98, the corporation would also likely have to absorb its legal costs of placing and then discharging the lien. Thirdly, the corporation would have to go back to the owners who have made alterations to the common elements and require them to enter into individual alteration agreements with respect to those alterations. These owners will not be happy to pay for the preparation and registration of a new alteration agreement, to say the least.
There are other practical considerations as well. By preparing a blanket agreement well in advance of any alterations being made, the board has to be very careful about how it describes the permitted alterations so as to provide flexibility. However, no matter how much effort is put into it, there will be owners who will not be happy to be boxed into a fixed set of specifications. As well, given that the alteration agreement is registered on title indefinitely, the board loses discretion, firstly as to whether or not to allow certain alterations in the future (which may no longer be considered desirable) and secondly, regarding any changes to the specifications (twenty or thirty years from now the board may have different opinions as to what the specifications should be, in terms of size, materials, or colour). Essentially, if the agreement is deficient in any way, the board has no way of improving it down the road. Finally, if it becomes at any time necessary to delete the alteration agreement from title to any particular unit, the corporation would have to obtain the agreement of all the unit owners to delete it, which may not be easy to do.
There you have it. There are some advantages to blanket alterations agreements, no doubt. For some corporations they seem ideal. But there are also clear disadvantages, not least the fact that these blanket agreements may not in fact be valid. The bottom line is that these agreements are risky.