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Nov 3, 2009 | Article  Marco Graziani

Transfer of Control

As published in the September 2009 edition of CondoBusiness. 

“Turn-over” is a significant stage of a condominium corporation’s existence because it is when the transfer of control of the condominium corporation from the declarant occurs.

At the turn-over meeting, in addition to the unit owners electing their board of directors, the declarant is required by the Condominium Act, 1998, to turn over certain documents, records, plans and information to the newly elected board of directors. Some of the required documents, records, plans and information must be provided by the declarant at the turn-over meeting, while others must be delivered by the declarant within 30 days from the date of the turn-over meeting.It is important for the condominium corporation to have these materials in its possession and control.
Accordingly, the newly elected board of directors should carry out what we call a turn-over audit (or arrange for the turn-over audit to be carried out) whereby, using the Act as a checklist, the condominium corporation determines which documents, records, plans and information have been provided and which remain outstanding. A request to the declarant to provide any missing materials should be made as soon as possible.
Although all of the materials to be provided at turn-over are important, a couple of these items are of particular importance and will assist/impact the condominium corporation on an ongoing basis. These particular items must be provided by the declarant within 30 days from the date of the turn-over meeting.
The condominium corporation requires a table setting out the responsibilities for maintenance and repair after damage, indicating whether the condominium corporation or the owners are responsible. A well drafted table will assist the condominium corporation in determining the maintenance and repair after damage obligations when applying the applicable provisions of the Condominium Act, in conjunction with the provisions of the condominium corporation’s governing documents and, in particular, its declaration. Although this may be less of an issue in newly constructed buildings, maintenance and repair after damage obligations will definitely become a live issue for the condominium corporation at some point in the future.
The second item that should be reviewed and assessed, as soon as possible, by the newly elected board of directors is the declarant’s standard unit description for the condominium corporation. The purpose of the standard unit description is to identify any improvements made to the units. In essence, anything forming part of the unit, and not included in the standard unit description, would be an improvement. The importance of this relates to both repair after damage obligations and more importantly, to insurance obligations, as improvements are an owner’s responsibility. 
Owners within a condominium corporation basically hold two policies of insurance, one which they share collectively with all other owners through the condominium corporation and the other which they hold individually. The Condominium Act does not specify what must be included or excluded from a standard unit description. This aspect is left to the declarant.
A proper standard unit description would assist in reducing potential conflicts between owners and the condominium corporation, by indicating who is responsible for a particular item. More importantly, the main objective for the standard unit description should be to reduce the aggregate insurance costs in building insurance paid by the condominium corporation and the insurance paid individually by owners.
In this regard, the inclusion or exclusion of any particular item should be considered in relation to the potential individual cost to an owner and the potential collective cost shared by all owners if the item forms part of the standard unit schedule. Striking a balance in this regard may be difficult.
Typically, such items as floor finishes and all chattels (i.e. appliances) are items that should not be included in the standard unit description. If the standard unit description simply consists of the declarant’s features list, then changes will most likely be required. Changes to the standard unit description may only be made by passing a by-law in accordance with Section 56 of the Act. A prudent first step for a newly elected board is to locate and review the declarant’s standard unit schedule with the condominium corporation’s insurance broker and the condominium corporation’s legal counsel.
As noted, all turn-over materials are important. Quite apart from the fact that it is your duty as a director to ensure that the declarant turns over the required documents, records, plans and information, if you leave it in abeyance until an emergency arrives, you may find that these materials have disappeared or are otherwise unavailable.

Related Services:

Marco Graziani

Marco Graziani Associate

B.A., LL.B.

mgraziani@finedeo.com
905.760.1800 x237
905.760.0050

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