Our laws are finally catching up to the condo boom

While we prefer to think of the Yukon as a rugged frontier place, a big city concept has exploded here in Whitehorse over the past couple decades: condominium living.

While we prefer to think of the Yukon as a rugged frontier place, a big city concept has exploded here in Whitehorse over the past couple decades: condominium living.

Each new condo in the Yukon is given a number issued sequentially based on when it is built, so it is easy to know how many there are. In 1996 there were fewer than 40. Today new condo developments are numbered well into the 200s.

It has been a painful period of growth. Developers, buyers, regulators, lawyers and bankers have had to deal with an antiquated piece of legislation with significant gaps and ambiguities. Several disputes have ended up in court.

Now, a new Condominium Act has been passed by the Yukon legislature with little fanfare and received assent on May 26. It will come into force at a date to be set by cabinet. The new act was the product of several years of consultation with various stakeholders.

Before we get any further, it’s important to define a few terms.

A typical condominium project is divided into two or more “units” – which are owned by individuals and are where people actually live – and the so called “common elements” – which are parts of the property shared by all of the owners. To use an apartment-style building as an example, your “unit” would be your apartment and the “common elements” would be the hallways, elevators, laundry facility, gyms, etc.

A condominium “plan” is a survey showing the lines between the various units and the common property. The “declaration” and “bylaws” are legal documents setting out all the rights and responsibilities that unit owners and the board of the condominium have.

Contrary to popular belief, condominiums are not just apartment-style buildings and row houses. At their core, condominiums are simply a system for shared living, and dividing up the expenses of maintaining the common elements. They can be used in a variety of situations.

There are mobile home condominiums and condominiums with a number of detached homes (usually similar in appearance) often surrounded on the outer perimeter by a common fence.

In Copper Ridge and Granger you will find duplexes that are technically “condominiums.” The owners don’t pay any condo fees and wouldn’t even realize that they live in a condominium if it weren’t for the fact that they split the cost of insurance for the building.

Many of the changes in the new Condominium Act are dry and arcane. They settle long-running debates that interest no one except for lawyers and government bureaucrats, like who pays for insurance on a stand-alone unit (a surprisingly complicated question under the old legislation).

But a few have more tangible implications, particularly for purchasers of new developments.

Most importantly, in my view, are the requirements that the new act imposes on developers. A point of frustration for buyers in the past has been the bold promises made by developers that they have failed to live up to – particularly regarding the completion of the common elements and the final look of a phased development. The problem being that when these details aren’t actually written down into an agreement they are more difficult to hold the developer to account.

The new act imposes a number of new requirements on developers that force them to either scale back their promises or plan on living up to them. When the new legislation comes into force, developers will owe new buyers a “duty of fair dealing with respect to the entering into, performance and enforcement of the (purchase) agreement.”

In cases where the development is not complete at the time the buyer takes ownership of their unit – a very common situation – the new legislation requires that the agreement contain a number of details that until now were an afterthought, like paving and landscaping.

The completion of the “common elements” has been a common problem, and the new legislation finally requires that developers provide buyers with some legally binding guarantees.

The new legislation also establishes some badly needed guidelines for “reserves” – money set aside to handle future expenses like new roofs and heating systems.

Some details of the new regime aren’t yet known as they will be contained in the regulations. The issue of so called “phased developments” – larger projects built in phases where you can’t say with absolute certainty what the final product will be until later – will be in the regulations. Hopefully cabinet keeps the reasonable expectations of buyers in earlier phases in mind by not allowing developers too much leeway to change the overall concept of the project in subsequent phases.

The new Condominium Act is not a panacea and the principle of buyer beware is always important when purchasing real estate. For most people buying a home is usually the biggest purchase they’ve ever made and it is an important one to get right. Buying a condominium adds another layer of complexity to your purchase.

Condominium living often provides a number of amenities and conveniences that don’t exist with traditional home ownership. It can be an excellent alternative for those who are uninterested in things like yard maintenance, and snow removal.

But there is a trade-off involved. Living in a condominium means living in a community, and communities typically have rules. It is important to know these rules and obligations before signing on to make sure you can live with them. That won’t change in the new legislation.

But at least the new act will bring some certainty and protection for new purchasers against developers selling big dreams. Now if only the legislature would turn its mind to introducing mandatory new home warranties – a subject I wrote on back in the fall – we would be getting somewhere.

Kyle Carruthers is a born-and-raised Yukoner who lives and practises law in Whitehorse.

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