This blog post deals with two different matters:

The first deals with rent charges or community associations agreements that are registered on title. You often see these in subdivisions that include recreational facilities or community centres. The developer will build some sort of community centre or recreational facility such as a horse riding barn. The developer will register an agreement on title to the subdivision’s lots which sometimes impose various financial obligations on the lot owners, including future purchasers. So it is very important to read these agreements before the conditions are removed as they may be costly to a buyer. I was recently asked by an agent to review one. The agreement provided for an annual levy on each lot of 0.25% of assessed value to pay for the ongoing expenses of the original community association that the developer built. You can do the math of what that means to a buyer if the property has a high value.

The second matter is the usual clause about the vendor paying any special strata assessment that arises prior to closing. We have been consulted by someone who bought a strata unit and there was a special assessment before closing. The money to pay the assessment was held back, but after my client took ownership the special assessment was cancelled because it was improperly passed at the meeting. The money was then paid to the vendor. However as the repairs still have to be done, a new resolution will eventually be passed so now my client has to come up with the money himself.

Some strata by-laws say that any refund or return of monies paid to the strata corporation go to the registered owner at the time the refund is made. But my client’s by-laws did not say that so now he has to come up with the money.

While this problem might only occasionally come up, I think you should protect your client by adding to the standard special assessment clause the following: “In the event that the special assessment is later cancelled for any reason, including that the resolution authorizing it was declared null and void, the buyer shall be entitled to the return of the monies paid.

DAVID M. SIMON