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| Harjot Atwal |
With a laugh, this lazy writer explains: I was googling “Sharing is Caring” quotes. The above came up. Quite fitting, I thought. Please forgive any changes in narrative style. I opened my law firm in March 2023. It is now two years later. I hired a new associate lawyer starting Mar. 20. I want her to write articles. Initially, this was her first assignment. I am a bit a possessive, though. Service to the legal profession is an important lesson I want to impart.
Possession brings me back to real estate law. I am taking the Real Estate Council of Ontario (RECO) course. Learning all kinds of things. Sitting in an office dealing with transaction after transaction is one thing. Seeing all kinds of complexity about even the architecture behind homes teaches one another. I recently wrote a five-part series about my lessons from RECO, and the fifth part is here. I was considering shared facilities.
Beyond just a joke to my new associate about sharing facilities with me or my mother’s company, it relates to their explanation about condominiums. So, mixed-use buildings involve both residential and commercial components. There may be a series of shops and retail offices on the main floor and there may be places to live upstairs. The issue is: How are the payments for utilities allocated between such units?
Without a Shared Facilities Agreement allocating the costs in such a mixed-use building, it amazed me to learn that new home-buyers might pay higher utility costs by buying into such a building. It is apparently the realtor’s responsibility to advise their clients about such possible additional costs. As a lawyer, I don’t think I have had clients buy into such a building, but it occurred to me that I would need to advise my clients similarly when reviewing their status certificates.
As I wrote about here, there are several things you look for as a lawyer when reviewing a condominium’s status certificate. Essentially, you need to ascertain the financial health of the condominium. Does it have enough of a reserve fund to deal with major repairs and replacements? Are there lawsuits against the condominium corporation such that you should advise your client that there is a possibility for a special assessment to be levied against their unit? Any such issues could lead to additional financial liabilities for your client, particularly in terms of the monthly common expenses (also known as maintenance fees) your client has to pay regularly.
Sometimes, such monthly common expenses account for things like property taxes, water, hydro and any other kind of regular expense. Sometimes, they do not. It will be difficult to ascertain this knowledge from just reviewing the status certificate without performing the additional due diligence of merely calling the condominium management company. Many times, what is required is thorough questioning of your clients in terms of what are they buying, what is their understanding of the building’s infrastructure assuming it is a condominium, are they aware of what their common expenses buy, like gyms and other amenities, do they have specific questions, like whether or not they can have pets, etc.
Providing proper service to your clients is not complicated.
From what I understand, a Shared Facilities Agreement should be shared in a condominium’s status certificate. It is possible it could be registered against title, such that when reviewing and pulling the Property Identifier Number (PIN) page, you could see it on title as perhaps a registered Notice instrument.
From paying attention to RECO, I thought I should make sure to ask what kind of condominium building my clients are buying into, so I can anticipate such potential issues. This will inform my status certificate review. I mean, I already did this, of course. But, as you acquire more and more knowledge, you become more and more aware of the all the potential myriad of difficulties your clients can find themselves having issues with as they try to close their transactions.
Take me, for example. I tried buying my own personal condominium on Feb. 27. I was ready to close, spent months talking with both of my divorced parents about how I would get a mortgage, met with them together at times, and still it did not close. With a laugh, I think of my parents when I think shared facilities. What happened? Well, the seller had three mortgages and other debts. They could not pay them all off with the net sale proceeds.
Why is this my problem? Well, I am not going to assume a property with debts. Similarly, I am not going to offer them a loan to help them pay their debts, unless I have appropriate security. They did not seem to have any based on the back-and-forth between our respective lawyers. I can’t close on a property if they cannot pay off and discharge their existing mortgages, if I need a mortgage myself. How do I explain to my lender that the mortgage is not in first place on title due to the sellers’ own financial difficulties?
I wrote a different article here about the difference between commercial and residential real estate law. It was essentially my contention that residential real estate law is better since it creates less anxiety. It is a less difficult practice to perform. I think I was too hasty in this assessment. Complexity always exists, particularly if you look for it.
I shared that article with all of my potential new hires during the interview process, along with this one about the importance of writing too. Writing is learning, simply put. Occasionally, as I write, I realize I was wrong about something I wrote before. My best advice to my new associate: Share a facility with me, write a few articles with me, and I will teach you whatever I know and how many mistakes I have made along the way.
Harjot Atwal is a real estate lawyer. In 2023, he opened up his own shop, Atwal Law Firm. For legal matters, you can reach him via email at harjot@atwallawfirm.ca. He is also a mortgage agent (level 1) with Pineapple Financial Inc. (FSRA #12830) and currently pursuing his realtor licence with RECO. His phone number is 647-967-6548, and you can also reach him on LinkedIn.
The opinions expressed are those of the author and do not reflect the views of the author’s firm, its clients, Law360 Canada, LexisNexis Canada or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
Interested in writing for us? To learn more about how you can add your voice to Law360 Canada contact Analysis Editor Peter Carter at peter.carter@lexisnexis.ca or call 647-776-6740.