By Bob Aaron
In perhaps 80 to 100 transactions in the last 15 years, Toronto Realtors wound up listing and selling condominium units that were not owned by their seller clients. It now appears that 22 condominium owners in a north Toronto project do not own the units they are living in.
This is the case at Liberty Walk Condominiums, an attractive stacked townhouse development at 760 Lawrence Ave. W., between Dufferin and the Allen Expressway. It was completed in March 2003.
Unit owners in March received a letter from their property management saying the condo corporation has been made aware that the location and registered title to several townhouses in the project do not match the physical units in which the owners are residing.
The affected project is Toronto Standard Condominium Corporation No. 1513. To date, the corporation is aware that 22 unit owners are living in townhouses that someone else in the complex owns.
The same issue may affect other blocks of townhouses and some of the parking units may have been transferred to the incorrect unit owners. The number of affected units is currently unknown.
This situation did not suddenly arise. In the 15 years since the creation of the condominium, many of these units have changed hands four, five and even six times – and at no point was the discrepancy discovered. That means that in more than 80 or 100 transactions, the listing agents probably did not verify the units being sold against copies of the registered condominium plans.
As well, purchasers were not shown the floor plans of the condominium to verify the location of the units being purchased.
How did this happen? In my view, it is the obligation of the real estate lawyer and perhaps even the real estate agent to obtain a copy of the condominium plans and review them with the buyers to make sure they are buying the correct unit. Unfortunately, some real estate lawyers clearly are not doing so.
But is it the obligation of the listing agent to verify the units being sold against the condominium plans to make sure that the sellers’ deed matches the unit in which they are living?
In Ontario, the legislated Code of Ethics states:
“A registrant shall provide conscientious service to the registrant’s clients and customers and shall demonstrate reasonable knowledge, skill, judgment and competence in providing those services.”
Does that extend to a requirement to obtain and cross-check the location of the unit, parking and locker against the plans before the unit is listed? Based on the Liberty Walk situation, there is a very compelling case to support such a requirement.
Some will argue that if the wrong unit is listed and sold without Realtor verification, it is ultimately the obligation of the buyers’ lawyer and not the Realtor to verify location of the units. While that is certainly true, the issue would come up long after the listing and sale process and the title search, and the deal would die just before the closing date.
If the issue was discovered at the time of listing, there would be ample time to resolve the problem long before the moving vans are being loaded.
Back in 2011, in a court case in which I was an expert witness, Justice Darla Wilson wrote in her decision, “I agree with the opinion expressed by Aaron that it is the lawyer’s responsibility when acting for a purchaser of a condominium unit to ensure that the client is getting title to what they believe they have transacted for. To confirm this, the client must be shown the plans to ensure that their unit is the one identified, in the correct location, the size, whether it has a terrace which might be an exclusive use common element, whether it is a single-storey unit or multi-level.”
That decision, and my opinion, were upheld by the Court of Appeal.
In Ontario, lawyers for purchasers can obtain copies of condominium plans to review with their clients for $15. Realtors would need access to the Teraview system to obtain the plans. Alternatively, they could get them from the lawyer for the sellers or by making a personal trip to the Land Registry Office.
I recognize that this would mark a sea change in the standard of practice for Realtors, but it is certainly an issue worth discussing.
Who is going to pay for correcting the titles? The Liberty Walk condominium corporation has reviewed the problem with its lawyers and, despite the contents of hundreds of status certificates issued over the years, has denied any responsibility.
The property manager’s letter to unit owners says that this is a matter that “unit owners’ real estate lawyers (should) review in any purchase or sale of condominium units.”
A notation of this issue has been added to future status certificates issued by the corporation.
Ultimately, the title insurers for the buyers will have to spend the tens of thousands of dollars necessary to exchange all 22 deeds and discharge and re-register the mortgages on each unit.