Posted: 25 Jun 2019 06:31 AM
PDT
In a previous blog
post we wrote about the requirements for shared facility
managers to be licenced where one or more of the parties to the shared facility
agreement is a condominium corporation. This is a new requirement
recently introduced when the Condominium Management Services Act, 2015 (“CMSA”)
came into effect.
This is just one issue that has
come up recently concerning shared facilities however, condominium corporations
continue to face challenges working with other parties, in governing and
operating shared facilities. Each party, whether it is a condominium
corporation, a retail/commercial owner or the developer, may have different
objectives and this often leads to very lengthy and costly disputes.
It is important that board
members and management take the time to understand the terms of shared facility
agreements (also referred to as reciprocal or cost sharing agreements) and know
what items are covered in the agreement and how decisions are made. Many
board members are surprised to learn that decisions may be made by unanimous
agreement, that there is no shared facility management provided for or/and no
reserve fund for shared facilities.
It is usually when disputes
arise, that board members and management, look to legal counsel to review the
agreement and soon discover what the issues are.
Here are a list of 8 top issues
with Shared Facility Agreements:
1. Unanimous decision
making. If parties don’t agree, how can decisions be made?
2. Agreement does not
provide for a shared facilities manager. Who manages the shared
facilities?
3. Agreement provides for a
shared facilities manager who was appointed by the developer and one or more
parties want to terminate that management company. Unanimous decision making
prevents termination of management if one party objects.
4. Missing shared facility
items. An item clearly being shared is not listed as a shared item. Who
pays for the cost and what portion of those costs?
5. Proportionate shares of
contribution are not equitable. The shared facilities agreement provided by the
developer, will set out each parties respective proportionate share of costs
relating to the shared facilities. It is down the road when the shared
facilities are in operation, that it becomes evident that the split between the
parties clearly favours one over the other.
6. Shared facilities
reserve fund is not in the agreement nor is a shared facilities reserve fund
study required. If there is no shared facilities reserve fund
referred to in the agreement, then each party will contribute to their own
reserve fund which will cover that portion of the shared facilities located
within their property. Commercial/retail owners, if a party to the
agreement, would not require that a reserve fund be maintained for any shared
facilities located within the boundaries of their property. This gives less
control to the other parties over reserve fund repairs to the shared
facilities.
7. No shared facility
committee. Yes, there are agreements in which one party will manage
the shared facilities and just report to the other. Decision making is made by
one with the others only able to dispute decisions through
mediation/arbitration proceedings.
8. Quorum for shared
facility meetings. All parties must show up to make quorum.
What do you do when one party fails to attend?
If possible, the best solution to all these issues is to amend the
shared facilities agreement, otherwise, condominium corporations will be faced
with long drawn out legal proceedings. Unfortunately, as is most
often the case, it is only when proceedings are commenced that parties soon
realize that the amendments are clearly the only way forward.http://www.lashcondolaw.com/condominium-shared-facilities-top-8-issues/
Next let's talk about Privately Owned Patios.... like between The Firken and Eden in Humber Bay Shore...
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