Shared facilities agreements
By Michelle Ervin—editor
09 February 2017
As developments become increasingly complicated, so do the
relationships between condo corporations and other parties bound by
co-ownership of building assets such as parking garages, according to
presenters of the seminar Shared Facilities Agreements: The Problems
& the Solutions at PM Expo last fall.
“Some of the big complexes, like around the ACC [Air Canada Centre],
you’ll see the agreements are getting very, very thick,” said Armand
Conant, head of the condo law group at Shibley Righton, “and it’s
getting very complex, because you have everything from retail component
to commercial, parts that are non-condo, parts that are shared
At the same time, recent changes to Ontario’s condo laws are poised to
make shared facilities agreements mandatory among parties with common
interests. It’s also hoped that spats over shared facilities agreements
will be among the types of conflicts eligible to be heard by a new
tribunal provided for in Condominium Act reforms, said Conant.
While the industry awaits the roll out of changes to Ontario’s condo
laws later this year, there are other ways to overcome these disputes
and improve these relationships now.
‘The root of the
Shared facilities agreements essentially establish the terms of
relationships between parties with a common interest, setting out how
decisions are to be made and who is to pay for what. Common interests
can include amenities, equipment and services such as pools, chillers
Also known as mutual use and reciprocal cost-sharing agreements, if
they are documented, they are written by the developer.
“They’re not drafted by the parties who are sharing these facilities;
that’s the root of the problem,” said Conant. “A, they don’t have to
have them, but b, when they are done … you find that often they’re
slanted towards whatever the developer is retaining or the commercial
It may not be appropriate to share costs evenly across owners,
regardless of use of, say, an amenity, as is done within condo
corporations, said Tania Haluk, vice president of operations for
Ontario, FirstService Residential. For example, a residential condo
corporation may complain that it’s unfairly being forced to subsidize
the costs of a commercial condo corporation responsible for an outsized
portion of a hydro bill. These rifts only emerge when the parties to
the agreements begin to use the shared facilities, she said.
In one dispute, a condo corporation punished its sister condo
corporation for a perceived breach of their undocumented terms of
agreement by cutting off access to the shared facility, which was on
its property. The sister condo corporation responded in kind by
refusing to pay its contribution to the facility’s costs.
‘A whole new
As developments have incorporated a growing number of components, these
agreements have bound together a growing number of parties, bringing
more people and opinions to the shared facilities committee table.
Complicating these agreements further is the move to spell out in
greater detail what each party can expect, Haluk illuminated.
“You read these shared facilities agreements that used to be a page or
two about right of access,” she said. “Now they’re like a whole new
declaration, breaking out every single component, which seems onerous
but is actually a good thing.”
The process of hammering out a protocol for when problems arise while
everyone is on amicable terms is kind of like signing a prenuptial
agreement before getting married, as Haluk put it. She also suggested
succession planning for individual condo boards as a way to sustain
positive relationships among the parties to the agreement. A consistent
understanding of the basis for cost-sharing provisions and
decision-making rationales can avoid challenges every time a party to
the agreement changes its representative on the shared facilities
committee, she explained.
Although not all shared facilities agreements are cause for friction,
some can and do get reopened for renegotiation. If that happens, Haluk
recommended checking emotions at the door and minding other parties’
“No one wants to gouge anyone,” she said, but added: “Who’s going to
put their hand up and say, ‘I’d like to pay more fees for something
because we’re unfairly enriched in the cost-sharing agreement,’ so it’s
If detailed shared facilities agreements are similar to prenuptial
agreements, then common interests are similar to the kids in a messy
divorce, maintaining a link between two parties that might otherwise
sever ties with one another. Sister condo corporations that co-own
assets can’t just walk away from their neighbour, as Marc Bhalla,
mediator, Elia Associates, remarked. When disputes do inevitably arise
in this context, it’s possible to resolve differences with a view to
“When you are able to successfully mediate a conflict in a shared
facilities situation, not only do you receive a more sustainable
resolution, you’re able to accomplish one that keeps in mind that you
have this forced, ongoing relationship,” he said.
It’s important for condo corporations to come to mediation with an
accurate picture of what their options are, particularly their best
alternative if mediation breaks down, Bhalla advised. He recalled a
case where a penny-pinching corporation entered mediation without a
lawyer, relying on an outdated legal opinion.
Other mistakes can include overlooking the condo corporation’s end
goals in preparing for mediation.
“Say you have a lot of bad blood between two boards of directors who
are trying to figure out how to cooperate and get along running the
recreation facility, and you have one member of one of those boards
who’s been there forever and who is not well-liked,” Bhalla offered by
way of example. “Is that the best representative to have in mediation
for that board?”
Property managers and lawyers can similarly play supporting roles in
helping or hindering prospects for dispute resolution, he cautioned.
Even if mediation fails to settle all of the issues on the table, it’s
valuable to cross some of the items off each party’s list before
heading to court, Bhalla said, if that’s where a dispute is headed.
A court ruling last year confirmed that condo corporations can get
relief when a shared facilities agreement is oppressive, said Conant. A
judge found that the agreement for a downtown Toronto complex known as
Maple Leaf Square met that test. As a result, the judge amended the
agreement, which had originally given complete decision-making
authority to the developer-controlled commercial component of the
The basis for the ruling lies in section 113 of the Condominium Act,
which Conant noted is the only reference to shared facilities
agreements in the current legislation. The clause gives the first
owner-elected board of a condo corporation 12 months following turnover
to end an agreement if a corporation can show that an agreement was
inadequately disclosed by the developer and produced an oppressive
There are two options for condo corporations that want to amend their
shared facilities agreement but don’t meet these criteria, Conant said.
Formal changes have to be embedded in bylaws, which requires a
favourable majority vote in each of the condo corporations that are
parties to the agreement in order to succeed.
“You’ve reached an agreement, you all sing Kumbaya, but how do you get
it passed by your unit owners?” he asked rhetorically, pointing to the
challenge of going this route.
Alternatively, it may be possible to alter a shared facilities
agreement by adding a clarification clause, which Conant likened to a
signed contract between the parties. However, he added that this
approach would not hold up to scrutiny as well as passing a bylaw,
which is the ‘most conservative’ approach to take.