Paid our fees, lost our unit—Part II 
On 22 June 2012 the owners were hit hard. The corporation lawyer sent them, and their mortgagee—the TD Bank—a Notice of Sale Under Lien.

Yet the cheque for the June condo fees was cashed.

The bank reacts
The bank acted both immediately and efficiently.

On 05 July 2012 the owners received a letter from the bank's solicitor stating that there were common expense arrears totalling $11,856.67.

This "final notice" stated that they wanted all of the following in 15 days or they would proceed to exercise of all its rights and remedies:
1.
Confirmation in written form from the condominium corporation setting forth that outstanding common expense arrears have been paid.
2.
Written confirmation from the city proving that all realty taxes assessed against the mortgaged premises are paid in full and up-to-date.
3.
A certified cheque in the sum of $525.00 payable to the bank's law firm, representing our legal fees to date.
4.
Current fire insurance policy evidencing that same is in full force and effect; and reflecting The Toronto-Dominion Bank as first loss payee.

The Toronto-Dominion Bank also retained the option of requiring the entire mortgage to be repaid immediately.

The owner was unable to get the required proof from the condo corporation.

The unit's mortgage was under a TD line of credit so the bank, without notice withdrew $11,856.67 from this line of credit and paid the arrears.

The bank sues the owners
Nineteen days later, on 24 July 2012, the TD Bank issued a statement of claim in Superior Court against the owners.

The bank wanted the value of the mortgage plus all of their expenses or possession of the unit. (This is when the owners found out that their mortgage was Due on Demand.)

The owners were forced to hire a lawyer and defend the action. Their lawyer brought a Third Party Claim against the condominium corporation.

The Third Party claim
On 28 Aug 2012, the owners sued the condo for all costs paid to the TD Bank and for damages. The owners claimed that:

Each of the three property management companies was unable to provide them with any information pertaining to the issue of the arrears in common expenses.
• 
The management companies were negligent when presented with proof of payment of the common expenses.
• 
The owners pleaded that they did not owe any arrears in common expenses, and the issue of any arrears is a direct result of the financial mismanagement and negligence in respect to the condo corporation in failing to properly oversee its management companies.

The owners pleaded that the condo corporation was negligent that it failed to keep a proper accounting of all common expense payments made by the owners.

In court
Justice Murray was annoyed with MTCC # 706's law firm for having to put the owners through litigation and the owners were upset having to pay out legal fees, taking time off work and wasting the court's time.

He told the corporation's lawyer that he did not care about legal fees he just wanted to know what was owed in condo fees.

Judge Murray arranged to hold mediation on 05 April 2013. During the mediation the condo's lawyer, along with the property manager, acknowledged that the owner's owed nothing for 2009.

So in essence the owner's won at mediation. They owed nothing.

The settlement
Justice Murray suggested that the condo pay the owners $9,500.00. The condominium corporation is prepared to pay this if the owners agree to drop all legal action against MTCC # 706.

So who won?
The owners?
The owners could not come up with financing to pay the TD Bank the cost of their mortgage so they lost their unit to the bank. They also owe thousands of dollars for their legal fees, the TD Bank's fees and the costs in trying to arrange another mortgage. They certainly did not win.

The bank?
So even though they won in court, they also lost a good customer who dealt with them for almost twenty years. They also took possession of a condo unit that they did not want.

The condo corporation?
MTCC # 706 lost $9,500 in court plus I imagine they paid all of their law firm's legal costs. They also have another unit on Power of Sale which will, in the short term, depress everyone's property values and further hurt the condo's position with CMHC.

They definitely did not win.

The condo's law firm?
I am sure they are the only winners in all of this. (Recently the board of directors has retained a new law firm.)

Was all of this preventable?
Certainly. First of all, the three different property management companies did not have any records showing that the owners were in arrears from February 2009 onward. That should have caused them to act with the greatest of caution.

Further more at the AGM held on 08 July 2012, the condo's auditor stated that he could not audit the corporation's finances for the years 2010 and 2011 because he never saw records so bad before.

He told the owners that the financial statements for 2010 and 2011 were not done and that the condo corporation was operating in the dark, although the board has monthly statements.

Yet, although the financial records were is such bad shape, the President in his report to the owners told them that there was $60,000 to $70,000 in arrears and they were now going to power of sales. He also said that this was a historical problem that the board inherited.

The condo lawyer chaired this AGM so he heard all of this.

Finally, the unit owners should have checked to insure that their fees were coming out of their account every month and they should have seen a lawyer who was experienced in condominium law as soon as they got that first letter from the condo's law firm.


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