The corporation’s law firm 

The corporation’s law firm does not work on behalf of the individual owners. The condominium corporation is their client. The board of directors represents the corporation so the board is the client.

Actually, if there is conflict among the board members, the law firm works at the pleasure of the majority of the directors.

The board hires the law firm, pays the legal bills and it is the board that gives the assigned lawyer directions.

The law firm draws up contracts, registers by-laws and changes to the declaration and handles legal issues with the developer, contractors, suppliers, the city and the owners.

The lawyer also registers a lien against units that are three months late in their maintenance fees and will represent the corporation in mediation, arbitration, small claims court and in Superior Court.

The lawyer will also advise the board on the provisions of the Act and the corporation’s declaration, policies and by-laws. The lawyer will also advise the board on election procedures and the collection and use of proxies. Many boards have the corporation’s lawyer chair the AGMs.

The lawyer usually takes direction only from the president or the manager and will not respond to questions or queries from owners or minority board members.

Solicitor's Code of Conduct
Lawyers tend to focus on their billable hours and hence the Solicitors' Code of Conduct—to act in the best interest of the client (the majority of the directors) invariably trumps any wider ethical guidance.

Some lawyers have been accused of meddling in condo politics by advising the incumbent board members on how to fend off challengers and being biased against opposition candidates when they chair the AGMs.

This is one reason why whenever the majority of the incumbent board is voted out of office, the new majority replaces the law firm.

Dispute between the board and an owner
If an owner violates a provision of the corporation’s declaration, by-laws, policies or rules, the board must inform the owner of the violation and insist on compliance.
The owner may foolishly ignore warning letters about noise complaints, unacceptable pets, a satellite dish, parking violations or whatever. If this happens, there is little the board can do but take legal action against the owner and the condo’s lawyer will be instructed to send the owner a letter.

The threat of legal action begins when the owner first gets a letter from the corporation’s lawyer. The letter describes the violations and it demands that the owner cease and desist. The letter will contain a threat of further legal action if he or she fails to comply.

Finally, the letter may demand that the owner pay the corporation $600 or more; the costs of preparing the letter. The letter then says that if the owner fails to pay within 12 days or so, the corporation will add the costs to the unit's common element fees and if the fees are not paid, it will lien the unit and proceed to put it up on a power of sale. The letter may say that this amount and any future costs will include interest charges.

Only a judge can order an owner to pay the corporation’s legal costs, however, the lawyer has stated what those costs may start at.

At this point, the owner would be wise to seek advice from a lawyer experienced in condominium law.

Section 134 (5)—The big hammer
The threat of legal action begins when the owner gets the first letter from the corporation’s lawyer.

Section 134 (5) states:
If a corporation obtains an award of damages or costs in an order made against an owner or occupier of a unit, the damages or costs, together with any additional actual costs to the corporation in obtaining the order, shall be added to the common expenses for the unit and the corporation may specify a time for payment by the owner of the unit.

Owners do not understand how serious it is and the legal costs they can face when the board takes legal proceedings to address non-compliance issues.

The losing side can pay thousands of dollars if the board and owner go to mediation. It quickly rises if they go to arbitration and can run into the tens of thousands if they go to superior court.

Judges have ruled—in some cases—that the unit owner has to pay the corporation’s full expenses in obtaining the order of compliance. (Of course, it works the other way around if the owner wins costs.) They award corporations, who are enforcing the rules, full indemnity because they do not think that the other innocent owners should be forced to pay when one owner flouts the corporations rules.

In two Ontario court decisions where the boards wanted pets removed from the property, one owner had to pay the board $19,000 in court costs while a second had to pay $25,000. This is on top of their own legal costs.

The declaration and by-laws
A lot may depend on the wording in the corporation’s declaration and by-laws. Your declaration and by-laws may state that any owner is bound to indemnify the corporation for any loss occasioned by his or her actions. Others are silent on this.

Collect as common expenses
It can get rough if the corporation can recover its costs by tacking them onto common element fees. Unpaid fees can, under certain conditions, allow the corporation to register a lien pursuant to Section 85(1) of the Act for unpaid common expenses.

If the condo has a strongly-worded declaration and by-law requiring an owner to fully indemnify the corporation from all costs which the corporation may incur caused by an act or omission of the owner, or any contravention by the owner with any provision contained in the Condominium Act, the corporation’s declaration, by-laws and rules the owner may be on the hook.

What if the lawyer got it wrong?
As I stated above, the lawyer’s letter may demand that the owner pay the corporation $600 or more; the costs of preparing the letter, and that if the owner fails to pay within 12 days or so, the corporation will proceed to lien the unit and have it put it up on a power of sale.

Almost all condo owners would agree with the board handling discipline problems so quickly and firmly. They would also agree that misbehaving residents should pay the costs of getting them to abide by the rules.

Section 134 (5) is in the Act to stop condominium corporations being hit with a rash of expensive and frivolous lawsuits by disgruntled owners. The idea is to prevent innocent owners from being burdened with costs for feuds that they are not party to.

No prior notice
However, what if the board did not inform the owner that he was in violation of the condo rules and the lawyer's letter arrived straight out of the blue? No verbal requests to cease and desist, no letters from the manager or the board. Nothing. Is a $600 lawyer’s letter a fair and honest way of giving first notice?

In one case where an owner was playing his stereo too loudly, the first two letters sent to the owner by the manager were never delivered. They sat at the security guards’ desk.

The lawyer can be used as a bullyboy. A vindictive board may use an expensive lawyer’s letter to harass a disgruntled owner. Most owners violate one or more rules from time to time. What is ignored when done by most owners, such as parking in front of the lobby while unloading groceries, is completely unacceptable when done by someone the board does not like. An expensive lawyer’s letter may be unfairly used to teach the owner a lesson or discourage a potential political opponent.

Owner is innocent
What if the resident did not do what they are being accused of? Sometimes the board receives incorrect information or makes assumptions that are not factual. What does the owner do, since the costs climb every time he writes a letter to the lawyer?

Accusations written by a lawyer are not necessarily true. The lawyer is acting as an agent of the board and he acts upon what they told him. Sometimes he has no way of knowing if what he has been told is accurate or fairly states the facts. Sometimes he doesn't care.

Perhaps an owner cannot afford to defend himself in court against false or inaccurate charges. Rough justice does not seem so sweet now does it?

Can they lien your unit?
On the basis of one letter? I am not sure. It depends on what the board is accusing you of and what your declaration, by-laws, policies and rules state.

They can register a lien but whether it is legal or not is something that a court may have to decide. This is when an owner needs advice from a lawyer who is experienced in condominium law.

It is likely that they will add it to your condo fees and let it gather interest. The amount will need to be paid by you to get clear title when you decide to sell. You will not be able to be a director or be able to vote at an owner’s meeting as long as you are in arrears.
Here is a posting that one condo director posted on a condo owner’s blog:

I want to know why lawyers are allowed to write BS letters to owners stating "you are liable for $xxx.xx costs in recovery" when it's not true. I am fed up with lawyers claiming "recovery" costs from owners—then in a separate covering letter to the board, they warn the corporation that "recovery" may not be possible in view of the Condo Act and/or our declaration.

They try to get money "back" for the Corporation—expenditure of money that the lawyer created, not the owner, by claiming it is owed by the owner.

They even try to charge the owner for writing the letter, when all that is necessary is a letter from management (or a set of letters from management).

I do not understand how they think that this is okay but this is a standard practice. Apparently this unsubstantiated "claim" system is very common in other aspects of business or in litigation, certainly not just condos.

What is the legal "principle" involved here that makes an unsubstantiated threatening claim okay in the first place? Normally we just tell our lawyers "no thanks" to the scary letter to the owner, but we have received hilarious threatening letters from lawyers demanding money when clearly none is owed (usually from shared facilities lawyers). Can someone explain this?

The lawyer is letting the board know that he is bluffing and that the judge may or may not make the owner pay up. It is gambling because it is not a guaranteed win for the board.
Most owners will become badly frightened when they read the lawyer's letter so they will pay up and snap into line. Many will move out.

However, if the board misjudges the owner and is dealing with one that has spunk, they may lose in court and will have to cough up the legal bills for
both sides.

The cute thing is that the board has a couple of advantages. If an owner looks for legal advice, most condo lawyers will tell the owner to pay the lawyer's letter, sell the unit and get out because going to court is not worth the time, money and lost sleep that it will involve.

If the owner sues, the corporation can offer the owner a settlement and a confidentiality clause will keep the other owners from learning the details.

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