The Tarion Warranties and Shared Facilities

The case of Allegra On Woodstream Inc. v. York Regional Standard Condominium Corporation No. 1284 dealt with major structural defects that were found to exist in a parking garage that is shared by three parties.

The Licence Appeal Tribunal (LAT) held that major structural defects existed in the design and construction of the shared garage. The Tribunal ordered Tarion to pay $1,736,271.23 to the condominium corporation.  [Under the Ontario New Home Warranties Plan Act, the Builder can, in turn, be obligated to indemnify Tarion for such amounts.]

The Builder appealed the Tribunal’s decision.

Among other things, the Builder argued that the Tribunal erred by awarding damages that included repair costs for portions of the garage that are owned by other entities, specifically YRCC 1307 (Sister Corporation) and a commercial owner.

• The Divisional court dismissed the appeal and upheld the Tribunal’s award.  In doing so, the Divisional Court said:

1284 has an ownership interest in the common elements that have a major structural defect. It was entitled to the costs of the remedial work to correct it. Awarding it 46% of the cost of the remedial work would not allow it to correct the defect. As noted by the Tribunal, if only that part of the structure occupied by 1284 was repaired, the remainder of the structure would remain unstable and dangerous, and 1284 would have received no remedy at all. In the circumstances of this case, the award was appropriate.

So in summary:  The Appeal Court confirmed that the major structural defects needed to be repaired throughout the entire shared garage.

In our view, this decision is also consistent with the following key concepts:

1. When a defect is claimed and proven, the warranties should entitle the claimant to a full repair at all locations where the claimant has a repair responsibility (including a shared obligation).  Otherwise, the claimant won’t receive the full remedy that is the claimant’s entitlement under the warranties.
2. Furthermore:  Per the definition of “common elements” contained the Condominium Act, the common elements include all appurtenant interests.   In our view, this includes shared interests.

Our further comment is as follows:  Any warranty claims (and performance audits) should always include claims in relation to shared facilities.

Stay tuned to Condo Law News to keep up to date on the latest developments on Tarion and Shared Facilities.