Condo board vs Existing Non-resident Parking and Storage Unit Owner – What happened when board tried to prevent outside owners from owning units?

by: Robert Pacan

Situation: Condo purchasers buy a parking and storage locker from another condo nearby because their building had none available. The condo board from the nearby building subsequently amends its declaration to prevent outside users from owning parking or locker units after the purchaser obtained ownership of the units. What happened next?

In the recent case of Grigoriu v. OCSCC No. 706, Ottawa purchasers entered into an agreement of purchase and sale for a residential condo unit by a developer, located in what I will label as building A. Unfortunately for the purchasers, no parking or storage lockers were available for purchase from that condo building. Luckily, the developer was building another condo, building B, right next door which still had parking and storage units available for purchase. The declaration of building B was silent regarding non-residents owning parking or storage units, so the purchasers bought them, while also buying their residential unit in building A.

A few years later, the declaration for building B with the parking and storage lockers was amended to prevent the use and ownership of parking units and storage units in building B by non-residents of that building.  In essence, the new provisions prohibited the sale or transfer of parking units and storage units in the building to non-owners of a residential unit at building B. The reasoning for this amendment was to address concerns with respect to the security of the parking garage.  There had been several incidents of vandalism in the vicinity of the garage involving graffiti on the exterior of the parking garage and damage to entry doors and light fixtures.

Building B’s condo board grandfathered the purchasers’ continued use of their parking and storage units for as long as they owned their residential unit. As would inevitably occur, the purchasers wanted to sell their residential unit in Building A and the parking and storage locker in Building B together. Due to the amended declaration in Building B, they were unable to sell both together. Their option was to attempt to sell the locker and parking to residential unit owners of Building B.

Evidence was shown at court that it was nearly impossible to sell the residential unit in Building A without parking and a storage locker. The purchasers alleged that they were unfairly prejudiced or oppressed as a result of the amendment and brought an application under s. 135 of the Condominium Act, 1998 asking the court to direct the corporation of Building B to further amend its declaration in order to address the alleged oppression.

The court found that the effect of the amended declaration was oppressive and unfairly disregarded the purchasers’ interests, and that the restriction prohibiting them from selling their parking and storage units to a future purchaser of their residential unit is a restriction not imposed on any other owner of a residential unit in Building B.

The court stated that the purchasers were severely prejudiced because they were unable to sell their residential unit without a parking space given the location of their residence, being some distance from the economic centres in Ottawa, necessitating a resident to have a car as well as a parking space for that vehicle. The court ordered that the only reasonable resolution was a further amendment to the declaration of Building B exempting the parking and storage unit owned by the purchasers from the non-resident owner ban.

This case should remind condo boards to be aware that amendments to declarations that affect certain owners of units unfairly may be subject to an oppression remedy through the courts. Treatment of all unit holders needs to be taken into account.