Law Times

Law times • OctOber 29, 2012 T BY JONATHAN HOOPER For Law Times Ontario could look to New Zealand for condo reform ideas u SPEAKER'S CORNER COMMENT has put the spotlight on the rules governing their purchase and sale. At the same time, the intro- he recent boom in con- dominium construc- tion in Canada — and Toronto in particular — duction of the proposed property owners' protection act through a private member' nouncement by the Ontario gov- ernment of a major review of the Condominium Act have drawn further attention to the rules. One of the issues under review s bill and the an- contract disclosure and making status certifi cates mandatory. Th e New Zealand approach Zealand is similar to the status certifi cate in Ontario. It includes details about the structure, gover- nance, and fi nancial status of the condominium corporation. But unlike status certifi cates, pre-clos- ing disclosure is mandatory. Purchasers may also request Pre-closing disclosure in New is the information disclosed to po- tential purchasers and investors. Th is issue recently arose in New Zealand, where I worked as a litigator representing condomin- ium corporations and owners in construction defect claims. In the 1990s, there was a boom in the construction and sale of condominiums in New Zea- land. Soon aſt er the construction boom, widespread defects and leaks began to appear and condo- minium corporations and owners initiated litigation to recover the remedial costs. One of the important issues that arose in litigation was the con- tent and suffi ciency of statutory disclosure requirements. During the boom, disclosure documents were not eff ective in alerting con- dominium purchasers to previous or existing building defects. Specifi cally, the content of the additional particulars of informa- tion contained in the disclosure statement at their expense. Buyers have the right to rescind the pur- chase if they are not happy with the information provided in the pre-closing disclosure. Th e pre-closing disclosure pro- cess in New Zealand is similar to a purchaser' chase agreement in Ontario aſt er viewing the disclosure statement. One of the benefi ts of the New s right to rescind a pur- Zealand approach is that is allows potential purchasers and investors to make well-informed decisions without imposing onerous regula- tions on vendors and condomini- um corporations. Obtaining pre-contract dis- closure allows potential purchas- ers and investors to assess certain risks associated with purchasing condominium properties and ob- tain legal advice before entering into a purchase contract. Another benefi t for purchas- disclosure documents was insuffi - cient to warn purchasers of known problems. Also, when purchasers fi nally discovered the known con- struction defects, it was too late in the purchase process. I represented many condo- minium owners and investors who obtained disclosure docu- ments but still found themselves owning condominiums that turned out to have leaks or other defects. Th e disclosure documents provided to them either did not clearly inform them of known construction defects or that infor- mation came to light only aſt er the purchase became unconditional. In 2010, the government of New Zealand changed the rules. Th e changes included implementing a more oner- ous disclosure regime through provisions such as mandatory pre-contract disclosure and two forms of pre-closing disclosure. Pre-contract disclosure is simi- could be as simple as making the disclosure statement available to all potential purchasers as pre- C ondominium Act. to disclosure requirements is something the provincial gov- ernment may want to consider in its current review of disclo- sure requirements in Ontario' s Reach one of the legal and business markets in largest LT Jonathan Hooper practised con- dominium litigation at Grimshaw & Co. in Auckland. He currently works at Forbes Roth Basque in Moncton, N.B., and is awaiting admission to the New Brunswick bar. Canada! PAGE 9 With more than 179,000 page views a month and 31,000 unique visitors canadianlawlist.com captures your market The canadianlawlist.com features: — A fresh new look, designed for improved user experience — Effective new ways to reach the legal market — Gold and silver advertising packages ers and investors is the mandatory disclosure of information about the condominium corporation through a provision similar to the status certifi cate. Th is form of mandatory disclosure provides purchasers with substantial infor- mation about the condominium corporation and its governance. Pre-closing disclosure allows purchasers to assess their future responsibilities as condominium owners, the fi nancial position of the condominium corporation, and its governance. It also provides purchasers with another chance to obtain legal advice about the con- dominium corporation. Th is degree of mandatory dis- For more information contact: Colleen Austin at 416-649-9327 or toll free at 1-800-387-5351 colleen.austin@thomsonreuters.com CLL Online ad - 1/4 pg - 3X.indd 1 GAIN COMMAND IN ANY COMMERCIAL REAL ESTATE DEAL NEW EDITION THE ART OF THE REAL ESTATE DEAL, 3RD EDITION BARRY D. LIPSON, Q.C. closure also has its benefi ts for vendors and condominium cor- porations. In the event of litigation involving the information pro- vided, they may properly assert that purchasers were aware of the details and chose to proceed with the purchase. Barring fraud or misrepresen- lar in form and content to the dis- closure statement in the Ontario Condominium Act. Pre-contract disclosure in New Zealand in- cludes a description of the prop- erty, a detailed fi nancial statement for the condominium corpora- tion, details of proposed mainte- nance projects, and whether the unit or the condominium corpo- ration has been subject to litiga- tion claims for building defects. Pre-contract disclosure can be s agent. The Art of the Real Estate Deal, 3rd Edition is a clearly and concisely written guide, consolidating the various aspects of commercial real estate transactions in one volume. WHAT'S NEW IN THIS EDITION The third edition has been significantly expanded and updated to include the following: tation, purchasers are deemed to have accepted the potential risks revealed in the disclosure docu- ments. Th e consequences of fail- ing to identify any problems dis- closed rest with purchasers and their solicitors. Th e New Zealand disclosure available to potential purchasers at open houses, at auction or upon request from the vendor' regime represents an attempt to strike a balance between protect- ing purchasers and investors and excessive regulation. Th e main diff erence between disclosure re- quirements in Ontario and New Zealand is timing. Implementing a New Zealand- style disclosure regime in Ontario www.lawtimesnews.com ORDER # 983674 $153 Softcover + CD-ROM approx. 380 pages September 2011 978-0-7798-3674-1 • A new section on the use of leverage in Chapter 2 – Property Valuation • A new section on break-even ratios in Chapter 3 – Risk Assessment • Updated pro forma for both subdivision and condominium development in Chapter 4 – Land or Site Valuation • A new section on acting in good faith in Chapter 8 – Preliminary Considerations • Substantial updates to Chapter 9 – Choice of Entity, relating to the acquisitions by a partnership and by a corporation, the tax consequences of each, and a new section on Joint Ventures • New precedents – partnership agreement and co-ownership agreement, and provisions relating to good faith and arbitrations AVAILABLE RISK-FREE FOR 30 DAYS Order online at www.carswell.com 10/11/12 9:36 AM Call Toll-Free: 1-800-387-5164 In Toronto: 416-609-3800 Shipping and handling are extra. Price subject to change without notice and subject to applicable taxes. Online Print and in

• Cover