Real estate purchases never seem to get less costly. It’s tempting to cut corners on a deal in an attempt to reduce other costs like realtor commissions and legal fees, but as one local condo owner recently learned, cutting those corners may be more costly in the end. Experienced and diligent real estate professionals can recognize red flags and protect your interests.

Back in 1969, a 15-suite apartment building was approved for construction in Edmonton. In March 2007, the building’s new owner, a real estate developer, sold suites 30 and 31 to Mr. Frais and his partners. Suite 30 consisted of a kitchen, a bathroom, and a bedroom. Suite 31 contained a kitchen, dining area, living room, 2 bedrooms, a bathroom, and a large closet. A wall at one end partitioned suite 31 from suite 30.

In April 2007, the developer applied for a condominium conversion. The conversion was approved – for 15 residential condominium units, though, the Condominium Plan Certificate did not list the number of units.

In late 2022, Alberta Health Services (AHS) inspected the building and reported that it contained 17 suites. Eventually, it was determined that suites 20 and 30 were not approved.  The permit history and floor plans were clear – there were to be only 15 suites/units in the building. No one could confirm when legal units 21 and 31 became suites 20, 21, 30, and 31. The City of Edmonton had no record of separate addresses for suites 20 and 30, though there were 17 mailboxes, including separate boxes for those suites.

On February 21, 2023, the Development Compliance Officer issued an order requiring the suite 31 owners and the condominium corporation to “acquire a Development Permit to expand the number of dwellings in an existing multi-unit housing building or decommission suite “30” by April 30, 2023.”

Mr. Frais appealed the order. Before the Edmonton Subdivision and Development Appeal Board (the “SDAB”), he argued that he had purchased suites 30 and 31 from the condominium developer, and both suites were identified on the purchase agreement. He had no idea that required permits had not been issued for partitioning of the unit into two suites, or that they did not exist as separate legal parcels.

Section 10.2 of the Condominium Property Act is clear that where a developer must apply for permits that obligation does not expire by virtue of the registration of the condominium plan or the fact of the developer no longer being an owner. Mr. Frais was willing to apply for the required permits but argued that the cost of that application should be borne by the developer – who is no longer on the scene – the realtor, or the condominium corporation. It is not clear whether he engaged a lawyer to assist with the original purchase.

Unfortunately for the owner, the SDAB does not have jurisdiction to decide the applicability of s. 10.2 of the Condominium Property Act, so it could not determine who is legally responsible for the costs of resolving this problem. All the SDAB can do, and all it did, was confirm that the suites must be brought into compliance, granting the owners an extension to August 30, 2023. The owners or the condominium corporation will either have to get a permit for the additional suite, or decommission it, which would require demolishing a bathroom, a kitchen and a demising wall.

While the costs of this work are, in our opinion, most likely the responsibility of the developer, the fact that the developer is not around to pay for them does not mean the work doesn’t have to be done or that the owners or the condominium corporation receive a pass. Someone is going to have to foot the bill and try to recoup the money later.

This is just one more example of the value of a great real estate professional. A realtor may, and a lawyer will, review all of a condominium corporation’s documents before a sale is finalized. That review should have caught these non-compliant suites (simply by virtue of the fact that there would only have been one certificate of title, a red flag when the purchase agreement notes two suites) which would have allowed Mr. Frais and his partners to address the problem before the deal closed.

Don’t bank on ‘good enough’ advice – you get what you pay for. The real estate and condominium law teams at Field Law are here to make sure you don’t have to tear down the bathroom you paid for. Contact us if you have questions about this case or others.