Condo Class Actions. Where Are They All Coming From?

The media has been very active in reporting on a number of class actions, all launched by the same law firm, with respect to various GTA condominium projects.  http://tinyurl.com/q53wlel

Contrary to media hype, the quality of condominium developments in the GTA is second to none in the world.  GTA condominium developers are experienced and build quality products substantially in accordance with the plans released at the time of marketing and sale.  Remember, however, that the marketing takes place at a very early stage and through the construction process, including municipal and governmental approvals and changing construction conditions, plans may change.  However, condominium developers are constrained by contract, the Condominium Act and their reputations from making any material changes to the projects which would either allow purchasers to walk away from their purchase agreements or sue for damages.

When one examines the outstanding class actions, it is clear that there is not a plethora of problems in the condominium construction business.  Three of the class actions relate to the falling glass phenomenon of several years ago.  Each of the developers involved took immediate action to address the problem, the cause of which is still under investigation.  All of these projects were built in accordance with existing building code requirements and good construction practices.  Since that time, the building code has been amended to address the type of glass to be installed on balconies to avoid future problems.  These class actions, therefore, do not relate to effecting repairs but only damages resulting from the temporary loss of the use of the balcony during the repair.

Earlier this year, a class action was commenced with respect to alleged misrepresentations on the Emerald City Project at Don Mills and Sheppard, Toronto, relating to access to the subway connection and Fairview Mall across the street.  Little has been written about the exact nature of the issue which relates to the difference between walking outside beneath a covered walkway for 20 feet from the building into the subway or walking directly underground into the subway.  No mention has been made as well, that the bulk of the units that were sold appreciated substantially since their purchase.  So where are the damages to these purchasers?

The most recent class action relating to the Great Gulf X Condominium Project on Charles Street, Toronto, was commenced when owners were dissatisfied with the pace of repairs to install new pressure valves for showers.  Although the issue may have arisen several years ago, until City sewer repairs were completed, the root cause within the building was not determined.  The developer has been taking immediate steps since then to correct the problem.  Again, why the need for a class action if the developer is rectifying the defect and these defects would likely be covered by the Tarion warranty in the unlikely event of Great Gulf not completing the repairs?

New condominium owners are protected by the terms of their contract and the warranties provided by Tarion.  Tarion backs a substitution warranty which requires that the builder provide what it has promised to provide to the purchaser under the terms of the Agreement of Purchase and Sale or if there are changes to materials or finishings, they have to be of equal or better quality. 

Changes to plans do happen but at the end of the day, the purchaser must get substantially what it has bargained for.  Builders endeavour to ensure that the final product is equal to or better than anything that they have promised to give at the outset of the marketing and sales stage.

New home purchasers in Ontario have one of the best warranty plans in the world - a 1-year full powertrain; a 2-year extended powertrain for electrical and other major items; and a 7-year structural defect powertrain.  The Tarion Warranty Corporation is vigilant in supporting these warranties where developers do not meet their obligations but by and large, developers endeavour to satisfy all warranty claims and maintain their reputation as good builders.

Given the thousands of units that are constructed every year and sold, these 5 class actions represent an aberration in the marketplace.  They arise as a result of the ability of one class action law firm to take advantage of the class action system whereby plaintiffs do not have to pay anything, and allow the class action plaintiff law firm to put pressure on developers to settle claims in order to avoid lengthy court costs and proceedings.