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Canadian Court Certifies Class Action Against Condominium Developer: Defense of Class Actions

Condo Buyers Allowed to Pursue Class Action Against Developer for Understating Common Expenses

The Toronto Star reports this morning that an Ontario judge has certified a class action brought by homeowners in a condominium development alleging that the developer “significantly understated” the “total funds required” to cover the project’s common expenses for the first year to be $413,000. This amount proved woefully inadequate. In its second year of operation, the project approved a budget reflecting a 62% increase in common expenses, but still fell $48,000 short of meeting expenses. While Canadian law governing class actions differs from that in the United States, for our purposes the important point is that a putative class action was filed against the developer, alleging that the sales materials and disclosure statements were “inaccurate, false, deceptive and misleading.”

Bob Aaron, a Toronto real estate lawyer, reports that “the developer was warned in writing by the property manger ‘that unless drastic adjustments are made, the second-year budget will likely be doubled.'” Mr. Aaron’s article is entitled, “Condo buyers’ class-action suit bears watching” and may be found in the June 24, 2006 edition of the Toronto Star.

Note: Coincidentally, the leading condo hotel lawyer in the United States has worked on more than 60 condo hotel projects all over the world. He is Jim Butler of Jeffer, Mangels, Butler & Marmaro. Anyone developing or financing a condo hotel-whether ground up construction or conversion-should contact Jim Butler to discuss the project. The Global Hospitality Group chaired by Jim Butler has assisted clients with more than $40 billion of hotel transactions involving more than 1,000 properties around the globe.