Bob Aaron firstname.lastname@example.org
Financial obligations, such as a requirement to pay monthly dues for parks, beaches or roadways, are only enforceable against parties to the contract. They don’t usually bind later purchasers.
A 2016 decision of the Ontario Divisional Court has affirmed that in some circumstances, a financial obligation registered on the title to a property can be enforced against future owners.
Normally, financial obligations — such as a requirement to pay monthly dues for parks, beaches or roadways — are only enforceable against parties to the contract. They don’t usually bind later purchasers.
But now a court has said that, in some cases, this type of obligation will bind all subsequent owners.
The latest case involves an area known as Wychwood Park, a small, tranquil enclave of 60 houses surrounding a private park and pond located southwest of Bathurst St. and St. Clair Ave. W., in Toronto. The community was created as an artists’ colony in 1891.
The private roadways are not maintained by the City of Toronto but by the trustees acting under a trust deed registered in 1891. They are responsible for road maintenance, lighting, snow removal and repairs.
The trust deed, which affects all the houses in the area, allows the trustees of the park to charge the owners a monthly fee to maintain the shared facilities owned by the trust. These include the roadways, tennis courts, park, ravine, pond and stream.
Most of the properties in the park can only be accessed through the private roads in the park. But a few front directly on Alcina Ave., which is a public road.
One of these properties has been in the hands of the Owen family since 1911. Around 2008, the family stopped making the payments required under the trust deed on the basis that they were not using the private park roads, and should not have to pay to maintain them.
In 2008, the trustees successfully sued the Owen family in small claims court for $4,000 in arrears of monthly payments for 2008 and 2009. The trial judge ruled that the family benefitted from the trust deed whether or not they used the roadways, and ordered the owner to pay the arrears.
On appeal, the Divisional Court upheld the decision.
In 2012, the parties were all back in small claims court again on a second claim for arrears of $12,799 which were owing for the years 2010 through 2014. This time the Owen family urged the court to accept the long-standing rule that the payment obligations could only be enforced against the owners in 1891 and not any later owners.
The trial judge agreed with them and ruled that the trust deed imposed payment obligations which were not binding.
Had it stood unchallenged, this ruling could have impaired the ability of the trustees to maintain the roads and common areas in the park, so they appealed to the Divisional Court last year.
The trustees argued that there were exceptions to the legal rule that positive obligations are not binding after the original owners sell. Earlier cases in England and Ontario have held in certain circumstances that financial obligations were enforceable if new owners knew about them when they bought their properties.
In the Wychwood Park scenario, the Divisional Court ruled that when the Owen family accepted a deed for ownership of their home, they did so on the implied condition that they were bound by the 1891 trust. Since their property ownership came with the benefits which all park residents enjoyed, each owner, including the Owen family, was obligated to make monthly payments to the park trustees.
Today, the problems experienced by the Wychwood Park trustees would be avoided by registering a vacant land condominium plan. That was not available in 1891 but the Ontario court has now fashioned a remedy which to me seems fair to all parties.