Compliance Costs Must Be Reasonable – Prove It Or Lose It

In a recent case, a condo was unable to claim indemnification for legal costs in issuing a compliance letter to an owner, as the condo failed to prove the breaches in the compliance letter. The condo did not provide the owner with some of the requested security reports, and the incidents were described in those reports as minor. Moreover, the condo failed to warn the owner of the alleged conduct in a timely way and did not give the owner an opportunity to participate in the investigation or respond to the allegations before issuing the compliance letter. The CAT emphasized that condos must be reasonable in their enforcement actions and that a condo's enforcement steps and costs must not be unreasonable or capricious. They must investigate complaints and provide fair warning to owners before escalating to the next step.