Termination of a Condominium Corporation

Legal Requirements for Termination

The Condominium Property Act (CPA) of Alberta outlines the legal framework for terminating a condominium corporation. Termination of a condominium plan requires approval from at least 75% of unit owners representing at least 75% of unit factors, unless the corporation’s bylaws specify a different threshold. The process must follow strict legal procedures, including notification to owners, a formal vote, and court approval when required.

Conditions for Termination

Termination may be considered under the following circumstances:

• The building has suffered severe structural damage or deterioration that makes repairs financially unfeasible.

• A majority of unit owners wish to redevelop the property for a different use.

• The condominium corporation is unable to meet its financial obligations.

• The land is being expropriated or repurposed for a public project.

Process for Termination

Step 1: Board Resolution

• The condominium board must pass a resolution proposing termination.

• The board must outline the reasons for termination and prepare a report for unit owners.

  
  

Step 2: Notification to Owners

• Owners must receive formal written notice outlining the proposed termination.

• The notice must include details on the impact of termination, voting procedures, and a timeline.

  
  

Step 3: Unit Owner Vote

• A general meeting must be held where owners can discuss the termination proposal.

• At least 75% of unit owners must vote in favor of the termination.

• Voting must be recorded and documented.

  
  

Step 4: Filing a Notice of Termination

• Once the required voting threshold is met, a Notice of Termination must be prepared and registered with Alberta’s Land Titles Office.

• The notice must include:

  • Evidence of the vote.

  • A legal description of the property.

  • Confirmation of the plan for distributing assets and liabilities.

    
    

Step 5: Court Approval (If Required)

• In some cases, court approval may be required if disputes arise or if unit owners contest the termination.

• A judge will assess whether the termination process complied with all legal requirements.

  
  

Step 6: Asset Distribution and Dissolution

• The condominium corporation must:

  • Settle outstanding debts (e.g., loans, contracts).

  • Distribute remaining assets among unit owners based on their unit factors.

  • Cancel or transfer utility accounts and close financial accounts.

  • File a final tax return and deregister the corporation (if applicable).

    
    

Once these steps are completed, the corporation ceases to exist.

Dissolution Impacts

Terminating a condominium corporation has significant financial and legal consequences:

1. Impact on Owners

   • Owners no longer hold condominium units but instead share ownership of the property as tenants in common.

   • If the property is sold, proceeds are distributed according to unit factors.

2. Financial and Legal Considerations

   • Any remaining debts or legal disputes must be resolved before termination is finalized.

   • Owners may face capital gains taxes if they receive financial compensation from property sales.

3. Municipal and Regulatory Changes

   • Once the corporation is terminated, zoning or property classification may change depending on municipal planning.

   • Future land use must comply with local development regulations.

Termination Decision Simulation

Scenario:

A condominium board is considering termination due to severe structural deterioration and escalating maintenance costs. As the condominium manager, you must guide the board through the legal steps required for termination.

Instructions:

1. Review the condominium’s financial and structural reports.

   • Is termination financially necessary, or could major repairs be an option?

2. Prepare a formal termination proposal.

   • Outline the key legal requirements by consulting the condominium corporation's legal council.

   • Describe the voting and notification process.

   • Explain the financial impact on unit owners.

3. Draft a notification letter for owners.

   • Provide clear information about their voting rights.

   • Explain what will happen to the property if termination is approved.

4. Evaluate potential challenges.

   • What risks could delay or prevent termination?

   • How should disputes among owners be handled?

     
     

Submit your recommendations to the board, ensuring all legal and procedural requirements under the Condominium Property Act are met.