Kitec Plumbing and the Potential Purchase of a Condominium Unit in Ontario

October 2018

Introduced in Canada around 1995, “Kitec Plumbing” was a plumbing system designed to replace typical copper water pipes with flexible tubing. The system was largely considered to be superior to copper piping as it was less expensive to produce and easy to install in virtually any space. While it was sold under various brands (including, AmbioComfort, AQUA, and IPEX), “Kitec” was the most common name associated with the plumbing system. Following a series of recalls starting in 2005, the system fell out of favour and Canadian sales stopped by 2007.

The 12 year window of Kitec Plumbing’s popularity was long enough to leave several ticking time bombs throughout condominium developments in Ontario. During the first half of the oughts, Kitec Plumbing was ushered into many new-build condominium projects across Ontario. In 2005, the product was subject to a mass recall due to a tendency to corrode at an accelerated rate, causing burst water lines and leaks. The system is not compatible with traditional copper piping, and remediation requires replacing the entirety of the water lines and plumbing throughout an entire building. According to one Toronto Star report, the costs of retrofitting a one-bedroom Toronto condominium can range from $5,000 to $6,500. If condominium owners are unable to draw upon the corporation’s reserve fund to finance these renovations they will be left out-of-pocket.

The Canadian class action against the manufacturer of Kitec Plumbing was settled in 2011. Eligible members of the class have until January 9, 2020 to file a claim and receive a portion of the settlement funds. As an opt-out class action jurisdiction, condominium corporations in Ontario have had the option to forgo participation in the class action and litigate their claims independently. The corporation must disclose their participation in such independent litigation in the status certificate provided to prospective purchasers.

While a status certificate (and ancillary documentation) may provide some clues that Kitec Plumbing is present in a condominium complex, the right to a thorough property inspection should never be waived. Kitec Plumbing is visibly identifiable inside condominium units and vendors hold no duty to disclose its presence in the unit or building. Once flagged, the presence of Kitec Plumbing presents two concerns for prospective condominium unit purchasers. First, will the system be replaced before leaks appear and cause property damage and disruption to the unit’s services? Second, who is responsible for the cost to replace the system in the unit and throughout the building?

Clients should always be directed to conduct a diligent review of the most recent reserve fund study, which might involve the opinion of an independent engineer, property manager, or accountant. Where Kitec Plumbing is present, the certainty of a system failure demands that an updated and accurate reserve fund study should address the timeline and cost of a complete plumbing system replacement. Lawyers should always identify to their client the extent of each unit owner’s maintenance responsibilities, as set out in the declaration. Understanding which plumbing (if any) is the responsibility of a unit owner, and which is properly under the care and control of the condominium corporation is important for assessing personal cost and leak mitigation. If a corporation has begun the process of replacing Kitec Plumbing, a recent borrowing by-law may have been passed authorizing the corporation to borrow a significant amount of money with the express purpose of retrofitting the plumbing throughout the complex. Any special assessments disclosed on the status certificate may indicate for what purpose a unit owner will be responsible for paying a proportional amount of the corporation’s debt load. Always be aware that when the responsibility for replacing the Kitec Plumbing is within the sphere of corporation (as opposed to the unit owner), any additional expenses (special assessments or increased common fees) will run with the unit and transfer to the new unit purchaser.

Fortunately, most leaks have already been identified and it should be fairly ascertainable to discover if a prospective purchaser will be inheriting the expense of replacing the condominium’s plumbing system. However, the cost and work to replace the system are legacies that one may simply not wish to absorb. There is no guarantee that these expenses will be fully subsidized by the class action settlement, and likewise, the risk and liability of independent litigation is not always worth the potential reward.  Kitec Plumbing is just one of many reminders that purchasers of a condominium unit are also buying a minority stake in a corporation and accordingly, a proportional amount of liability for the decisions made by the previous owners.

Written by: Stuart McAlister

Sourcehttps://www.thelawyersdaily.ca/articles/7514/drip-drip-drip-kitec-plumbing-and-buying-a-condo-in-ontario?category=analysis

Author

Stuart is a lawyer practicing corporate/commercial law and commercial real estate law at our Kitchener-Waterloo office. Prior to joining Cohen Highley, Stuart articled and practiced at a nationally recognized firm. He is an avid soccer fan; certified scuba-diver; filmmaker/photographer; and tech enthusiast. More →