As discussed in a post earlier this week, there has been some confusion as of late over the phrase “units in a corporation”. Does that mean all units? Only voting units? Owner-occupied units? Residential units? Fortunately, there is a section of the regulations that interprets the phrase.
Subsection 1.1(1) of O.Reg. 48/01 states:
In simple terms, where the Act or regulations refers to a portion of the units it means:
- owner-occupied units for business reserved for those units;
- all units, except s.49(3) units (described below); or
- all units if they are all s.49(3) units and the vote is not for owner-occupied units.
Subsection 49(3) of the Act states that no owner shall vote in respect of a unit that is intended for parking, storage, or a space for services, facilities or mechanical installations unless all units in the corporation are used for those purposes. I call these the “non-voting units”.
Subsection 1.1(2) of O.Reg. 48/01 provides a list of sections in the Act where subsection 1.1(1) applies. The list includes:
- Removal of directors (s.33(1))
- Turn-over meetings (s.43(1))
- Requisition meetings (s.46(1))
- Quorum for meetings (ss.50(1), (1.1) and (1.2))
- By-laws (s.56(10(a))
- Substantial change votes (s.97(4))
- Termination (ss.122(1)(a), 123(7), and 124(2))
Subsection 1.1(3) of O. Reg. 48/01 provides a short list of sections in the regulation where this clause is also to apply, such as when a condominium wishes to dispense with information certificates (clause 11.4(1)(c)).
It is interesting that subsection 1.1 is not receiving more attention given the wide ranging impact it has on several sections of the Act and a few sections of the regulations as described above. I recall a blog by our neighbour Michael Clifton from Clifton Kok LLP (see here) about it before the amendments came into force, but not much from people since. (We also posted about it in 2017 – you can read it here). Maybe if people were aware of it we wouldn’t have strange decisions like the borrowing by-law case from earlier this year.
What does this mean for you? Condominiums must carefully review the portion of units applicable to the situation. To borrow a phrase from Michael, the portion is normally the “primary purpose” units (i.e. residential, commercial) or “voting units” as I call them. However, in some cases it will still include parking, storage or other types of units as the regulations did not list every section in the Act in subsection 1.1(2).
The impact of this section can best be illustrated with an example. Take a condo with 100 units: 40 residential, 10 commercial, and 50 parking units. The following rules apply when making changes to the documents:
- Declaration amendment – 80 or 90% of all units in the corporation depending on the change being made. This could mean 80 or 90 units would need to consent in writing to the proposed amendment. Some argue it is 80 or 90% of the 50 voting units only as the non-voting units are not able to vote. Others argue it is not technically possible because the Act says the non-voting units cannot vote and the Act requires 80 to 90% of all units. To add to the debate, the declaration amendment section also uses the term “consent” instead of vote so some argue the non-voting units may consent, but not vote. It is unfortunate that the regulations did not clear up the ambiguity for declaration amendments. Hopefully a future amendment will address this issue.
- By-law amendment – majority of voting units, unless the regulations indicate it is a by-law that may be passed by a majority of units present at the meeting (see our previous post about this here). This means 26 units for by-laws requiring a majority of voting units. For by-laws passed by a majority present at the meeting it could mean as few as a majority of those present (note: enough units must be present to achieve quorum). If only a quorum (i.e. 25% of voting units) is present at the meeting the magic number is only 7 units out of the 100 units.
- Rules – there is a bit of debate about this one too, but my opinion is it requires a majority of votes cast at the meeting (by show of hands, ballot or proxy) not to be against the rule. Again, quorum (25% of the 50 voting units) must be present at the meeting. This could be less than 7 units if every unit at the meeting does not cast a vote for or against the rule.
If in doubt, seek a legal opinion from a condominium lawyer. Stop by our booth (#41) at the CCI Golden Horseshoe Conference May 4th and 5th to discuss this issue and pick up some other amendment tips. We’d be happy to help.