On March 12, 2020, we wrote a post about the most common questions that we are receiving about COVID-19 in condominiums. The focus was on the basics: the obligations of condominiums to ensure the property is safe, the ability of the condominium to clean or sanitize common areas without approval of the owners, reducing or closing common amenities unless essential, and handling repair and maintenance work. I’m going to do much of the same today, but the focus will be on meetings, condo fees, and liens.
As a reminder, I am not a medical professional. The Public Health Agency of Canada is a great source for tips on preventing the spread and keeping yourself safe. https://www.canada.ca/en/public-health/services/diseases/2019-novel-coronavirus-infection.html. Public Health Ontario also has great resources, including a helpful self-assessment tool if you are concerned that you may have the virus. https://www.publichealthontario.ca/
AGM season is quickly approaching with many condominiums required by the Condominium Act, 1998, to hold their AGMs by the end of June (for those with a December 31st year end). Currently, the advice of most condo lawyers is to postpone any non-essential meetings until it is safe for large social gatherings again. This may not be possible in all cases. Fortunately, there are some alternatives to the traditional meeting.
- Board meetings – Section 35(5) of the Act allows condominiums to hold board meetings via teleconference or another form that is prescribed (currently none) if all directors consent to the holding of the meeting via teleconference. There is no longer a requirement for the condominium to pass a by-law. All board meetings should be held via electronic means.
- Virtual meetings & Electronic Voting – The Act allows condominiums to pass by-laws to allow owners to vote using telephonic or electronic means and even be present in ways that are not traditional (i.e. in person or by proxy). These by-laws are approved with the lower threshold for by-laws, being a majority of owners at the meeting (in person or by proxy).
- Proxy Only Meetings – Another option is to have a meeting where owners are only represented by proxy. The owners would name a single person as the proxy holder for all of the proxies. That person alone could hold a meeting so long as they have enough proxies to establish quorum. This can be used to pass by-laws or conduct other business so long as there are enough proxies with votes in favour of the matter to be voted upon.
I have clients with scheduled meetings to approve borrowing by-laws, pass standard unit by-laws, and vote on other matters that may not be able to wait for several months to hold a meeting of owners in person. They are primarily using the proxy only meeting to secure enough votes to approve the matter. The biggest concern with this is obviously collecting the proxies. The owners should be encouraged to return the proxies via email or fax, or use one of the electronic voting and proxy companies. Door-to-door collection should not be used to collect the proxies.
Depending on how long we need to practice social distancing, we may need to consider the use of some of these options for the upcoming AGM season. In the present circumstances, it may be acceptable for all condominiums to use virtual meetings and electronic voting even if they don’t have by-laws approving these sorts of meetings. To comply with the Act as much as possible the use of proxies to secure quorum and for voting purposes could be used in conjunction with a virtual meeting.
Liens & Condo Fees
There has been much talk about relief for Canadians in the form of deferrals of common household payments, such as for mortgages, loans, and utilities. The question that many have is “what about condo fees?” There is no government mandate or relief package with respect to condo fees. As such, owners must pay their condos fees when they are due or they risk a lien being registered against their unit.
Some condo lawyers have suggested lobbying the Ontario government to assist condominiums with temporary measures that could include extending the period of time to register a lien when an owner defaults. While we appreciate the sentiment, we don’t see this as a likely solution for this pandemic. Fortunately, there are other options that may be just as effective without putting some condominiums in a precarious financial situation.
- Revise the budget, monthly fee, or payment schedule. Boards can change the budget without input from the owners (note: check by-laws for requirements on notice, process etc.). This option can be used in a number of ways to provide temporary relief to owners. If the condominium has a surplus, or is able to eliminate expenses (i.e. postponing non-essential operating projects), one option could be to reduce the monthly fees payable by owners over the current fiscal year. The Board could change the payment schedule to eliminate upcoming payments (i.e. April), adjust the entire schedule so more is due toward the end of the year, or make payments due every other month. The aim with revising the budget is to give owners more time to pay or reduce the monthly fees, both of which should reduce the burden for owners experiencing financial difficulties due to the pandemic.
- Extend the normal lien policy. Some condominiums have a policy of starting the lien process at 45 or 60 days. This period can be extended so long as the lien is registered by the end of the third month after the initial default. For example, if an owner first defaults on April 1st the lien does not need to be registered until the end of June. If owners are able to make some payments, but not all, the condominium can apply the payments toward the oldest arrears in accordance with case law. In our example this means that if the owner defaults in April, but pays May and June, the lien could be registered beyond June by applying the payment in May to April, the June payment to May, and so on. If in doubt, talk to the condominium’s lawyer about how to apply payments and ensure the lien does not expire.
- Another option coming soon. I understand that there may be a new relief option available to condominiums soon. I don’t have too many details at this time, but stay tuned for more information about this. We will post again as it becomes available.
Keep in mind that the board has an obligation to manage the affairs of the condominiums, which includes ensuring there are adequate funds to pay ongoing expenses. While the directors may be sympathetic to owners (or themselves be in a tough situation), they must ensure adequate funds are collected to pay the condominium’s expenses.
Condominium Authority of Ontario (CAO)
As of the date of writing, the CAO’s position is that all timelines for reporting, director training, and steps in CAT proceedings must be followed. There has been quite a bit of backlash over this decision. It is difficult for managers to file reports as most are busy trying to deal with the pandemic by keeping owners informed, arranging for additional cleaning and sanitizing, and minimizing risks to employees. On the other hand, most of the timelines are legislated by the Act; the CAO does not have control over most of them. The CAO has indicated that it will waive late fees as long as returns are filed by June 30, 2020.
There are plenty of good resources out there for condominium directors, owners, and managers. Check out some of the other great blogs, your local CCI chapter, the CAO’s website, or the CMRAO’s website. On March 25, 2020 at 5 p.m. our friends at CondoAdviser are holding another webinar, CondoVirus – Episode 2. It will cover quarantines, access to the building, short-term rentals, condo fees, and budgets. This event is held completely online so you can enjoy it from the safety of your home. For more information, visit the CondoAdviser website here: http://condoadviser.ca/2020/03/next-webinar-on-coronavirus-in-condos-wednesday-march-25/condo-law-blog-Ontario.