New to the Condominium Way of Life: Part 3

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Here is our third Q-and-A style blog post! In this post we discuss the different documents that condominiums have to describe the rights and obligations of unit owners and occupiers, as well as the condominium board of directors – the declaration, by-laws, and rules.

Q. Can you explain the difference between a declaration, by-law, and rules?

A. The condominium’s declaration is often called its “constitution” because it (along with the description) creates the condominium. It is like a condominium’s articles of incorporation. It sets out basic information about the condominium, like the number and type of units, the type of condominium, conditions and restrictions on use of the units, the proportions of ownership and contributions toward common expenses, the unit boundaries, and maintenance and repair obligations. The description is often called the “survey” or “map”. It shows the boundaries of the units, common elements, and exclusive use common elements.  Condominiums must have a declaration and description and both can be amended.

The condominium’s by-laws typically address board governance and other matters related to how the condominium operates. For example, the by-laws will describe the qualifications for directors, how meetings of the owners are to be conducted, and procedures for conducting mediations. One of the most important by-laws is the standard unit by-law. The standard unit by-law describes the condominium’s obligations for insurance on the units. Any item that is not part of the standard unit as defined in the by-law will be considered an improvement that the owner must insure. Every owner should review their standard unit by-law and provide a copy to their own insurer to make sure they have adequate coverage in place. Other by-laws address special situations, like granting easements or rights-of-way to a neighbour, borrowing funds for a repair project, or paying remuneration to the directors. Most condominiums have at least one by-law and many have several, but there is no requirement to have one at all. By-laws can also be amended or repealed (deleted).

The condominium’s rules tend to cover more mundane issues, like the requirements for garbage disposal (i.e. type of bags or containers, garbage days, permitted times for using garbage chutes). The rules are much easier to change than the declaration or by-laws, so they tend to contain subject matter that changes regularly, like the process to obtain a parking permit from the manager or parking control company. There is no requirement to have rules, but most condominiums have them.   

It is important to note that there is a hierarchy among the documents. The declaration is at the top. The by-laws and rules must be consistent with the declaration to be enforceable. For example, a condominium could not pass a rule that permits short-term rentals if the declaration prohibits them. Next in the hierarchy is the by-law, or by-laws. Finally, the rules are at the bottom of the hierarchy. The rules must be consistent with the declaration and by-laws to be enforceable.  

Q. How strict can each of the documents be?

A. The Condominium Act, 1998, describes the permitted and mandatory subjects for each type of document. There are several different parts of the Act and its regulations that describe the subject matters, but the most commonly used sections are:

  1. Section 7 for declarations;
  2. Sections 56 & 57 for by-laws; and
  3. Section 58 for rules.  

It is important for the condominium to use the proper document for the new condition or restriction or it could be unenforceable. For example, a by-law that attempts to describe the unit boundaries will be unenforceable as the Act requires the unit boundaries to be described in the declaration and description.

The Act also requires by-laws and rules to be reasonable. The declaration has no such requirement. What is reasonable? The Act does not say. Fortunately, there are several reported cases that provide some guidance in determining if a proposed new by-law or rule would be reasonable.

Q. What can I do if I, as a unit owner, think that a rule, by-law, or provision in a declaration is too strict/unreasonable?

A. All amendments to the declaration and by-laws must start with the board of directors. As such, if an owner has concerns about a provision being unsuitable for the community the owner should reach out to the board to discuss possible amendments. If the board refuses to take steps to change the document, an owner may want to apply to challenge the validity of the document. There are a few different ways this can be done, including the Superior Court of Justice, mediation/arbitration, or the Condominium Authority Tribunal.

For rules, owners may requisition a meeting to amend or repeal rules according to subsection 58(5) of the Act, which states:

Amendment by Owners

(5) The Owners may amend or repeal a rule at a meeting of owners duly called for that purpose.

Note subsection 58(5) of the Act does not permit owners to create new rules.

Q. How do I, as a unit owner, go about reviewing a condo’s declaration, by-laws, and rules?

A. You should have obtained copies of the declaration, by-laws, and rules when you purchased your unit. If not, you can obtain copies from the condominium. We normally suggest owners review their documents in the following order:

  1. Rules;
  2. Declaration; and
  3. By-laws.

The reason for this recommendation is that the rules tend to be the easiest to read and will often highlight the key restrictions or conditions for using the property. Reading the rules first gives owners an idea of what to look for when reviewing the declaration. Also, the declaration tends to be more complex and lengthier, which can frustrate owners and make them less likely to continue reading the other documents. The by-laws are important for directors, or candidates for the board, to review as they describe how the board conducts business. For owners, most of the by-laws will be irrelevant to their daily living.

Special thanks to Zach Powell, summer student at Robson Carpenter LLP, for asking the questions owners want to know and preparing this post!

Condominium Boards: Reviewing Your By-Laws is Vital to Running Your Condominium Effectively

Condominiums have registered by-law(s) setting out important corporate governance matters, including:

  1. Directors and officers: elections and appointment, qualifications, length of terms of office, the number of directors and officers, etc.
  2. Board meetings: quorum, voting, etc.
  3. Borrowing money for the corporation
  4. Assessing and collecting common expenses
  5. Standard unit definitions and insurance deductible responsibilities
  6. Maintenance and management of the property and corporation’s assets

and the list goes on.

But does the Board of Directors truly need to read these by-laws? YES!

By-laws are not documents of legal jargon that can be filed away – by-laws contain important information with an ongoing impact on the condominium. The by-laws must be followed in order to run the condominium effectively.

For example, how many directors are you required to have on your Board at any given time? If your by-law requires at least 5 directors, but you only have2, then your Board has not met its quorum requirements and cannot properly carry out Board business.

Understanding your by-laws is also important when sending information to owners, such as a Notice of Meeting. If you are electing directors at your next Annual General Meeting, you should always review your by-laws before stating in the Notice of Meeting the number of director positions up for election and the length of the terms of each director position. The by-laws may also prohibit nominations from the floor, which the owners should be told of in advance of the meeting.

During the COVID-19 pandemic, many condominiums have started holding electronic meetings, which may include electronic voting. As condominiums have been forced to adopt electronic methods, they are realizing these new methods can be highly effective and would like to continue in this manner after the pandemic ends.

Before passing a new by-law to permit electronic meetings and voting, we recommend reviewing your current by-law(s) to see if electronic meetings and voting are already permitted, and to ensure compliance with the by-law’s terms. If your current by-law(s) do not meet your condominium’s needs, they can be amended.

If reviewing your by-laws seems like a daunting task, we would be happy to assist you to ensure your condominium is operating as effectively, efficiently, and happily as possible.

Part Two: Another “3 Ps” in Condos? Policies, Programs, and Plans

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Earlier this week we wrote about policies, programs, and plans in condominiums. This post is the second in the series where we briefly discuss some other required policies and some recommended ones.

REQUIRED POLICIES, PROGRAMS AND PLANS

Condominiums may be required to create policies in a variety of situations. The most common situation is where a condominium has an employee (or more broadly a “worker” in some cases).

Accessibility Policies

The Accessibility for Ontarians with Disabilities Act (“AODA”) is designed to make Ontario accessible for persons with disabilities by January 1, 2025. It aims to do so by developing, implementing, and enforcing accessibility standards.

The requirements for the accessibility standards differ based upon the number of employees of an organization and if the organization is a public or private organization.  “Small organizations” are organizations with at least 1 employee and less than 50 employees, which captures many condominiums in Ontario. These condominiums should have created an accessibility policy by January 1, 2015. As a small organization there is no obligation to put the policy in writing, although it is recommended. The policy must be explained to employees.  

Interestingly, the focus for the AODA is on “employees” not “workers” like with workplace violence and harassment policies. Under the AODA the term “employee” excludes independent contractors and volunteers. Accordingly, it is possible that some condominiums may have no employees. In this case, the condominium would not be obligated to create accessibility policies or comply with other requirements of the AODA. That said, these condominiums should still ensure their contractors and others comply with the AODA where required to do so.

COVID-19 Policies & Plans

Employers in Ontario have an obligation to protect employees from unsafe working conditions and hazards. As condominiums remain open throughout the lockdown, it is important for condominiums to create a COVID-19 workplace safety plan. A template COVID-19 workplace safety plan is available on the Ontario website here: https://www.ontario.ca/page/develop-your-covid-19-workplace-safety-plan

Some municipalities have additional policy requirements for condominiums, such as mask requirements in common elements and amenity areas.

RECOMMENDED POLICIES, PROGRAMS AND PLANS

Even where condominiums are not obligated to create a policy it may be desirable to do so as they can be useful at describing expectations for the community.  

Anti-Harassment and Anti-Discrimination Policies

The Human Rights Code (the “Code”) prohibits discrimination in five social areas. The Code protects against discrimination based on 17 grounds, including age, sex, family status, disability, and race.  

Anti-harassment and anti-discrimination policies are intended to make it clear that harassment and discrimination will not be tolerated. These policies set standards and expectations for behaviour within the condominium. The policies typically explain what types of behaviour are not permitted and set out the roles and responsibilities of various individuals. In recent years, many condominiums have passed these policies as rules to make them easier to enforce using the provisions of the Condominium Act, 1998. The Ontario Human Rights Commission has sample policies available on its website: http://www.ohrc.on.ca/en/policy-primer-guide-developing-human-rights-policies-and-procedures/5-anti-harassment-and-anti-discrimination-policies

Additions, Alterations, or Improvements Policies

Some condominiums have created policies to set out guidelines for owners looking to make additions, alterations, or improvements (“changes”) to the common elements under section 98 of the Condo Act. For example, the guidelines may explain the permitted types, materials, and colours of commonly requested changes, such as fences, screen doors, and landscaping features. These policies do not eliminate the need to comply with section 98 of the Condo Act, but they do make it easier for condominiums to ensure these requests are treated fairly and consistently for all owners.

The lists above and in our previous post are not exhaustive. It is also important to note that the samples or templates provided are not substitutes for legal advice. Condominiums should speak to their lawyers for advice prior to enacting these policies.

Another “3 Ps” in Condos? Policies, Programs, and Plans

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Most people are familiar with the declaration, by-laws, and rules of condominiums, but many are less familiar with policies in condominiums. This is not surprising as the only references to “policies” in the Condominium Act, 1998 (the “Condo Act”), are for insurance policies. In recent years, condominiums are more regularly creating policies to address a variety of topics. This post is the first of two which will describe some policies that condominiums may be required to create and others that may be recommended.

WHAT IS A POLICY?

Generally, a policy is a set of guidelines that support future decisions and define expectations. For condominiums, a policy may be created, amended, or repealed by resolution of the board of directors. It does not require approval of the owners. That said, the policy will only be enforceable if the board of directors had authority to make a decision on the subject-matter of the policy without approval of the owners. The policy must also be reasonable and consistent with the declaration, by-laws, and rules of the condominium.  

REQUIRED POLICIES, PROGRAMS AND PLANS

Condominiums may be required to create policies in a variety of situations. The most common situation is where a condominium has an employee (or more broadly a “worker” in some cases).

Reserve Fund Investments

The Condo Act requires condominiums to create an investment plan before investing any part of the condominium’s reserve fund accounts. The plan must be based on the anticipated cash requirements of the reserve fund as described in the most recent reserve fund study. It is wise to create the plan with the help of an investment professional.

Workplace Violence and Harassment Policies and Programs

Every employer in Ontario must prepare and review, at least annually, policies on workplace violence and harassment according to the Occupational Health and Safety Act (“OHSA”). The policies are required regardless of the size of the workplace or the number of workers, but there are additional requirements where there are six or more regular workers. The employer must also maintain a program to implement the workplace violence and harassment policies.

It is important to note that the definitions of “employer”, “worker”, and “workplace” are very broad. For example, “worker” includes both employees and contractors. A worker could include a cleaner, landscaper, superintendent, or property manager depending on the circumstances. As such, it is likely that most, if not all, condominiums in Ontario would be required to have these policies and programs in place.

A sample workplace violence policy and program has been produced as part of the Ontario Ministry of Labour’s Workplace Violence and Harassment: Understanding the Law guide which can be found here: https://files.ontario.ca/wpvh_guide_english.pdf It is important to keep in mind that the workplace violence and harassment policies and programs must be modified to reflect the risks of the workplace after the employer completes its risk assessment.

Make sure you check back for part 2 of this series for more required policies and some recommended ones.

How to Read the Condo Act

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I sometimes receive emails or calls from owners and directors who disagree with my opinion on an issue because they have read the Condominium Act, 1998, and misinterpreted part of it. Once I explain the relevant part of the Act or assist them in finding the relevant information they missed, we are usually able to agree on the issue. In the hopes of avoiding these sorts of disagreements in the future, I thought that I would provide some tips for reading and interpreting the Act. Continue reading

Amending the Condo Documents

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Lately our firm has been working on a lot of revisions to condominium documents: the declaration, description, by-laws and rules. Cannabis has been a very popular topic these past few months. Some condominiums are updating their condominium documents to reflect changes to the Condominium Act, 1998. Others are making changes to the number of directors or their qualifications.

Many clients complain that the process to change their documents is confusing. The main reason for the confusion is that each type of document has its own process to change it. The purpose of this post is to describe the basic process to change each of the documents.

Continue reading

Errors in the Declaration or Description?

Despite being reviewed by a number of people during the development phase, sometimes a declaration or description is registered with an error or inconsistency in it. For instance, where two condominiums are mirror images of each other and the documents prepared from the first are used for the second. When the declaration for the second is registered they forget to switch the proportions to account for the reversed layout, which leads to the smallest units paying the largest share and the largest units paying the smallest. Unfortunately, the error is not discovered until after the second condominium is registered and the owners of the largest units (paying the smallest amount) will not consent to an amendment. What can be done? Continue reading