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 By-laws can also be amended or repealed (deleted).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.

Condo By-laws: What’s the Deal with Voting?

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With many condominiums passing by-laws to allow for virtual meetings and electronic voting, one of the most frequently asked questions right now is: how many owners need to approve the by-law? This became a common question after the Condominium Act, 1998, was amended in 2017 to create two different voting thresholds for by-laws. Prior to the amendments there was only one answer: a majority of the units in the corporation. (*Excluding units used for parking, storage, or services/facilities/mechanical installations unless all units are used for these purposes). There are now two answers: a majority of the units in the corporation or a majority of units represented at the meeting.

Confusion increased in 2019 when a court applied the wrong voting threshold to a borrowing by-law. We previously wrote about the case here: https://ontcondolaw.com/2019/05/01/the-controversiality-of-the-voting-threshold-borrowing-by-laws/

What is the level of support required to pass a by-law?

Most by-laws still require a majority of the units in the corporation to approve them at an owners’ meeting. This list includes:

  • Directors: the number, qualifications/disqualifications, elections, removal, term of office, and the regulation of board meetings
  • Borrowing: to authorize the condominium borrowing money to carry out its duties
  • Standard Unit: to define the standard unit for each class of unit for the purposes of determining obligations for insurance and repair after damage of improvements
  • Deductible: to shift responsibility for deductibles under the condominium’s insurance policies to owners in certain circumstances
  • Property: to lease a part of the common elements, grant or transfer an easement or licence through the common elements, or release an easement that is part of the common elements.

The by-laws that may be approved by the lower threshold, majority of the units represented at the meeting, are by-laws about requirements that were created by the amendments in 2017, such as:

  • Candidate Disclosures: Adding candidate disclosure requirements for elections to the board or requiring them to be in writing or provided within a certain time period
  • Information Certificates: Adding required content or increasing the frequency of them
  • Meetings: Adding material for meetings and notices of meetings, permitting virtual meetings and electronic or telephonic voting, and permitting a portion of the proxy or ballot identifying the unit or owner to be disclosed in record requests
  • Records: defining additional core records and other records the condominium is required to maintain, and setting retention periods for the additional records.

The lists above are not exhaustive.

Process for Making, Amending or Repealing By-laws

The process for having owners approve by-laws is the same for all by-laws, except for the voting thresholds described above. The board of directors must, by resolution, approve the by-law at a board meeting. The condominium must then call a meeting of owners to present the by-law to the owners. The preliminary notice of meeting must indicate that proposed changes to the by-laws will be presented at the meeting and the notice of meeting must include a copy of the proposed by-law. At the meeting, voting is typically conducted by recorded vote (ballot) and proxies casting votes. If approved by the required number of units, the by-law certificate must be signed by the board and sent to the lawyer for registration. The by-law is not effective until registered on title. Once registered, the by-law must be included in status certificates.

Common Errors with the Amendments: Part 3

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We posted previously about some common errors and misconceptions that we have run into since the Act was amended last year. We are still encountering issues regularly. Given the complexity of the regulations is it any wonder we are still encountering mistakes and misconceptions? Here are some of the most common issues we have encountered so far:
Myth: If a candidate makes a disclosure prior to her election or appointment she is automatically disqualified. For instance, if a candidates checks off the box that says “I am not an owner” the candidate cannot be on the board.

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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.

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Owner not oppressed by by-law restricting use of parking spaces

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I recently read an interesting case about parking rights in a commercial condominium. The applicant was the owner of three units, which were leased for use as a restaurant. The owner commenced an application against her condominium after it passed a by-law restricting parking in common element spaces.

Historically parking was allocated on a first-come, first-served basis. This led to problems with insufficient parking for customers and employees of many of the units. In 2009 the Board passed a by-law to change the allocation of parking spaces. The by-law allocated two parking spots to each unit. In 2014 the Board discovered that the by-law was never registered so it was not valid. The Board passed another by-law in 2015 to fix the problem. The 2015 by-law increased the number of parking spaces per unit to four. The result was that the restaurant had significantly less available parking for its customers.

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