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 By-laws can also be amended or repealed (deleted).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

Condo Declarations Are Not Carved In Stone

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One of our first posts of the year was on the requirements for making, amending, or repealing by-laws. In response to that post we were asked about the requirements for making, amending, or repealing rules. This lead to our third post of the year. If you haven’t read both posts make sure you go back and read them. Today, we will briefly describe the options for changing a condominium’s declaration or description (sometimes called the “survey” or “plans”).

The Condominium Act, 1998 (the “Act”) describes three methods for amending a declaration and/or description: 1) with consent; 2) with an order of the Director of Titles; and 3) with a court order. It is important to note that the Act allows a condominium to update its address for service or mailing address without amending the declaration. For more information, see section 108 of the Act.

With Consent

The most popular method of amending the declaration and/or description is to do so with the consent of the owners. If the amendment includes a change to the proportions of ownership or contributions to the common expenses, the exclusive use common elements, or maintenance and repair obligations, it requires the consent of the owners of 90% of the units. All other changes require 80% of the units. Ask your lawyer for a definition of “units” for the purposes of a declaration or description amendment.

I should note that this method may also require the consent of the declarant if the declarant has not transferred all of the units (except telecommunications units) and less than three years has elapsed from the later of the registration of the condominium and the date the declarant first entered into an agreement of purchase and sale for a unit.

Once the board of directors are satisfied with the proposed amendment they must call a meeting of owners to present the proposed amendment to the owners. The normal process for calling a meeting is used, including the use of the prescribed forms and the normal timeline. The notice of meeting must include a copy of the proposed amendment. The board must collect the written consent of the owners, but the consent does not need to be collected at the meeting. The amendment must be registered in the land registry office before it becomes effective.

With an Order from the Director of Titles

The Act also permits condominiums to amend the declaration or description without the approval of the owners in certain circumstances. Section 110 of the Act states that a condominium (or another interested person) may apply to the Director of Titles appointed under the Land Titles Act for an order amending the declaration or description to “correct an error or inconsistency that is apparent on the face of the declaration or descriptions, as the case may be.” The amendment is not effective until a certified copy of the order is registered on title to the units.

Our office has seen this process used where there was a minor typo found in the declaration, such as where it referred to the wrong instrument number for a document or it referred to levels that did not exist. The Director of Titles has refused requests where the error or inconsistency appeared to be obvious to us, such as where there was an inconsistency between the unit boundaries in the declaration and those in the description.

With a Court Order

The Act also permits condominiums (or an owner) to seek an order from the Superior Court of Justice to amend the declaration or description without the approval of the owners. Notice of the application must be given to the condominium and every owner and mortgagee whose name appears in the condominium’s records. The judge must be satisfied that the “amendment is necessary or desirable to correct an error or inconsistency that appears in the declaration or description or that arises out of the carrying out of the intent and purpose of the declaration or description.” The amendment is not effective until a certified copy of the order is registered on title to the units.

The courts have also ordered declarations and descriptions (and other documents) to be amended in other circumstances. For instance, if the declaration is oppressive, unfairly disregards an owner’s interests, or unfairly prejudices them, it is possible that a court would order the condominium to amend the declaration if an application is brought by the owner under section 135 of the Act (oppression remedy). This is very rare. See an old post for further information: https://ontcondolaw.com/2014/06/06/owner-successfully-applies-to-court-for-amendment-to-declaration/

We previously wrote a single post summarizing the requirements for changing declarations, by-laws and rules. I encourage you to review it if you want a more succinct version of our last three posts. You can find it here: https://ontcondolaw.com/2018/08/29/amending-the-condo-documents/

Quiet condo for retirement? Maybe not…

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A recent case discusses an interesting (and becoming more common) situation where a building is registered as a condominium, but also operated as a retirement home under the Retirement Homes Act, 2010. An action was commenced by certain unit owners against the condominium and various corporations involved in the operation of the retirement home. The owners claimed that the defendants breached the declaration, by-laws, and Retirement Homes Act, 2010, by acting in a discriminatory manner against some of the owners. The owners sought an order that: 1) required the defendants to ensure that at least 2 directors are independent of the defendants; 2) required the defendants to use an agreement that sets out the services program with mandatory fees in accordance with the by-laws; and 3) damages in the amount of $50,000. Continue reading