Condo Lingo – Common Errors and Misconceptions Part 2

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This is the second post in this series. As the name implies, in this series we will discuss some common terms and phrases that are used incorrectly by owners and others in the industry. Today’s post focuses on terms related to meetings and voting by owners.

Quorum

One of the most misunderstood terms is “quorum”. A quorum is the number of units that must be represented at a meeting to transact business at the meeting. According to subsection 50(1) of the Act, a quorum for the transaction of business is 25% of the units in the corporation, except for certain meetings. Quorum for the first meeting held after registration of the condominium (if required to be held before the turn-over meeting) to allow owners to elect two directors to the declarant board is 25% of the units not owned by the declarant.

Quorum may be reduced if two meetings have been held and the condominium failed to achieve 25%. Quorum drops to 15% for third or subsequent attempts to hold certain meetings after the first two attempts fail to achieve 25%. These meetings are the annual general meeting, turn-over meeting, or any other meeting (i.e. requisition) to elect one or more directors or appoint an auditor.

To count toward quorum, an owner must be entitled to vote at the meeting (i.e. not in arrears for 30 days or more at the time of the meeting) and they must be present at the meeting or represented by proxy. Participating in electronic voting will count as being present at the meeting if the condominium passes a by-law indicating such or the temporary amendents made to the Act are made permanent.

Lastly, keep in mind that all units are not created equal when trying to determine quorum for a meeting. Units used for parking, storage or services/facilities/mechanical purposes should not be included unless all of the units in the condominium are those types of units. For example, if there are 100 residential units and 200 parking units, quorum is 25 residential units and not 75 units of any type.

Vote vs. Consent

The Act uses different language to describe the approval of owners or others whose approval may be required, such as the declarant or a mortgagee. For example, owners “vote” for some matters and “vote against” other matters. To add to the confusion, sometimes “consent” is required instead of a vote.

Owners “vote” for procedural matters at meeting, changes to the common elements, assets or services under s.97, the election or removal of directors, to make, amend or repeal by-laws under s.56, and to terminate the condominium under ss.122-125 (note a mortgagee “consents” to termination instead of voting). A new rule will be approved by the owners if the owners at the meeting do not vote against it, which means a tie vote would result in the rule being approved whereas in most cases a tie would be considered a vote against the motion.

On the other hand, owners must provide their “consent” to terminate telecommunications agreements under s.22(9), dispense with the audit under s.60(5), declaration amendments under s.107, and amalgamations under s.120.

There are a number of similaries with votes and consents. For example, owners can lose the right to vote or consent if they are in arrears for 30 days or more but they can become eligible by paying the arrears prior to the meeting for votes or prior to end of the consent period for consents. Similarly, there is only one vote or consent per unit. If there are multiple owners of a unit the majority will cast the vote or consent.

The main difference is that a vote is conducted at the meeting (i.e. ballot, proxy, show of hands, electronic vote) whereas a consent could be collected before or after the meeting depending upon the specific requirements of the Act.

Lastly, as was the case with quorum, it is important to remember that certain units (i.e. those used for parking, storage, service/facilities/mechanical) do not have the right to vote or consent to certain matters unless all units in the condominium are those types of units. Speak with your lawyer for more information about the units to be included in a specific vote or consent process.

Proxy – Is it a Paper or a Person?

The term “proxy” has different meanings in the Act. It is used to describe the prescribed proxy form (in paper or electronic format) that appoints another person to attend a meeting of the owners. It is also used to refer to the person who has been appointed to attend or vote for the owner in the proxy form. To avoid confusion, I tend to use the term “proxy” or “proxy form” to refer to the prescribed form and “proxy holder” as the individual.

The proxy holder takes the place of the owner (or other person entitled to vote at the meeting, such as mortgagee of a unit). A proxy cannot be used for board meetings. The proxy holder does not need to be an owner, but the proxy holder must be in attendance at the meeting. The proxy form may give the proxy holder the right to vote for matters on behalf of the owner as they see fit or include the owner’s vote for some or all of the matters to be voted upon at the meeting.

Thanks to our summer students, Zach Powell and Hannah Johnston, for help with this post. Stay tuned for more in this series!

The New Forms: A Review

forms

On November 1, 2017, the government introduced 15 new forms to the condo industry in Ontario. There are new forms for calling meetings, like a preliminary notice and notice of meeting. There are three forms about the record of owners/mortgagees and receiving notices electronically. There is a single prescribed proxy form. There are three new certificates (PIC, ICU, NOIC) and a notice for distributing them online. Even record requests have been complicated (or simplified depending on your perspective) with the creation of three prescribed forms.

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The NEW PROCESS for Owners’ Meetings

meetingThe first phase of amendments to the Condominium Act, 1998, came into force on November 1, 2017. While the first phase included amendments to a variety of areas, there were a few areas with significant changes. One of the most significant changes will be to the way we call and hold owners’ meetings.

While much has been written about the new AGM process, it is important to note that the changes to the Act apply to all owners’ meetings (i.e. AGMs, requisition meetings, special meetings) in most circumstances.  The transitional provisions are not entirely clear so if you intend to call and/or hold a meeting of owners between November 1st, 2017 and December 10th, 2017, you should speak with a lawyer to see which provisions apply to your meeting.  Continue reading