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!

Loss of Quorum on the Board

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Many condominiums struggle to find enough candidates to fill the positions on their board. Other condominiums have a hard time keeping directors on the board after their election. Whatever the reason, there are times when a condominium may not have enough people to fill all positions on the board. What’s a condominium to do? This post will describe some of the legal obligations on the condominium and directors. It also includes some possible solutions to attract more candidates and keep directors once elected to the board. Continue reading

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.

Continue reading

Highlights from the 22nd Annual CCI-T Conference

 

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Photo by Pixabay on Pexels.com

It was a pleasure for the Robson Carpenter team to see and chat with many familiar faces at the conference this past weekend. The conference was full of fantastic exhibitors and informative sessions on a broad spectrum of issues, challenges, and anticipated changes in the condominium industry. There were so many great speakers, panels, and topics in the various sessions that I often wished I could be in two places at once to listen in on concurrent sessions!

In no particular order, here are some of my favourite moments and takeaways from the conference:

Discussion of Security Issues

I particularly enjoyed the Q&A style insights, advice, and perspectives from the panel in “Palace or Prison: Security Through Environmental Design” with security topics ranging from lighting, mirrors, cameras, and signage, to communication systems for communities. Of note, the panel’s emphasis on unique situations and issues for different types of condominium communities from massive high rises to townhouse complexes was very engaging.

Proxies

It was interesting, if unsurprising, to hear numerous speakers and people I interacted with on the tradeshow floor express ongoing frustration with the length and complexity of the new prescribed form. Clearly this form continues to be a source of frustration for managers, boards, and owners. On the bright side, representatives from the Condominium Authority of Ontario (“CAO”) did highlight they have created an information guide as well annotated sample proxies available on their website (link here https://www.condoauthorityontario.ca/en-US/resources/proxy-overview/ ) to assist owners in understanding how to fill out these forms. Hopefully more refinements to the form are planned by the government in the future.

CAO and CMRAO Statistics

Interesting numbers on the 1st Year of the CAO and Condominium Management Regulatory Authority of Ontario (“CMRAO”) – representatives of the CAO and CMRAO shared some fascinating statistics about their respective 1st anniversary of operation:

  • The CAO’s database estimates there are over 11,000 condominium corporations in Ontario. Of those, 85 % have registered with the CAO and 84% have provided the required returns (transitional and annual)
  • Over 2,800 licensees registered with the CMRAO
  • Over 300 condominium management companies with 3 companies employing over 100 property managers each.

The Condominium Authority Tribunal (“CAT”) which currently has jurisdiction over records disputes under section 55 of the Condominium Act, 1998 (the “Act”) already has 127 active cases. We previously posted about some of the first decisions released by CAT here (link).

Quorum

There were some interesting questions and discussions in one session regarding condominium corporations that have passed by-laws increasing the quorum threshold from the 25% required by the Act for the 1st and 2nd attempts to call an owners meeting. My opinion, and one shared by a few other lawyers I have spoken to, is that the most recent amendments of the Act in subsection 50(1.2) have voided those higher quorums (ex. 33 1/3 %) thresholds in by-laws. Quorum can be no more than 25%. If a corporation wants to increase the threshold from 15% on the 3rd and subsequent attempts to call an owners meeting, the quorum increase is restricted to remaining at 25% by 50(1.2) of the Act.

Exhibitors

On a final note, the exhibitors with booths that had a live-magician, hockey memorabilia collection, and handwriting analyst were captivating and very popular draws for many.

If you weren’t able to attend this year’s conference, don’t forget the Golden Horseshoe chapter of CCI has its annual conference coming up in the spring of 2019. We will have a booth and both Craig and Michelle will be speaking.  Definitely something to look forward to attending as we slip into the winter season!

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

Draft Reg#2 – Part 3

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The draft regulations also address issues like notices of meeting, voting, quorum, board meetings by electronic means, and voting thresholds for by-laws.

Notices of Meetings

The regulations set out the detail for the preliminary notice that must be sent to owners before an owners’ meeting. It details the type of information about candidates for director positions, candidates for auditors, and other material that owners want to be included (so long as 15% of the owners request it and it is not contrary to the Act or regulations). The preliminary notice will be a standardized form.

One thorny issue will continue to be requisition meetings. Since the amendments to the requisition process will not be included in the first phase of amendments, but the changes to the notice of meeting sections will be, it means that the board only has 5 days to send a preliminary notice of meeting after it receives the requisition. For example, if the requisition is received on January 10, the preliminary notice must be sent by January 14, the notice of meeting by January 29, and the meeting held on February 13. There would be no margin for error in sending out the notices or the meeting would be held beyond the period required by the Act (35 days from the receipt of the requisition).

It is intended that the regulations would come into force on July 1, 2017, but they would only apply to meetings held 40 days or more after the regulations come into force and for those where notice has not been sent.

Voting & Quorum

As you may know, quorum for meetings will be changed by the amendments to the Act. Quorum for owners meetings will be satisfied by: 1) 25% of the owners represented at the first and second attempts to hold the meeting; or 2) 15% of owners at subsequent attempts.

The regulations also require every condominium to have a standard provision in its by-law that no person voting by ballot, proxy, or electronic means, would be required to identify his name or the unit in which the vote is cast. There will be mandatory proxy forms for owners’ meetings instead of the optional forms used now.

In addition, there will be a lower threshold for voting for certain by-laws (i.e. to change the content for information certificates and notices, to add extra disclosure obligations for directors). Instead of a majority of all owners, the threshold would be lower: a majority of votes cast at the meeting.

These changes should be in force on July 1, 2017, but it would only apply to meetings held 40 days or more after the new quorum and voting sections of the Act come into force.