Rules and Governance

Note that the answers provided below are the opinion of the writer. They should not be taken as legal advice. Consult a condominium lawyer if you need legal advice. Feel free to send us your questions, and we will do our best to add them to this list. 

What is the Condominium Act?

The Condominium Act, 1998 is the law that governs condominiums in Ontario. A condominium is technically a corporation, but does not fall under the Business Corporations Act. Instead, it has its own law. The Condominium Act, 1998 is currently being upgraded, and a new law will be coming into effect in 2017. For this reason, we will not be citing specific sections of the Act in this FAQ. With the exception of the Human Rights Code, the Condominium Act supersedes all other legislation with respect to a condominium. Meaning, if your building tried to pass rule or a by-law that contradicted the Act, that rule or by-law would not be legal.

What Other Laws or Rules are Active in my Condominium?

The Condominium Act is just one of several layers of rules that govern a condominium. The hierarchy looks something like this:

Condominium Act --> Declaration --> By-Laws --> Rules --> Procedures

The Condominium Act is Ontario Law, and lays out the creation, governance, and other aspects of a condominium. The Condominium Act can only be changed by the Ontario Legislature. Regulations under the act are slightly easier to change, but cannot be done by any individual condominium.

The Declaration is specific to each building, and lays out items like the type of condominium, the percent ownership of each unit and the boundaries of the unit. The Declaration can be changed with a vote of over 80% of the owners for some items, and over 90% for other items.

The By-laws are specific to each building, and can be pass by a vote of over 50% the owners. These can cover topics like borrowing, defining the unit with respect to insurance coverage, general governance, and a host of other internal affairs.

The Rules are meant to keep order in the building, and include the more mundane items like pet restrictions, use of the visitor parking lot, and moving hours. A rule change can be passed by the Board of Directors, as long as notice goes out to all owners, and the owners are given the right to object.

Procedures are simple day-to-day items that do not require the owner’s involvement, like changing the office hours, or the temperature of the pool.

Who Runs a Condominium?

You do. Sort of. Since the building is not owned by one person or company, it’s the owners that actually run it. But only a few actually have a say in the day-to-day operations. Much like a small government, the owners elect representatives – a Board of Directors – to manage the affairs of the corporation. These are (usually) unpaid volunteers from the pool of owners who have some knowledge that would be useful in running the building. Since the Board of Directors can’t be expected to know the details of condominium management, they often hire a Management Company to take on this role.  The management company runs the condominium, but it is the Board that makes almost all of the decisions. The level of autonomy that a management company has depends on their management contract.

How to pick a good management company?

Since the management company is the one who actually manages the corporation, it is crucial that the Board choose not only a good company, but the right company for your building. Assessing the management company comes down to much more than just price. Board members should look to the company’s reputation in the industry, their knowledge of condominiums (some companies operate rental buildings, but don’t know the specifics of condominiums), and their track record in terms of dealing with complex financial, physical, and legal issues.

A mid-sized condominium may have annual revenues of over a million dollars, and millions in assets (the building itself!) It is imperative that the management company have the business experience and problem-solving skills to match these needs.

With the new Condominium Act, management companies will be required to have additional training in order to be licensed to practice. We welcome this news!

What is an RCM?

An Registered Condominium Manager is a designation given by the Association of Condominium Managers of Ontario (ACMO). Getting it requires passing a college program, and the ACMOs own test, and keeping it requires ongoing education. Hiring an RCM is useful, but in our opinion a Board should also use additional criteria when choosing a manager or management company.  

How do we choose our Board of Directors?

This is important. Remember how we said that the Board of Directors is ultimately responsible for the governance of the corporation? Keeping a good Board of Directors is therefore crucial to having a well run condominium, and protecting your investment. The Board of Directors is composed of 5 members (although sometimes as low as 3 and as many as 9). These people are owners in the building, and in many condominiums live on site as well.

A portion of the board of directors is elected every year at the Annual General Meeting (see below). For example, if there are 5 board members, there should be 1 to 2 directors elected each year so that the new members can learn from those already on the board.

What is an Annual General Meeting (AGM)?

An AGM is the annual meeting where owners are invited to learn about the financial wellbeing of the condominium by going over the annual audit, to ask questions to the auditor, to elect members to the board of directors, and often learn about and ask questions about the general state of the condominium and ongoing projects.

An AGM requires a minimum number of owners to be present, either in person or by appointing someone as a proxy. This is called quorum, and it is set at 25% by the Condominium Act.  If an owner owners more than one unit, each of the units count towards quorum.

If people do not show up and quorum is not reached, the election cannot take place and another meeting must be scheduled.

What are proxy votes?

During an election, people will often find that directors are elected with a large number of votes even though few people showed up at the meeting. This is possible because people can appoint someone to act as a proxy. A proxy cannot choose who to vote for on behalf of an owner, but can bring their vote to the meeting. So if an owner knows who is running in advance, they can vote for that person by giving their vote to a proxy.

How do we know that a candidates’ proxies are real?

This is a difficult question, as candidates can easily forge proxies, and owners who are not interested in the election have been known to sign proxies for two competing candidates. If an owner has submitted two proxies, the one with the later date is valid, but this can also open up the process to misuse. Creating rules for campaigning and proxy management in advance of an election is key if an election is likely to be contested. This is a question that does not have a simple answer, and may require legal assistance.

Can a Director be Removed?

Yes, but it is a difficult process and can cause harm among the community. To remove a director, one must first requisition a meeting. To do this, a specific form must be filled out and signed by at least 15% of the units (again, if an owner owns multiple units, each unit counts towards this threshold). If the threshold is met, the requisitionists must bring it to the attention of the president and property manager, who are required to hold a meeting within 45 days of receipt. At this meeting, a vote takes place to remove the director(s), which requires over 50% of the units to pass. This is a difficult threshold to reach, which often requires the use of proxies and campaigning. As noted earlier, this can be incredibly harmful to a community and to individuals living in the building, and should only be attempted in worst-case scenarios.

Questions From Owners

I have a loud neighbour – what do I do?

If the neighbour is someone who you can talk to, we would recommend speaking with them and telling them that the noise they create bothers you. If it is someone who you do not feel comfortable speaking with, we recommend talking with your property manager. It is the manager’s job to speak with the owner and resolve the problem.

What if the noise continues?

If the noise continues and the property manager is aware of the problem, something has gone wrong. It may take a few weeks and a couple of letters for a manager to effectively change the behavior of an owner, but these changes are often very much possible. If the problem continues to persist, the manager may have to seek board approval to take matters further, including having legal letters written, and ultimately court orders. This however can take a lot of time. Remember that unlike a rental building, the board and management do not have a simple way to evict an owner from their own home.

The same people keep winning elections by proxy. How do we remove them?

The most common reason a board member keeps winning is because they have the support of the owners of the building. However, if you and many others in a condominium feel that they are not doing a proper job, there are ways to become more active. The best way would be to run for the board yourself. Speak to other owners, and collect proxy votes from owners who cannot make it to the AGM in person to cast a vote. Once on the board, you can work with the board to make the changes you feel are necessary. If, however, it is difficult or impossible for any new owners to join the board, and the same members continue to control the condominium, there are mechanisms that can be used to remove directors. See above for a full explanation.

A neighbour above keeps throwing cigarette butts out the window. Last week one landed on my balcony and started a small fire that damaged by balcony, and my furniture. Now I can’t go outside and I am out a patio set. Who is responsible and who do I complain to?

Speak to the manager immediately! If you can prove that they did indeed throw the cigarette butt, they would be responsible for the damage.