Condo Act, Declaration, Rules, and By-Laws

What Is The Condo Act?

This is an act of legislation that regulates most aspects of condo formation, purchasing, living in, and governance. Each condo document has to be based on this Act which, in Ontario, is in theory the responsibility of the Ministry of Consumer and Commercial Relations. Each province has its own act because housing is a provincial jurisdiction. In Ontario, we have The Condominium Act 1998 that came into effect in May 2001.

Many problems and loopholes remain in this Act and in other provinces’ Acts as well. In addition, there is no one in charge of overseeing compliance to this Act.

The situation is such  that individual owners are protected by this Act only when their condo boards and their management company function well, understand this Act, follow it, and enforce it evenly, largely through a condo’s declaration and rules. It's not unlike gambling: some win, most lose...

Owners who are victimized do not have any recourse for their justified complaints because no one is really in charge of administering this Act and making sure that abuse does not occur or that boards do not fail in their duties, whether purposely or out of ignorance. As well, the Act is rather inaccessible to owners and recourse to legal advice can be expensive and even difficult to obtain (For Problems of Legal Recourse, click into Condo Auditors and Lawyers).

Another general problem is that this Act serves managers and boards better than it serves owners. It is much easier for managers and boards to force owners who run afoul of regulations to comply with the Act than for owners to do the same thing when their manager or their board is the guilty party.

Please click here for the Legislative Brief to strengthen the Condo Act in terms of owners' rights that was submitted to the government of Ontario in September 2011.

What’s A Condo Declaration?

A declaration is like the constitution of a condo. It is a thick document that is based on the Act and that each owner receives upon buying a unit in a condo. For resale condos, it comes with the status certificate. (Click here for Why Is the Status Certificate So Important?)

Condo Declaration

A declaration provides information regarding each suite’s boundaries as well as its share of common expenses, which common elements are “exclusive use,” that is, are used only by each unit, such as a terrace, balcony, parking spot, locker, or even a patio or a yard in a townhouse condo. The declaration describes the recreational facilities and how they are to be used. It may mention restrictions on pets.

Declarations are specific to each type of condo. For instance, a condo that shares facilities with another one will include sections that focus on this aspect and regulate how these shared facilities will be administered and used. A townhouse condo will have sections that will not appear in the declaration of a high rise and vice versa.

The declaration is the basic document for condo owners. Therefore, a unit owner should at least leaf through it, or ask the real estate lawyer to interpert certain sections, preferably before buying. For instance, declarations put limits on some activities (pets, business) and a prospective buyer who doesn’t know about these may have problems later on.

Declarations are written by a builder or a developer’s legal firm. Therefore, it is this building company that decides what will be an exclusive-use common element versus what is owned by the unit. When a unit is resold, declarations are contained in the status certificate given to prospective or new owners. (Click here for Factors to Consider When Buying a Condo)

Unfortunately, declarations are not user friendly: They are not clear, are written in legalese, and very difficult to understand.

(Between June 2009 and December 2011, this website has received at least 40 requests for interpretation of certain segments of various owners' declarations--regrettably, these readers are advised to contact a lawyer or the referral service of the Ontario Law Society--where people can consult a lawyer for up to 30 minutes for a very small fee.)

Another problem with declarations is that they are not standard from condo to condo, so that what is an exclusive-use common element in one may not be in another. This makes for a very confusing situation.

The declaration cannot be changed unless 80% to 90% of unit owners consent in writing, depending on the issue. A written consent is obtained by the board after a meeting of owners during which the amendment is discussed. Lawyers are consulted by boards before any amendment is considered.

Declaration, by-laws, and rules will differ somewhat depending on whether a condo shares facilities with another, whether it’s a high-rise building, townhouses or bungalows, or a mixed-use building. Or yet, if it includes a marina or gardens for the use of residents.  A time-share and hotel-condo will have their own set of rules as well.

What Are Rules For and Who Makes Them?

Rules are initially enacted by the builder or developer and later on by the board of the condo. Rules have to be reasonable and in accordance with the Act as well as the Human Rights Code of each province. Generally, a set of rules is drawn by a builder’s law firm and given to each new owner along with the declaration. In Ontario, rules have a common core but vary by type of condo, the facilities that exist, and may even differ between similar condos. It would be more functional if rules were universal from condo to condo.

Rules basically exist, as stated in section 58(1) of the Act, to promote the safety, security or welfare of owners and their property as well as the corporation’s assets. Rules also exist for the purpose of preventing unreasonable interference with residents’ use and enjoyment of their units and common elements.

Rules and regulations are helpful as they guide the behaviour of residents. People then know what to expect.

Rules generally cover issues of responsibility for the maintenance of common elements, behaviours in common elements, noise, garbage disposal, bicycles, pets, parking, exclusive-use common elements such as terraces, balconies, and patios, moving, fire safety, and health, recreational facilities, guest suites, grounds, roof gardens and shared facilities.

One very good rule that a condo can pass is to prohibit owners from leasing their unit for less than 6 months. This prevents a condo from becoming a “condo hotel” if it is the will of the community. 

We have seen that it is difficult to change the declaration. Rules can be added or eliminated somewhat more easily. How is this done?

The board has to draft a rule, or propose to eliminate a rule. The board then approves it and the new rule is posted or sent in a notice to all owners. This notice states the new rule, gives its purposes, and also explains that, if owners object, they can requisition a meeting. If no meeting is requisitioned, the rule is considered accepted by owners 30 days after the notice has been posted. (Click here for Requisitioned Meetings)

In turn, rules have to be enforced by boards of directors consistently. The problem here is that some boards do not do so and there is really no one in charge of enforcing board compliance. However, Courts generally uphold a condo’s rules unless they are unreasonable or in violation of another legislation.

What if the board does not enforce the rules?

First, write the board and request that rules be consistently enforced. This failing, requisition a meeting to discuss the issue. And if all fails and there are other serious problems in the condo, and if owners can do this, they should requisition a meeting to replace the board. But if this is not possible, Section 134 of the Condo Act in Ontario allows for a court application in order to force the board to comply with the Act: not enforcing rules goes against the Act. However, recourse to a lawyer is necessary here.

What Are By-Laws?

By-laws are legally binding documents approved by a condo’s board of directors and voted by owners at an owners’ meeting. By-laws’ purpose is to complement what is missing or is not specific enough in the declaration. (Click here for Owners’ Meetings and Voting)

By-laws that are important for condos are now described.

Standard Unit By-Law

The Standard Unit By-Law describes in detail what in each suite is “standard,” that is, what is not an upgrade (or an improvement). Standard means what was specified and sold by the builder as part of the regular sales package.

What is an upgrade? It is, for instance, a higher-quality carpet than what was offered by the builder or that an owner later installed while renovating her suite. In some developments, marble floors and hardwood floors are standard but, in others, they are upgrades and owners incur additional costs to have them installed. Cabinets that are specifically designed for an owner constitute an upgrade. Ceiling lights in bedrooms and living areas may be upgrades. An additional shower enclosure is another example as are higher-grade paints and wallpapers.

Therefore, this by-law describes the standard type of carpeting, tile, or marble, tub, countertop material, cabinetry and faucets/taps that came with the unit or would have come with the unit if upgrades had not been paid beyond the price of the regular or standard features.

 

The other purpose of this by-law is to specify what is covered by the condo’s insurance and the owner’s insurance. When an accident, such as a pipe bursting, occurs and damage results, damage to upgrades in a suite is never a condo’s responsibility but solely that of owners and their insurance.

 In some condos, when time came to draft this by-law, it was specified that no flooring and no countertop were to be the responsibility of the condo corporation, but were strictly owners’ responsibility. The rationale behind this, as explained by lawyers, is that floors and countertops, when they are worn out or damaged, are the two items that are the most susceptible of being purposely damaged by owners in a staged “accident” so as to make the condo responsible to pay for their replacement.

Obviously, when this happens, a condo can investigate but it is difficult to prove that an owner or a tenant has damaged their flooring or countertop purposefully. As a result, the condo may have to pay the $2,500 deductible (or whatever deductible) and more. If five such deductibles occur in a year, this means $12,500 for the condo and the possibility of the insurance premium going up.

In such a situation, all owners have to pick up the tab for these deductibles and the subsequently raised insurance premium.

It is understandable that upgrades would complicate a condo’s finances if the condo were responsible for their replacement in the event of a water leakage or fire. In many cases, it would be difficult to replace them at cost because original proof of sale may no longer exist. As well, there would be a great deal of bickering on the part of owners as to the quality of the replaced upgrades. In addition, when fire destroys a room, proof of upgrades may vanish.

This is why upgrades are like furniture and personal possession: They are the responsibility of owners’ insurance.

Insurance Deductible By-law

This by-law addresses who pays for the insurance deductible and complements the declaration in this respect. In other words, it addresses the question of who is responsible for what. For instance, it clarifies

  • Which damage to a suite or common elements is covered in the corporation’s insurance: Damage caused by fire, smoke, flooding, water seepage from the common elements into a suite, from one suite to the common elements and from one suite into another;
  • Who is responsible when such damage is the result of an act of omission or commission (voluntary or involuntary) by an owner, a resident, a guest of any resident, or someone who works for a resident.

Examples:

A resident is alone cooking and falls asleep; the pot burns, a roll of paper towels catches fire, the smoke alarm goes off but, by the time he wakes up, his suite is damaged by smoke and so is the corridor next to his suite. The damage to the corridor is assessed at $2,000 while the condo’s insurance deductible is $2,500.

Who pays?  Depending on the declaration and the by-law, the owner may pay the $2,000 for the corridor. If the owner does not pay, this sum becomes part of the common element arrears and a lien can be registered against his suite. (Click here for Liens). If it is a tenant who is responsible, the owner may still have to pay and recoup the money from the tenant.

Another example is that of a resident or guest who leaves the water running to answer the phone, forgets to turn off the water, and the water runs and seeps down to the suite below and damages the ceiling. In this case, the damage is repaired by the superintendent and the corporation charges $350. The owner of the “leaky” suite may have to pay, depending on the declaration or by-law.

A guest is left alone in the men’s change room and proceeds to vandalize the place. The concierge sees the young man go in and out. The damage is assessed at $5,000. The owner not only has failed to accompany his guest (which is a rule in most condos) but he becomes responsible for the condo’s deductible at the very least—depending on what the declaration or insurance by-law states.

A last example focuses on damage done from common elements: A pipe bursts in the walls between two suites and damages several suites below. The condo has to pay for the damage to suites, but only for the aspects that are specified in the standard unit by-law. Owners’ insurance (or owners) has to cover upgrades and replacement of all furniture and personal possessions.

Click here for Insurance.

Mediation/Arbitration By-Law

This by-law provides a condominium corporation with a set of procedures to follow should a dispute arise between two owners or between an owner and the condo. This by-law addresses how a mediator is chosen, who can be a mediator, timelines, documents to be presented, fees, and what defines a failure of mediation. Similar clauses are written for the process of arbitration.

For owners especially, there are many problems with the entire process of mediation/arbitration.

The problems are as follows:

  • These are costly procedures (fees generally start at $350 per hour). And this does not even include legal fees. (For Owners' Problems of Legal Recourse, click here into Auditors and Lawyers)
  • The outcomes may be neither fair nor satisfactory.

Arbitration

  • It is difficult for owners to provide a list of potential mediators. In contrast, condos may already have such a list or obtain one from the condo lawyer. An owner who is a recent immigrant may have even more problems because she may not have the necessary contacts.
  • If the condo corporation is involved, it is supported by its lawyer (paid by all owners). But the owner may have to pay if the arbitration goes against him. (The reader may want to see letters in Issues with Lawyers.)
  • An owner may initiate such a procedure against another owner for purely childish reasons. If the mediator understands this, then he or she may charge the initiating owner for all the fees. But it’s a big “if.”

Everyone, including condo lawyers, agree that mediation and arbitration are faulty processes. It is herein suggested that the Condo Act of Ontario should be amended to, among others, institute a Condo Ombudsman Office, independent of the various condo industries, that would oversee procedures, enforce rules, and settle disputes in condos.

By-Laws for Rental of New Lockers, Parking Spaces, and New Guest Suites

Such by-laws are generally necessary when managers and boards of directors resolve that there are empty spaces in the common elements where lockers or parking spots could be put.

Or, yet, a building may have two party rooms and the one that is rarely used could be turned into a guest suite.

Once the board establishes that a sufficient number of residents are interested in leasing the lockers, parking spots, or guest suites, the corporation can then proceed to present this by-law at an owners’ meeting. This is necessary unless the declaration already provided language to the effect that these spaces existed and could be later transformed and rented without owners’ approval. 

Other By-Laws

An occupancy standard by-law is passed in some condos in order to regulate the number of persons who can live in a suite depending on the number of bedrooms. It is, however, difficult to enforce this by-law because there is always the risk of violating the Human Rights Code. In addition, municipal by-laws have to be followed in these considerations. As well, this by-law could be used by unfair boards and managers to discriminate against some residents. (See Readers Respond list of topics.)

Other by-laws that can be passed pertain to a new bulk rate cable service when not included in the original declaration. As well, a loan by-law will specify the amount that can be borrowed for a specific project, such as roof replacement, when a reserve fund is depleted. This by-law will also stipulate a time line.

Or a by-law can describe who can be a member of a board of directors. For instance, some condos restrict these positions to persons who are owners or are resident owners. Such by-laws may also specify reasons that would allow a board or a group of owners to ask a director to resign (such as not attending meetings, breaking rules) without having to vote at a requisitioned meeting. (Click here for Requisitioned Meetings)  At this point, it is difficult to know how fairly such a by-law might be applied, given the widespread breaches in fairness taking place by boards, managers, and even lawyers, as well detailed in readers' letters in various sections of Readers Respond.

A condo can also pass a by-law or a set of rules that govern how board meetings are conducted. Such by-laws could, for instance, allow owners to attend board meetings or bring some business to be discussed. However, it should be said that some boards already do this occasionally. These are decisions that should probably best be left to a board’s discretion rather than set in stone in a by-law.

Indeed, such a by-law might not always produce the intended results as some owners may abuse the situation and directors may find it difficult to reach decisions while under constant and critical scrutiny. As a consequence, in the future, no one may wish to become a board member because of recent experiences of owners disrupting meetings and harassing directors in the process of reaching decisions. It would then be difficult to remove the by-law.