A “condo” refers to a real estate ownership structure that involves shared ownership of common elements and community decision-making. A condo is also a type of corporation responsible for making decisions about the condominium property on behalf of the owners.
Monthly condominium fees are paid to the condominium corporation, ensuring that the common elements are maintained and pays various contractors (such as property managers, security, snow removal, landscaping, etc.). This can be great for those that do not want to deal with the burden of home maintenance. The trade-off, though, is the lack of decision-making and control. Decisions regarding the condominium, in large part, are made by the Board of Directors. Owners have various rights concerning how the condominium is operated, but most of the decision-making power for the day-to-day operations rests with the Board. Owners and potential owners need to understand their rights and understand the pros and cons of condominium living.
Below is a very brief overview of some of the information that owners should know. However, it is important to speak with your real estate agents/brokers and your lawyer to understand your rights in full.
Ontario’s Residential Condominium Buyer’s Guide
This Guide was created by the Condominium Authority of Ontario (“CAO”) in collaboration with the Ministry of Government and Consumer Services as a resource for the purchasers of new condominium units. Starting January 1, 2021, developers are required to provide a copy of this Guide to purchasers of pre-construction and new residential condominiums or proposed condominiums, along with the currently required disclosure statement. The purpose of this Guide is to provide purchasers in Ontario with information and resources to make a more informed decision when purchasing a residential condominium unit.
Under section 73 (2) of the Condominium Act, 1998, buyers have a 10-day cooling-off period in which they may rescind their purchase and sale agreement. This 10-day period begins on the later of the date on which the buyer receives the Agreement of Purchase and Sale, disclosure documents, and the Guide.
The Guide equips prospective buyers with information on condominium ownership and the condominium purchase process. This article will focus on information on condominium ownership and condominium living.
Organization of the Condominium Corporation
The provisions of the Condominium Act govern a condominium corporation, 1998, SO 1998, c 19, the Declaration, the By-Laws and the Rules – in that order.
The Declaration is the foundational document of the corporation. It includes the proportion that each unit owner contributes to the common expenses, information about how the units and common elements can or cannot be used, the definition of the “standard unit,” etc.
The Declaration can only be amended upon the consent of at least 80% or 90% of the voting units, depending on the amendment being made.
The By-laws lay out how the corporation governs itself and how it operates; they are the administrative guide for the corporation.
By-laws must be approved by most owners (except where the Condominium Act, 1998 provides otherwise) and registered with the Land Registry Office.
The Rules govern what the owners and occupants can and cannot do in their specific condo community. For example, some condominium corporations have rules preventing owners from renting their units to students or rules regarding smoking or pets.
The Board may make or amend a Rule and provide notice of the Rule to the owners. An owner that disagrees with the Rule may requisition an owners’ meeting to vote to prevent the change(s) to the Rule from being passed. If an owners’ meeting is not requisitioned, the Rule becomes effective after 30 days have passed since notice of the Rule was given.
The Declaration, By-Laws and Rules must comply with the Condominium Act, 1998. Owners must read and are familiar with these documents. Issues often arise when there is misinformation or unfamiliarity with such documents.
As an owner in a condominium corporation, you typically own your individual unit and collectively share ownership and expenses for the common elements. While units are for the exclusive unit of the owner, common elements are typically not for exclusive use but the use of all owners. For example, common elements may include parking garages, elevators, lobbies, etc. Common elements may also include structural elements like the walls between the doors, plumbing and electrical work.
Some condominiums have common elements for the exclusive use of a particular owner, known as exclusive-use common elements. For example, a balcony may be an exclusive-use common element.
Rights and Obligations of an Owner
Owners have the right to:
- Attend and vote at owners’ meetings;
- Seek election to the Board of Directors, if qualified;
- Review certain records of the corporation, such as financial statements and meeting minutes;
- Requisition an owners’ meeting in certain circumstances;
- Use the common elements and amenities of the condo following the condo’s governing documents;
- Request that an item be added to an owners’ meeting agenda.
Owners have an obligation to:
- Comply with the Condominium Act, 1998 and the condominium’s governing documents;
- Repair and maintain your unit following and subject to the condominium’s governing documents;
- Pay your common expense fees on time;
- Notify your condominium corporation if your unit is leased; and,
- Attend and vote at certain meetings.
Responsibilities of the Board of Directors
The Board of Directors consists of an elected group of people responsible for governing the affairs of the condominium corporation. Ideally, they play a critical role in supporting a positive, healthy condo community and ensuring that the corporation and its assets are well managed and maintained.
Some of the responsibilities of the Board of Directors are:
- Setting the condominium corporation’s annual budget;
- Selecting and paying contractors and service providers;
- Hiring and overseeing the condominium property manager;
- Ensuring required maintenance and repairs are carried out;
- Hire specialists to conduct regular reserve fund studies following the Condominium Act, 1998;
- Proposing new or amended Rules and By-Laws;
- Providing various notices to owners;
- Making decisions regarding the corporation’s finances;
Directors are elected for a fixed term but may run for re-election when their term expires. Directors are typically elected at the corporation’s Annual General Meeting.
As of November 1, 2017, directors must complete the training program for directors provided by the CAO. Directors who fail to complete the training within the prescribed timeframe are immediately disqualified from their board and cease to be a director.
There is a lot of information to digest about condominiums before purchasing a unit. The above information is just the tip of the iceberg. Speak to a condominium lawyer at Richardson Hall LLP to learn more.