Christopher Mendes, Condominium Lawyer, was recently highlighted in Bloom and Co. Property Management's new blog segment, Guest Contributors. In this feature, Chris shares valuable insights into "The Top 5 Questions Asked by Condominium Owners," addressing essential concerns and common inquiries about condominium living.
SV Law is proud to showcase its Lawyers like Chris, who contribute their insights to industry conversations and publications.
Read the original blog on Bloom and Co.'s website.
The Top 5 Questions Asked By Condominium Owners
Recent years have shown that condominium owners in our service area feel less informed than ever before. Purchasing a condominium unit means more than purchasing a home; owners join a community governed by the Condominium Act, 1998, and the governing documents can be overwhelming. We reached out to our boards of directors to better understand the common questions condominium owners are asking. The boards provided valuable insights, raising important topics for discussion. To delve deeper into these questions, we collaborated with Chris Mendes of SV Law LLP for expert guidance. Check out the top 5 questions asked by condominium owners below!
1. What are my rights as a condominium owner in the case of a dispute or legal issue?
In a communal living environment, such as a condominium, disputes can arise in several circumstances and scenarios. There can be disputes between individual owners, owners and the condominium corporation, and disputes between the condominium and third parties, such as the condominium’s developer (known as a “declarant”).
Generally, owners have the right to the peaceful use and occupation of their units and the common elements, subject to the provisions of the Condominium Act, 1998 (the “Act”), a condominium’s declaration, by-laws and rules. These documents form the foundation on which the condominium community rests, and which set out the conditions and restrictions which govern the use of the units and common elements. For example, a condominium’s declaration and rules can contain conditions such as the number and size of animals owners are permitted to keep, how the units can be rented out (i.e. no Airbnbs) and can prohibit unreasonable noise, smoking and nuisances.
A condominium’s board, elected by the owners, has an obligation to ensure the provisions of the Act and a condominium’s governing documents are enforced. Owners have both the duty to comply with these documents and the right to require condominiums to enforce them.
The Act provides for three (3) dispute resolution mechanisms when there is disagreement between owners and/or the condominium. First, for violations of the Act itself, a condominium or an owner can bring their dispute to the Ontario Superior Court of Justice. This process is used in circumstances such as where someone has caused a dangerous condition, where someone has made unauthorized changes to the common elements, or where an individual believes they have been treated oppressively.
Second, for specific disputes, an owner or condominium can bring their matter before the Condominium Authority Tribunal (“CAT”). The CAT is a specialized tribunal which hears and resolves disputes related to (i) noise/nuisances; (ii) smoke or odours; (iii) light or vibrations; (iv) parking and vehicles; (v) storage; or (vi) access to records.
For all other disputes, the Act requires that the parties engage in mediation. Mediation is a process whereby a neutral third party assists the parties in reaching a resolution, without forcing a decision. If mediation is not successful, then arbitration is required. Arbitration is a process whereby an appointed arbitrator hears the evidence and makes a final determination.
As disputes in a condominium setting can often cover multiple interrelated issues, it is important to seek legal advice on your specific circumstances to ensure you are headed in the right direction.
2. Can Boards make decisions about major contracts that affect the community without consulting the owners?
Like all legal questions, the answer is “It depends”. Generally, boards, elected by the owners, are tasked with the governance of the condominium corporation, including setting their budgets, entering and negotiating contracts, and managing the property. Provided boards are acting within the authority granted by the Condominium Act, 1998, and comply with their governing documents, boards are given wide discretion to make the decisions they feel are in the best interests of the Condominium, without consulting the owners directly. A court, for example, will not reverse a condominium board’s decision or replace the decision, unless the board has acted outside of its authority or contrary to the Act. This is referred to as the “business judgment rule”. Boards, like all democratically elected bodies, are accountable for their decisions at election time.
There are, however, situations where boards cannot make decisions without consulting with the owners or conducting a vote of the owners. For example, a condominium cannot borrow money from a bank or lender without first passing a by-law. By-laws under the Condominium Act, 1998, require an owners’ meeting and the positive vote of a majority of all units.
Another example is that a condominium cannot make changes to the common elements, changes to the services provided to the owners, or changes to the assets of the condominium unless section 97 of the Condominium Act, 1998 is followed. This section sets out how a board can make these kinds of changes, and such depends on the costs of the change. If the costs are below 1% of the condominium’s annual budgeted common expenses, a board can make that change without input from the owners. If the costs are between 1 and 9% of the budgeted common expenses, a board must first send notice to the owners containing the details of the change which gives the owners the right to call a meeting to vote on that change. If the costs are 10% or more of the budgeted common expenses that change is “substantial” and before that change can be made 66.66% of all owners must vote in favour of this change.
The Condominium Act, 1998 balances the rights of owners, with the practical realities that a board must manage the condominium and be accountable to the owners at election time.
3. What happens if no one volunteers to serve on the Board?
Condominiums are democracies. The board is elected by the owners (typically at the annual general meeting) to govern the condominium, make decisions on behalf of the condominium, and ensure that the Condominium Act, 1998 (the “Act”) and the condominium’s governing documents are adhered to.
Much like how Canada could not function if no one ran for parliament, a condominium cannot function without a board. A board must also have a quorum in order to operate. Quorum is a majority of the positions on the board. For example, if a condominium’s by-laws provide that the board consists of five (5) members, there must always be at least three (3) directors for the board to function.
If a board loses quorum, section 34 of the Act requires that the remaining members of the board call a meeting within thirty (30) days of losing quorum, for the owners to elect enough directors to constitute a quorum. If the remaining members of a board do not call such a meeting, an owner may, including when there are no remaining directors.
In rare circumstances where there is no one willing to run for a position on the board, section 131 of the Act permits any owner to bring an application to the Superior Court of Justice, asking the Court to appoint an administrator. The Court will only appoint an administrator if, among other things, it is in the best interests of the owners. The Court will specify the powers and duties of the administrator. A recent case, Laxmi Real Estates Inc., v. Toronto Standard Condominium Corporation No. 2470, 2024 ONSC 5143, sets out the test the Court will apply to determine if an administrator will be appointed. An administrator may only be appointed where:
- There is a demonstrated inability of the board to manage the corporation;
- There is substantial misconduct or mismanagement, or both;
- There is a need to bring order to the affairs of the corporation
- There is the existence of a struggle within the corporation amongst competing groups which impedes or prevents proper governance; and (among others);
- Whether only the appointment of an administrator has the proposed of bringing order to the affairs of the condominium.
This is a high threshold to meet, and condominiums should strive to have board members elected by the owners before applying to a court.
Many owners have also asked whether condominiums can retain outside individuals to be board members where there are no owners willing to serve. Section 29 of the Act sets out the qualifications for an individual to serve on a condominium’s board, however, being an owner of a unit within the corporation is not a necessity. A condominium’s by-laws, pursuant to section 56(1)(a) of the Act, can expand on these qualifications. Before a non-owner can run and serve on a board, the condominium’s by-laws should be reviewed. If there is no restriction in the by-laws, then outside/non-owners are permitted to be on a board, provided they are elected.
If a condominium is considering electing “professional” board members it should be noted that before a director can be paid for their services, a by-law is required. Like most by-laws, such requires an owners’ meeting and the positive vote of a majority of all owners. Even if such a by-law is passed, director remuneration by-laws are only valid for three (3) years.
4. What are the responsibilities of a condominium board versus the responsibilities of individual owners with respect to reporting to management and/or completing site inspections?
As referenced above, section 17 of the Condominium Act, 1998 (the “Act”) sets out the duties of the condominium, as governed by its elected board. These duties include (but are not limited to):
- Managing the property and the assets, if any, of the corporation on behalf of the owners;
- Controlling, managing and administering the common elements and assets of the corporation; and,
- Taking all reasonable steps to ensure that the owners, the lessees, and the agents and employees of the corporation comply with the Act and the condominium’s declaration, by-laws, and rules.
While a board remains ultimately responsible for the condominium, often many of the day-to-day operations of a condominium are delegated to a condominium manager (with board oversight). Condominium managers are governed by the Condominium Management Services Act, 2015, and the provisions of a condominium management services agreement. This agreement will set out the specifics of a manager’s duty, which can include quarterly site inspections, overseeing common element repairs, and taking initial efforts to enforce a condominium’s governing documents.
That said, neither boards, individual directors, nor condominium managers can be omnipresent. Owners, who reside in their units, are at the condominium every day and are more likely to note potential issues faster, or more frequently than a condominium manager can during scheduled site inspections. While a discovered issue may be one a condominium is ultimately responsible for, it is important to note that condominiums are communities. Owners, boards and condominium managers need to work together to ensure that the corporation functions and is responsive to owners’ needs. If an issue is noted by an owner, it is important to bring it to the attention of management either through a friendly call or email. Such can ensure issues are not missed.
5. As an owner, what happens if I can’t pay the monthly fees or special assessments?
The Court has found that the common expenses (i.e. monthly fees or special assessments) are the lifeblood of a condominium. A condominium cannot function without them. Unlike business corporations, which have revenue from business operations, condominiums only have common expenses. Common expenses are used for the maintenance of the property, the retention of contractors, payments for services rendered to a condominium, the reserve fund contributions and to keep the lights on (among other items).
Section 84 of the Condominium Act, 1998 (the “Act”) provides that all owners must contribute to the common expenses in the proportion outlined in a condominium’s declaration. These percentages are typically found in the schedules to a declaration (namely Schedule “D”). An owner cannot opt out of, or be exempt from the obligation to contribute, even if that owner has waived or abandoned a right to use the common elements, is making a claim against the condominium, or the declaration limits the use certain owners can make of the common elements.
As all owners must contribute to the common expenses in their declaration percentage, if one owner does not pay, it hurts all other owners – the other owners must pick up the tab, so to speak. This results in unfairness to all other owners. To deal with this unfairness, and in recognition that common expenses are the “lifeblood” of a condominium, section 85 of the Act prescribes how non-payment is addressed.
Under section 85 of the Act, when an individual does not contribute, the condominium has a lien upon the defaulting unit. This lien covers the costs of the arrears plus all interest and expenses incurred in collecting the unpaid amounts. The lien is registered on title to the unit in question and has priority over all other debts, including the mortgage (with very limited exceptions). If a lien is not paid it is enforced in the same manner as a mortgage which, in extreme circumstances, can include power of sale proceedings. This process ensures that condominiums (and therefore all other owners) are made whole.
We extend our sincere thanks to Chris for taking the time to sit down with us and explore these important topics. SV Law, a local firm specializing in condominium law, provides valuable assistance to both owners and corporations in navigating condominium-related matters. Having strong legal representation is a crucial asset for condominium corporations, offering clarity on all issues, including those discussed above. At Bloom & Co., we prioritize client education and recognize the importance of transparency. Our mission is to ensure the management of well-informed and satisfied condominium corporations.
The content of this article is intended to provide a general guide to the subject matter and is not legal advice. Specialist advice should be sought regarding your specific circumstance.