What the Condominium Act Allows or Disallows

As mentioned in a previous article, the Condominium Act 1998 and its Regulations govern all condominium corporations in Ontario.

And the Declaration and Description of each condominium govern each individual condominium. Below that, the By-laws and Rules of each condominium also govern each individual condominium.

The hierarchy of authority is: the Condominium Act and its Regulations over-rules the Declaration and Description; the Declaration and Description over-rules the By-Laws, and the By-laws over-rules the Rules.

Must Do:
The Act sometimes dictates what a condominium corporation (its directors and/or officers) must do.

Example: a condominium corporation, after conducting a reserve fund study, is required to send a notice to the owners as stated in the Act [Note 1].

But what kind of information should the notice contain? In what format should the notice be?

The pertinent Regulation further clarifies and stipulates that the notice that the board is required to send shall be in Form 15 [Note 2]. The regulation also provides a sample copy of Form 15 [Note 3].

Legalese speaks: When the law says "shall", you may take it to mean "has to", so "shall be" is equivalent to "has to be", "shall have" means "has to have".

Optional:
The Act sometimes provides something optional that a condominium corporation (its directors and/or officers) may choose to do or not to do.

Example: the proxy used to vote at a meeting of owners may be in the prescribed form [Note 4].

The legalese speaks: "may be" simply means "optional", even though the regulation also provides a sample copy of a proxy as Form 8 and Form 9 [Note 5].

Must Do with Flexibilities:
The Act sometimes dictates what a condominium corporation (its directors and/or officers) must do, but a condominium corporation may do it in other manner if certain conditions are met. This gives some flexibilities for its board of directors and its officers some flexibilities how things are run.

Example: The Act says that when a meeting of directors is called, all directors have to be given a written notice at least 10 days before the day of the meeting, unless there is a by-law that specifies otherwise [Note 6].

This means that if there is a by-law stating that the notice can be given with at least 24-hour notice, then that’s fine. Otherwise, if someone (such as the property manager) sends out a notice to all members of the board about a meeting to be held three days later, this will violate the Act.

The By-law No. 1 of TSCC 1446 (880 Grandview Way) paragraph 5.10 allows a meeting of Board of Directors to be called by giving at least 48-hour written notice, excluding Saturdays, Sundays and statutory holidays.

[Note 1] The Condominium Act 1998, Section 94, Subsection (9)(a): "Within 15 days of proposing a plan, the board shall send to the owners a notice containing a summary of the study, a summary of the proposed plan and a statement indicating the areas, if any, in which the proposed plan differs from the study."

[Note 2] Ontario Regulation 48/01 section 33, Subsection (3): The notice that the board is required to send under subsection 94 (9) of the Act shall be in Form 15.

[Note 3] A sample copy of Form 15 is provided in the regulations. Click here to see it.

[Note 4] The Condominium Act 1998, section 52, Subsection (6): An instrument appointing a proxy may be in the prescribed form.

[Note 5] Form 8 is a sample copy of a proxy for general matters (click here to see it), and Form 9 is a sample copy of a proxy for general matters and for the election of directors (click here to see it). Many condominiums use Form 9 at their AGM (Annual General Meeting) as it is usually when directors are being elected.

[Note 6] The Condominium Act 1998, section 35, Subsection (2): The person calling a meeting of directors shall give a written notice of the meeting to every director of the corporation at least 10 days before the day of the meeting, unless the by-laws specify otherwise.

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Index of Articles

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Do Condo Directors Get Paid?

Many condo owners often wonder:
- Do condo directors get paid?
- How do I know that whether the directors in my condo get paid or not?

The Condominium Act 1998 stipulates that in order for condo directors to get paid, it has to be set up as a By-law of the condominium corporation, and the By-law also has to specify how much the condo directors are to be paid. [1]

Unless the condo builder (in legalese: the Declarant) has already put such (paying condo directors) in a By-law (rarely the case), all subsequent By-laws will have to be passed at a meeting of owners, such as the Annual General Meeting (AGM).

When you buy a resale condo unit, you should (if not, you are making a big mistake) obtain a document called Status Certificate which includes, among other documents, the By-laws of the condo you are buying into.

Just go through the By-laws of your condo documents, and you’ll know that whether your condo directors are getting paid, or are they doing voluntary unpaid work.

Another place that usually should contain such information is the financial statements that come with the package for the AGM. It should contain an item showing the amount of director remuneration.

Most condo directors don’t get paid for being a director on the condominium corporation, including all the directors of the three condominium corporations of the Grandview Way residential complex.

So, please pay your respect to your condo directors as they expend their time and energy for this voluntary unpaid job, just to look after your interest in the condo. Give them a round of applause at your next AGM.

[Note 1] The Condominium Act 1998 Section 56, subsection (2):
A by-law relating to the remuneration of directors shall fix the remuneration and the period not exceeding three years for which it is to be paid.

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The Term of a Condo Director

How long can a condo director serve? Thai is, what is the term of a condo director?

The Condominium Act 1998 stipulates that a condo director can serve at most three years, but if the By-laws of the condominium corporation say the term is shorter, then it’s the shorter term.[1]

When the term expires, the position is up for election. The same person can run as a candidate for the same (or a different) position on the Board. Nevertheless, other people can also run for the same position against the incumbent candidate.

If at the end of his/her term, a director does not want to run for the Board again, but there is no other person wants to fill up the vacancy, this director may (i.e. if he/she agrees to) continue to act as a director until a successor is found – even if it means the term is longer than three years.[2]

If a board consisting of five members has five new faces elected at the same AGM (Annual General Meeting), this would disrupt significantly the continuity of operations of the condo.

In order to minimize the chance of such happening and make the transition smooth, at the very first meeting (in legalese: the turnover meeting) the condo builder (in legalese: the Declarant) turns over the affairs of the condominium corporation to the owners of the condo, they help elect five directors. Usually (but no always), these five first directors are of different terms: two for a 1-year term, two for a 2-year term, and one for a 3-year-term.

After one year, the terms of those two 1-year directors expire and are up for election. The newly elected directors (it could be the same two persons, or two new faces) now start to serve 3-year terms.

After two years, the terms of those two 2-year directors expire and are up for election. The newly elected directors (same or different persons) now start to serve 3-year terms, too.

After three years, the term of the 3-year director expires and is up for election, The newly elected director (same or different person) now also serves a term of three years.

After that, all terms are of three-year durations. So every year, there are one or two positions on the Board up for election.

A director is expected to, but not obligated to serve the full term. There are many reasons why this may happen, and the most common reason is a director resigns. Other reasons are, touch wood, a director dies, or does not meet the qualifications of being a director. (Read more about the qualifications of being a condo director here.)

When a director cannot fulfill his/her term, the rest of the board may decide (by majority vote if they cannot all agree) to appoint some person to be a member of the Board. Of course, this person has to meet the basic qualifications of being a condo director.

This director, appointed but not elected, can only serve until the next Annual General Meeting (AGM), [3] even if the remaining term of the resigned director may be longer than one or two years.

[Note 1] Condominium Act 1998 Section 31, subsection (1):
A director is elected for a term of three years or such lesser period as the by-laws may provide.

[Note 2] Condominium Act 1998 Section 31, subsection (2):
A director may continue to act until a successor is elected.

[Note 3] Condominium Act 1998 Section 34, subsection (2):
If a vacancy arises in the board and a quorum of the board remains in office, the majority of the remaining members of the board may appoint any person qualified to be a member of the board to fill the vacancy until the next annual general meeting.

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Owner-Occupied Units

All units in a condo have owners. Some owners live in their units; some rent out their units.

Let’s face it, renters are less likely to take good care of the rental units or the common elements. I am not saying that they won't, but they are just less likely. Hence, the more rental units a condo has, the more likely that the faster the common elements become run-down.

In order to protect the interests of the owners who actually live in their units, the Condominium Act 1998 tries to protect the interest of these owners who occupy their units by creating a “reserved position” on the Board of Directors of the condominium corporation.

The Act stipulates that if 15% or more of the units in a condo are occupied by owners (“owner-occupied units”), a position on the Board of Directors is reserved (the “reserved position”) to be voted only by owners of owner-occupied units. [1]

What a mouthful! “Owners of owner-occupied units” in plain English means “owners who live in their units.” In other words, the director who takes up this “owner-occupied position” can only be elected or removed by owners of owner-occupied units.

Some condo by-laws (such as those in the Grandview Way residential complex) refer to this “owner-occupied position” as “owner-occupied director.”

A common misunderstanding (even among some property managers) is that this owner-occupied position can only be filled by owners of owner-occupied units. This is incorrect. The Act does not stipulate that. Unless the by-laws of the condominium corporations restrict that (but rarely the case), the qualifications for the person who take this “owner-occupied position” is no different from any other persons taking up any non-owner-occupied positions.

Click here to read about the qualifications for being a director.

[Note 1] Condominium Act 1998 Section 51, subsection (6):
If at least 15 per cent of the units of the corporation are owner-occupied units on or after the time at which the board is required to call a turn-over meeting under section 43, no persons other than the owners of owner-occupied units may elect a person to or remove a person from one of the positions on the board.

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How Many Condo Directors?

The Condominium Act 1998 mandates that a board must have at least 3 persons.[1] However, the By-Laws of a condominium corporation may increase this number.

For a board of directors meeting to be legitimate or in legalese "duly constituted," a quorum of the board has to be present (i.e., the minimum number of directors present at the meeting), and the quorum is a majority of the members of the board.[2]

If there are only three members on the board (as the minimum number required by the Act), the quorum will be the majority, i.e., two persons.

If the board consists of four members, the majority will be three persons, not two persons. Think about "majority" as "more." Here, "the majority has to be present" simply means that "more people present than absent." If two persons present and two persons absent, then the number of persons present is not more than the number of persons absent, so there is no majority, thus no quorum.

If the board consists of five members, then the quorum is three persons.

Since the quorum is the same for even number of persons and the next odd number, it is obvious that it is advantages to have odd number of persons on the board of directors because this will diminish the chance of a board meeting being called off because of not enough directors present (i.e., in legalese: a quorum is not present).

For a 4-member board, two directors absent will not meet the quorum. But for a 5-member board, it takes the absence of three directors to not meet the quorum.

The same can be said for a 7-member board rather than a 6-member board, a 9-member board rather than an 8-member board, etc.

If a board consists of only three directors (the minimum number required by the Act), it only takes one director's resignation (or, touch wood, untimely death) to make the condominium corporation violate the Act.

Since it is very hard to find people to be a director of the board, so five appears to be an optimal number. Perhaps that’s why most condo builders set the number of directors at five in a By-Law of the condos they build.

[1] Condominium Act 1998, Section 27, subsection (2):
The board shall consist of at least three persons or such greater number as the by-laws may provide.

[2] Condominium Act 1998 Section 32, subsection (2):
A quorum for the transaction of business is a majority of the members of the board.

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