Condominiums are communities and some run more smoothly than others. Before buying a unit, ensure you understand how condominium corporations make decisions about finances, common property, rules and regulations.
This section outlines the role of the board of directors, your voting rights and responsibilities, common rules and restrictions as well as the differences between “self-managed” condominiums and those that hire property management firms to handle their daily operations.
WHO MAKES UP THE BOARD OF DIRECTORS?
The board of directors (or “council” in B.C.) is generally elected by, and made up of, individual condominium owners. Their number, qualifications, election, term in office, pay (if any), removal from the board and other related matters are outlined in provincial or territorial legislation and/or the condominium bylaws.
The board of directors meets regularly to handle the business affairs of the condominium corporation, including policy and finances, and makes decisions about the upkeep and repair of the common property.
HOW ARE VOTING RIGHTS DETERMINED?
The board of directors makes many decisions for the condominium but certain decisions must be made by unit owners. Each unit owner has voting rights at meetings.
Your voting rights will be determined by:
- the condominium legislation in your province or territory; and/or
- your condominium’s governing documents (such as its declaration and/or bylaws); and
- your financial standing with the condominium corporation. If you’re in arrears with your contributions, you risk losing your voting rights.
Some condominiums assign one vote per unit. Others weight the vote based on ownership of the common elements. This ownership interest is often called a “unit factor,” “proportionate share” or “percentage of ownership.”
The unit factor for any particular unit will generally be calculated in proportion to the unit’s value in relation to the total value of all of the units in the condominium corporation. For example, a tenth-floor, three-bedroom corner suite with a rooftop garden will typically have a greater unit factor than a two-bedroom basement unit.
Your unit factor is also used in calculating the monthly fees you must pay toward the upkeep and renewal of the common elements.
MUST I ATTEND MEETINGS AND/OR SERVE ON COMMITTEES?
You may have to, depending on what your condominium’s rules or other governing documents require. Whether it’s compulsory or not, you have a responsibility to yourself and to other owners to become involved in your condominium community.
Meetings are a forum for owners to discuss the running of the condominium and to vote on changes to the common property, bylaws and other matters. For a vote to take place, there must often be a minimum percentage of owners present (called a “quorum”), so everyone has a responsibility to attend.
If you can’t attend an owners’ meeting, you may have the right to send someone in your place. This person is called a “proxy.” When owners will be voting on important matters, such as changing a bylaw or electing a new director to the board, you can send your vote via a proxy. Typically you would need to appoint your proxy in a signed document.
AM I BOUND BY DECISIONS IF I DIDN’T ATTEND MEETINGS OR VOTE?
Yes. Your board of directors holds regular meetings and has the right to make certain decisions that affect the corporation at those meetings, whether or not you are present.
Decisions that require the approval of unit owners are made at annual general meetings or special meetings. You should be notified about these meetings well in advance and plan to attend or appoint a proxy. If you don’t cast your vote and a motion passes, you are bound by that decision.
WHAT’S THE DIFFERENCE BETWEEN CONDOMINIUM BYLAWS AND RULES?
A condominium’s bylaws govern how the condominium corporation is run. They often address matters such as the election and practices of the board of directors, the collection of common expense contributions and how rules are passed.
Rules focus on day-to-day concerns of condominium living and vary from condo to condo. They may be very strict or very relaxed depending on the nature of the corporation, but they help ensure that the condominium is a safe, pleasant and attractive place to live. Rules also spell out what your rights and obligations are as an individual owner.
Rules frequently cover:
- the maximum number of occupants per unit;
- when you may use certain amenities, such as the pool or exercise room; and
- the appearance and/or alteration of the unit space.
Carefully review and consider all rules and obligations prior to purchasing a unit. You can get a copy of the rules from the seller, the property manager or the board of directors. Make sure your copy is up to date.
Provincial and territorial condominium legislation sets out what matters can be covered by bylaws, and sometimes rules. All bylaws must be consistent with both this legislation and the condominium corporation’s declaration. Rules should not deal with matters covered by bylaws otherwise they could be struck down if challenged.
Condominium legislation in some jurisdictions doesn’t differentiate between bylaws and rules.
Before you buy, ask current residents if they’ve experienced problems with noise, pets, parking, smoke or odours from other units and how they were handled. This is particularly important if you’re moving from a single-family home to a multi-unit condominium.
PROPERTY MANAGEMENT FIRMS VERSUS SELF-MANAGED CONDOMINIUMS
Most condominium corporations hire a property management company to handle their day-to-day operations, under the leadership of their boards of directors. These tasks often include:
- collection of monthly fees and any special fees;
- cleaning and maintenance of common areas;
- payment of common area utility bills;
- operation and maintenance of heating, air-conditioning and other building systems; and
- snow and garbage removal.
Other condominiums are “self-managed.” Their boards of directors — and in some cases, volunteers who are residents or owners — carry out the day-to-day operational tasks.
Self-management can save money as well as give owners a greater sense of control and community. But it has several challenges including:
- finding volunteers who have knowledge of building maintenance, budgeting, insurance and legal issues and who can devote enough time to the condominium’s day-to-day business;
- lack of continuity (due to volunteer turnover); and
- a weak system of checks and balances.
When considering the purchase of a particular condominium, ensure that you are comfortable with its management, whether the condo contracts out this responsibility or takes it upon itself. There may be implications for both your condo fees and any obligations you may have toward the building’s operation and maintenance.
Self-managed condominiums can work well, but it’s important to have strong support from a lawyer and an accountant who are experienced in condominium operations