Condo Corp Management Questions

Note that the answers provided below are the opinion of the writer. They should not be taken as legal advice, but more as guidelines from a condo corp management company. Consult a condominium lawyer if you need legal advice. Feel free to send us your questions, and we will do our best to add them to this list.

General Questions

Legal Questions

Finance Questions

A condominium is more than just the high rise residential building. Condominiums are corporations that can be residential or commercial, high rise or low rise, townhouse, or even vacant of any structure. This is because a condominium is actually a legal entity that defines co-ownership of a shared real estate asset. Condominium operate under their own law in Ontario, and come in many different shapes and sizes.

The unit owners do. A condominium corporation is broken up into two parts: The units, which are fully owned by the owner, and the common elements, which are shared among all owners. While the common elements are shared by the owners, they are often managed by a Condo Corp Management company. In a high-rise, this means that your unit itself is yours alone, but that everything outside of the units, including corridors, elevators, land, and parking garage is shared between all of the owners. It gets a bit more confusing since the unit is connected to the common elements, but we’ll get into this later on.

In Ontario, there are several different types of condominium. Standard Condominiums can be thought of as buildings with different privately-owned units, as we described above. This is the most common type, and until 1998, the only type of condominium. In Standard condominiums, maintenance and repairs are somewhat tricky since the unit is connected to the rest of the building.

Common Element Condominiums are condominiums where owners own a parcel of land in a development instead of a unit in a building. The structure built on this “Parcel of Tied Land” (POTL) is entirely owned by the individual, making repairs and maintenance relatively simple. The word “tied” in “Parcel of Tied Land” means that the unit owners share a common asset, like a road, or an area of land. For example, in a Common Element Corporation in the form of a townhouse development, the owners may be responsible for the shared roads and street lighting. This differs from a regular townhouse development where the city would take on these services.

Vacant Land Condominiums, Phased Condominiums, and Leaseholds are some of the other types of condominium corporations that are possible in Ontario, but these are far less common.

The common elements are the portion of the condominium that are shared among the owners. This could include assets like the building’s amenities (pool, gym, etc.), but also includes less obvious items like the parking garage, the lobby, the corridors, the lighting, and virtually everything else that lies outside of the boundaries of the units themselves. These assets are co-owned, with each owner owning a percent that is proportionate to their unit size (Other methods of determining percent ownership exist as well). The percent ownership of each unit can be found in the corporation’s Declaration. This document will be explained later on.

A condominium unit is where you live. This is your home. Legally, the unit is the portion of the condominium corporation that is owned by the owner (as opposed to being jointly owned by all owners). In buildings, determining the boundaries of the unit, the repairs and maintenance of the unit, and the insurance on a unit, can all be complicated since the unit is physically attached to the rest of the building. These divisions are laid out in the corporation’s Declaration, which will be explored below.

The Condominium Act, 1998 is the law that governs condominiums in Ontario. A condominium is technically a corporation, but does not fall under the Business Corporations Act. Instead, it has its own law. With very few exceptions, such as the Human Rights Code, the Condominium Act supersedes all other legislation with respect to a condominium. Meaning, if your building tried to pass rule or a by-law that contradicted the Act, that rule or by-law would not be legal.

The Condominium Act is just one of several layers of rules that govern a condominium. The hierarchy looks something like this:

Condominium Act --> Declaration --> By-Laws --> Rules --> Procedures

The Condominium Act is Ontario Law, and lays out the creation, governance, and other aspects of a condominium. The Condominium Act can only be changed by the Ontario Legislature. Regulations under the act are slightly easier to change, but cannot be done by any individual condominium.

The Declaration is specific to each building, and lays out items like the type of condominium, the percent ownership of each unit and the boundaries of the unit. The Declaration can be changed with a vote of over 80% of the owners for some items, and over 90% for other items.

The By-laws are specific to each building, and can be pass by a vote of over 50% the owners. These can cover topics like borrowing, defining the unit with respect to insurance coverage, general governance, and a host of other internal affairs.

The Rules are meant to keep order in the building, and include the more day-to-day items like pet restrictions, use of the visitor parking lot, and moving hours. A rule change can be passed by the Board of Directors, as long as notice goes out to all owners, and the owners are given the right to object.

Procedures are simple day-to-day items that do not require the owner’s involvement, like changing the office hours, or the temperature of the pool.

Yes. In addition the Condominium Act, the building must be compliant with a number of other laws, such as the Building Code Act, the Employment Standards Act (if there are staff), the Human Rights Code, Occupational Health and Safety Act, Accessibility for Ontarians with Disability Act, and a number of others. It is your management’s job to ensure your building is compliant with all relevant legislation.

You do. Sort of. Since the building is not owned by one person or company, it’s the owners that actually run it. But only a few actually have a say in the day-to-day operations. Much like a small government, the owners elect representatives – a Board of Directors – to manage the affairs of the corporation. These are unpaid volunteers from the pool of owners who have some knowledge that would be useful in running the building. Since the Board of Directors can’t be expected to know the details of condominium management, they often hire a Management Company to take on this role. The management company runs the condominium, but it is the Board that makes almost all of the decisions. The level of autonomy that a management company has depends on their management contract.

Since the management company is the one who actually manages the corporation, it is crucial that the Board choose not only a good company, but the right company for your building. Assessing the management company comes down to much more than just price. Board members should look to the company’s reputation in the industry, their knowledge of condominiums (some companies operate rental buildings, but don’t know the specifics of condominiums), and their track record in terms of dealing with complex financial, physical, and legal issues.

A mid-sized condominium may have annual revenues of over a million dollars, and millions in assets (the building itself!) It is imperative that the management company have the business experience and problem-solving skills to match these needs. To make it easy for you, just choose Brilliant Property Management 🙂

With the new Condominium Act, management companies will also be required to have additional training in order to be licensed to practice. We welcome this news!

This is important. Remember how we said that the Board of Directors is ultimately responsible for the governance of the corporation? Keeping a good Board of Directors is therefore crucial to having a well run condominium, and protecting your investment. The Board of Directors is composed of 5 members (although sometimes as low as 3 and as many as 9). These people are owners in the building, and in many condominiums live on site as well.

A portion of the board of directors is elected every year at the Annual General Meeting (see below). For example, if there are 5 board members, there should be 1 to 2 directors elected each year so that the new members can learn from those already on the board.

You choose your board members at the Annual General Meeting, either by voting in person at the meeting, or by proxy if you cannot attend. More on this below.

An AGM is the annual meeting where owners are invited to learn about the financial wellbeing of the condominium by going over the annual audit, to ask questions to the auditor, to elect members to the board of directors, and often learn about and ask questions about the general state of the condominium and ongoing projects.

An AGM requires a minimum number of owners to be present, either in person or by appointing someone as a proxy. This is called quorum, and it is set at 25% by the Condominium Act. If an owner owns more than one unit, each of the units count towards quorum. If people do not show up and quorum is not reached, the election cannot take place and another meeting must be scheduled.

The Condominium Act requires a pre-notice to go out to the owners 40 days before the meeting, and then another notice 15 days before the meeting. The "Notice of Meeting" package contains:

The time and location of the meeting
The agenda
The financial statements from the previous year
The minutes from last year's meeting
Basic information on the candidates running for the board
The proxy form
Any other material that the board included in the package, such as rule changes, new by-laws, etc.

During an election, people will sometimes find that directors are elected with a large number of votes even though few people showed up at the meeting. This is possible because people can appoint someone to act as a proxy. They can do this by using a proxy form. The proxy form is a government prescribed form that you get with your AGM package. It allows you to “attend” the meeting and vote, even if you cannot be there.

For the most part, if a proxy is filled out correctly it is considered valid. However, there can be instances where people fill them out incorrectly, where people sign two proxies with conflicting information, or where candidates actually forge proxies (although this is extremely rare).

Creating rules for campaigning and proxy management in advance of an election is key if an election is likely to be contested. This is a question that does not always have a simple answer, and may require legal assistance.

Yes, but it is a difficult process and can cause harm to the community. To remove a condo board director, one must first requisition a meeting. To do this, a specific form must be filled out and signed by at least 15% of the units (again, if an owner owns multiple units, each unit counts towards this threshold). If the threshold is met, the requisitionists must bring it to the attention of the president and property manager, who are required to hold a meeting within 45 days of receipt. At this meeting, a vote takes place to remove the director(s), which requires over 50% of the unit owners to pass. This is a difficult threshold to reach, which often requires the use of proxies and campaigning. As noted earlier, this can be incredibly harmful to a community and to individuals living in the building, and should only be attempted in worst-case scenarios.

The annual audit is exactly what it sounds like! It is a full review of the corporation’s books, performed every year, to determine how the condominium is performing financially. The audit is performed by an independent third party, and the auditor shares the results directly with the owners at the Annual General Meeting. The audit is one of the legislated safeguards used to ensure that owners money is being spent wisely. It is the owners who choose the auditor directly - not the board of directors.

An income statement (also known as a Profit and Loss, or “P&L”) is a document that shows the revenue and expenses of the condominium for a period of time, broken down by category. Most income statements also give budgeted numbers, and “Year to date” numbers, which show how much was earned/spent so far in the year. This can be used to see which items are over/under budget, which items the corporation spends the most money on, and which items need to be reviewed. Income statements are extremely valuable when reviewing the corporation’s finances, and are included in all audited financial statements.

A balance sheet shows the financial position of the condominium at a given moment in time. Balance sheets are an excellent way to see a summary of how much the corporation has in each of its accounts, including money owed to the corporation, money the corporation owes to others, and various other balances. This is another report that will appear in the audited financial statements, and a useful tool when reviewing the corporations financial position.

You don't! But there is a process in place if someone doesn't pay, which can ultimately result in the condominium selling their unit (this is extremely rare). If an owner is late in paying their fees, the condominium can register a Lien on the property. This is not something that is done often, as the costs are very high for the owner, but in cases where the condominium cannot collect, they do have this option. The process starts when the condominium issues a Notice of Lien, which gives the owner 10 days to pay. If the balance is not paid after 10 days, the condominium can issue the lien and register it on title. If the owner continues to miss payments after that, the condominium can eventually move to a Power of Sale, and sell the unit, although this almost never happens.

The operating account is used for day-to-day operations such as staffing, utilities, general repairs and maintenance, and administrative expenses. It is analogous to ones own personal chequing account, but on a much larger scale (unless you happen to be really rich). Reserve accounts are similar to personal savings accounts. They can be used only for major repairs and replacements of building components, and often only for expenses over a set limit. As an example, replacing a boiler would likely be a Reserve Fund expense, whereas maintenance on that boiler would be an Operating expense. Maintenance fee payments from condominium owners go directly into the Operating account, and then a portion is transferred to the Reserve account. This portion can be found in the Reserve Fund Study and the Form 15. More on this below

A Reserve Fund Study is a long-term budget done every three years that covers the replacement of all of the condominiums main components. The Study must be done by a qualified engineer, and includes a full list of building components, the condition of these components, and a financial plan to cover their replacement costs. A typical Reserve Fund Study budgets 30 years into the future with the goal of determining how much money will be needed in any given year, so that the condominium can start saving for such a time. For example, a Reserve Fund Study may reveal that the parking garage is in poor condition, and will need major work done in the next 5 years. It will approximate the cost of the work (including inflation), and determine how much people need to contribute in order to have the necessary funds to pay for the work at that time. This is done for all components of the condominium, and it is upgraded every three years to account for any changes. A summary of the Reserve Fund Study – called a Form 15 – is also prepared by the engineer, and goes out to all potential buyers before a unit is sold.

Maintenance fees are determined during the budget process. Several factors go into determining the correct maintenance fees:

Operating Budget
Reserve Fund Study
Cumulative Profit or Loss

The operating budget looks at how much was spent in the previous year, and how much will be required to operate in the coming year. The goal is to have a zero balance at the end of the year, since condominiums are not-for-profit organizations, so only money that is needed will be collected from the owners.

A significant portion of the operating budget consists of transfers to the Reserve Fund. The amount that goes into the Reserve Fund is determined by the Reserve Fund Study, which is created by an engineer after having done a full inspection of building components. If money is needed for major work in the building, even if it is needed years in the future, fees will have to be adjusted to begin saving for such a time. Alternatively, if the Reserve Fund Study has a high balance with few major projects on the horizon, transfers to the Reserve Fund may be lowered.

A final consideration is the cumulative profit or loss. Remember how we said the goal is to budget zero profit or loss? Well, in reality this rarely is the case. With so many variables and price fluctuations, it is common for there to be profits or losses each year. These are added up and form a cumulative profit or loss that shows up on the Balance Sheet. If a corporation has a large surplus or a large deficit, they may consider lowering or raising fees to reduce this amount.

Some condominiums choose to share amenities with other buildings, and pay a relative portion of the costs to maintain them. This could be something small like an outdoor pool, or something substantial like an entire fitness complex. Shared facilities will often have their own budgets, but will be funded through owners’ maintenance fees. An expense will be present on the corporations Income Statement, and will play a part in determining maintenance fees. Shared facilities are a great way for condominiums to have better amenities that they otherwise would not be able to afford, but come with their own set of challenges.

Some projects are small and require very little money, while some are very large and can cost millions of dollars. There is no set limit to what a condominium can spend on a project, but there are rules that dictate how the owners should be notified when large sums of money are being spent. These are outlined in section 97 of the Condominium Act (1998). When a condominium replaces a component with something of similar material and quality, there is often no need for special notice to the owners, but when the board decides to upgrade a component, there are specific rules on how much can be spent with and without owners being notified.

Condo Corp Management Questions from homeowners

A townhouse condominium usually requires the owners to share ownership of the roads on the land that they occupy. In other words, the owners pay for the roads and other shared assets that the city would normally pay for in a regular townhouse development. So why pay property tax? Obviously, property taxes pay for more than just the roadways in from of your home, but shouldn’t there be a discount if owners are already required to pay maintenance fees? This is a question that we can’t answer here. Call your city councillor!

Unlike in an apartment building, a condominium management company does not own the building. They are hired by the Board of Directors, and may or may not have permission to make the necessary repairs. The issue may indeed be the management company, but could also be the Board of Directors, or simply just a lack of the necessary funds to do the repairs. As an owner, you have the ability to request documentation to see what the issue is, and why repairs are not being done. If there is no valid reason, you should get involved and run for the board.

If the noise continues and the property manager is aware of the problem, something has gone wrong. It may take a few weeks and a couple of letters for a manager to effectively change the behavior of an owner, but these changes are often possible. If the problem continues to persist, the manager may have to seek board approval to take matters further, including having legal letters written, and ultimately court orders. This however can take a lot of time. Remember that unlike a rental building, the board and management do not have a simple way to evict a difficult owner from their own home.

The most common reason a board member keeps winning is because they have the support of the owners of the building. However, if you and many others in a condominium feel that they are not doing a proper job, there are ways to become more active. The best way would be to run for the board yourself. Speak to other owners, and collect proxy votes from owners who cannot make it to the AGM in person to cast a vote. Once on the board, you can work with the board to make the changes you feel are necessary. If, however, it is difficult or impossible for any new owners to join the board, and the same members continue to control the condominium, there are mechanisms that can be used to remove directors. See above for a full explanation.

Adding a new component to the building – in this case a new structure with a gym in it – is different than a normal Reserve Fund expense. The Reserve Fund is used for major repairs and replacements, but since this is a new component it does not meet this definition. Instead, this would be considered a capital expenditure, and the board would not be permitted to go ahead with this type of project without going through various steps that would include permission from the owners.

It depends if the renovation is simply replacing the old lobby with similar materials (a replacement), or if they are upgrading with new materials and furniture (an upgrade). If it is an upgrade, as almost all lobby renovations are, there are limits to how much they can spend without notification/permission from the owners. This is laid out in sections 97 of the Condominium Act (1998). Large expenditures require notification to, or permission from the owners.

Send us your condo corp management questions today!

Relevant Condo Corp Management Laws

While the condominium act is made up of over 180 sections, the ones below are the ones that we find most useful on a day-to-day basis. For more information go to the Condominium Act website by clicking the link at the bottom of this page.

Section 19 - Right of Entry
Section 19 states that an authorized representative of the condominium (like a property manager) can enter a unit if they give the owner reasonable notice. This can only be done if the entry is necessary to "perform the objects and duties of the corporation".
The condominium's representative can also enter without notice in case of emergency.
Section 29 - Director Qualifications
Section 29 lays out the qualifications for being on the board of directors. These include being over 18 years old, not being bankrupt, and a few other restrictions. A condominium could add additional qualifications by passing a by-law making access the board more restrictive.
Section 46 - Requisitioning a Meeting
This section covers how owners can requisition a meeting, and specifically how this would be done in order to remove a director. Owners require written support of 15% of the homeowners to call the meeting, and must go through various steps for the meeting to be considered valid.
Section 55 - Access to Information
Section 55 allows homeowners to have access to a wide range of corporate documents, and spells out the process for obtaining them. With few exceptions, such as records relating to staff, other owners, or litigation, almost all documents can be viewed by the owners.
Sections 89-92 - Damage
These sections cover what happens in the event of damage. In condominiums, where there is a mix of shared and individual ownership, insurance can be tricky. These sections lay out who is responsible for repairs.
Section 97 - Changes Made by Corporation
Section 97 covers changes made by the condominium. Most of the work that a condominium does does not require the direct permission from the owners, but some changes are large or significant enough to warrent owner input. This section goes over what kind of notice or permission is required for different types of work or changes.
Section 98 - Changes Made by Owner
Section 98 is similar to section 97, but it is for owners who wish to make the change to the common areas.
Sections 138-144 - Common Element Corporations
These sections cover laws specific to common element condominium corporations.

Condo Corp Management Links

ACMO

The Association of Condominium Managers of Ontario

ACMO

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CAO

Condominium Authority of Ontario

CAO

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Condo Act

The Condominium Act of Ontario

Condo Act

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CCI

The Canadian Condominium Institute

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Condo Corp Management Questions

General Questions

Legal Questions

Finance Questions

Condo Corp Management Questions from homeowners

Send us your condo corp management questions today!

Relevant Condo Corp Management Laws

Section 19 - Right of Entry

Section 29 - Director Qualifications

Section 46 - Requisitioning a Meeting

Section 55 - Access to Information

Sections 89-92 - Damage

Section 97 - Changes Made by Corporation

Section 98 - Changes Made by Owner

Sections 138-144 - Common Element Corporations

Condo Corp Management Links

ACMO

ACMO

CAO

CAO

Condo Act

Condo Act

CCI

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