Condo Administration 101
Condominium governance is the process of deciding how the condo is run and ensuring that the condo is moving in the right direction, with everyone involved in getting there. It also requires making sure that decisions fit within the law, comply with the condo documents and the condo acts, and ensure that the decisions are being implemented and followed.
Proper governance means that the condo board, management, owners, and tenants are working together to achieve goals consistent with the:
All decisions made by the condo board must be made with the three pieces of legislation in mind as well as with the condo documents which outline the rules and regulations for living at the condominium. Bylaws contain provisions relating to:
The condo board is elected by the owners. It is accountable to the owners for the day-to-day activities and general oversight of the condo . Day to day activities are carried out by the condo board, as well as by the condo manager. In essence, all decisions and actions taken at the condo are made by the condo board.
The condo board meets regularly (usually once a month) to discuss pressing issues, including those listed below:
Condo boards are also responsible for employing condo managers to help carry out the day to day business of the condo. The condo manager is selected by the condo board, and is accountable to the condo board; however, the board and manager work closely in seeking out solutions to condo issues, carrying out decisions, and achieving the goals of the condo. The board must report to owners on an annual basis about what the condo has accomplished during the preceding year, and it is at the annual general meeting of owners that board members are elected or re-elected.
Components of Condominium Rules and Regulations
When it comes to the "do’s" and "don’ts" pertaining to the use of common elements and individual units, there are common components of rules and regulations that are found in condo corporations across the province:
Noise Restrictions – Most rules and regulations contain stipulations prohibiting any occupants of a unit from making any noise that may disturb other occupants. This goes beyond the obvious and covers things such as dragging furniture across the floor, moving appliances, and even ordinary footsteps. The rule may also prohibit any other noises from party to party. The reason why noise restrictions are important is that they protect the peaceful enjoyment of all residents of the condominium and may go a long way in helping to protect the condo corporation from unnecessary litigation.
Pet Policies – These rules may regulate the types of pets that can be kept in units, the number of pets permitted, their size, and their weight. There are also rules that address the placement of litter boxes, cages, and pens. Many condominium managers have seen their fair share of litigation from disputes that arise as a result of the introduction of pets. Therefore, we find that managers will either restrict pets or restrict many elements of pet ownership through the use of rules and regulations.
Use of Common Elements – This category includes rules prohibiting residents from using the elevators to move furniture, prohibiting the use of hallways to store personal belongings, prohibiting parking on the premises by visitors, occupants, and guests, and prohibiting pets from being on balconies. In addition, owners or occupants may be required to reserve the use of certain common areas in advance of hosting an event. There may also be rules regarding the observance of quiet hours.
The common elements in a condominium are often the most significant factors in residents acquiring a unit. Owners want to ensure that they can fully use and enjoy those common elements without interference. The rules and regulations therefore seek to create an open, safe, and pleasant place for all owners to enjoy.
Condo Bylaws
When drafting condominium bylaws, it is important to strike the right balance in providing comprehensive rules and regulations that will address the interests of all unit owners while at the same time not being so restrictive that they infringe upon the rights of individual unit owners. The bylaws should be drafted using the latest version of the North Carolina Condominium Act as a guide while at the same time ensuring that the bylaws have the flexibility to be amended in the future as needed. The bylaws should not simply be a regurgitation of the latest edition of the NC Condominium Act. Instead, the bylaws should build on the mandatory provisions of the Condominium Act and provide additional guidance as to how the community will operate and further the goals of the community.
Your attorney will be able to provide you with examples of and guidance as to what are appropriate rules and regulations for an Association’s bylaws. Some common provisions found in bylaws include the size and number of board members, officer positions, election procedures, quorum requirements, and amendment procedures. Many associations also include specific bylaws governing maintenance obligations, insurance responsibilities and reserved spaces.
Dispute Resolution in a Condominium Setting
The necessity for dispute resolution provisions goes beyond that contained in section 135 of the Condominium Act, 1998, and you should consider whether to include provisions providing for mediation or arbitration, or both, as the primary method of resolving disputes in your condominium community. As well, since the Condominium Act, 1998 provides that a court may not make a vesting order requiring that a party to a court proceeding complete an unfinished act in the declaration, the by-laws or a written agreement, the objections of a party to completing an unfinished act may be resolved more quickly and economically through a mediation or arbitration process. And if a court refuses to make a vesting order for the completion of an act required to be completed under the declaration or bylaws, the Court is obliged to specifically set out the details of the act that is to be completed in its order. If a court order setting out those details is required, it will take much longer and cost much more than mediation or arbitration to finalize the completion of an act.
The recommended method for including mandatory mediation and/or arbitration provisions in your new condominium declaration or by-laws is as follows:
An owner of a unit or a corporation may give notice to the other of mediation, arbitration or either of them to resolve a dispute under the Act, the declaration or the by-laws. Within 5 days after receiving a notice under subsection (1) a corporation shall, at its own expense, furnish to the other, other than the corporation, a list of 3 persons or organizations qualified to act as a mediator or arbitrator.
If the notice is given by an owner, the owner and the corporation shall meet with a mediator on a date, at a time and place reasonably agreeable to them and, if they are unable to agree, the mediator shall fix the date, time and place.
The mediator shall aim to resolve the dispute in a single session to a maximum of 2 sessions, within 45 days after the notice is given.
The dispute shall be deemed to be resolved if within 45 days after the notice is given or such longer time as they may agree, there is an agreement in writing signed by the owners .
If, at the end of 45 days after the notice is given, or such longer time as they may agree, an agreement has not been reached, the owner shall have an absolute right to elect to have the dispute determined by arbitration and the owner shall give notice in writing to the corporation of the particulars of the matters to be determined by the arbitration. The parties shall then select an arbitrator from a list of 3 persons or organizations provided by the other in the circumstances set out in subsection (1).
Section 135(4) to (6) of the Condominium Act, 1998, provide that the court may order that a dispute or claim be submitted for mediation, binding arbitration or both if the matter or matters in dispute or the claim arises under the Act, the declaration, the by-laws or if the court is satisfied that the dispute or claim may have a negative impact on the condominium community or that it is in the best interest of the condominium community that the matter be resolved. In dispute resolution provisions to your declaration or bylaws, it should be considered whether to mandate dispute resolution to proceed in accordance with the arbitration process.
The following example of a dispute resolution provision for incorporation in the condominium declaration or the by-laws is provided for your consideration:
The parties agree to the inclusion of binding arbitration provisions pursuant to the Arbitration Act, 1991 or the Arbitration System of the Condominium Authority of Ontario Act, which is to be binding upon the parties. Where the parties do not wish to include binding arbitration provisions, the parties agree to the following:
Any dispute between the parties arising out of or related to acts or omissions during the occupation or possession of a unit or the common elements or services in this condominium may be arbitrated by the parties pursuant to the Arbitration Act, 1991 or the Arbitration System of the Condominium Authority of Ontario Act, or shall be concluded through the Condominium Authority of Ontario’s disputer resolution procedures where the Condominium Authority of Ontario offers conciliation or a dispute resolution program. All costs, other than the administration fees of the Condominium Authority of Ontario, as may be relevant, relating to the dispute resolution process shall be borne by the parties.
Amending and Enforcing Condominium Rules and Regulations
The process for maintaining and updating the rules and regulations of a condominium complex requires a careful balance of appropriate procedures and sound judgment. A standard management policy is to have the rules reviewed by the community manager and, if necessary, an attorney, on an annual basis to ensure that they continue to meet the community’s needs and comply with current laws and regulations.
However, some prudence must be exercised when determining whether proposed changes are just minor housekeeping alterations to existing rules versus significant changes to the rule or regulation. Significant changes to rules will require approval according to the condominium’s document provisions concerning amendment of the rules and regulations. A number of states, however, have provided by statute that rules are considered to be automatically amended (and do not require amendment by formal procedure) if they are not disapproved after mailing to unit owners and tenants of record.
In addition to consistency with the governing documents, when determining whether to make a change to an existing rule or regulation, consideration should also be given to whether the change will be necessary to effectively enforce the rule, whether the rule or regulation should be amended so that the community manager can enforce it on behalf of the condominium association, and whether the proposed regulation is reasonable under the standards discussed above.
Condominium Rules and Regulations from a Legal Perspective
Condominium rules and regulations are another area that seems to strike much fear in the hearts of condo managers and boards. Perhaps this stems from the fact that many rules are not created or enforced, or simply certain rules that show up out there in the world just can’t be right. And they aren’t.
We know that condo rules and regulations help maintain the cosmetic and functional integrity of a condo, but if they aren’t right, they will be ineffective, or worse, unenforceable. It is important to therefore understand what to keep in mind from the legal perspective when creating and enforcing condo rules and regulations.
The Body Corporate and its Executive Committee have an important responsibility in the creation of rules and regulations. S.41.1 of the Condominium Act, 1998 gives the Board of directors the authority to make rules governing the control, management and administration of the common elements and assets of the condo corporation. If the Board of directors consists of an executive committee, then it is the committee that may make rules for the Board’s approval, and consequently for the Owners’ approval.
The Condominium Act requires rules to be reasonable and specifically provides that rules cannot be changed without the Owners’ consent, directly or indirectly. The Board or Executive committee can therefore not, at their whim, pass any rule they consider reasonable.
It is interesting in fact that on the opposite side, owners may not bring forth a rule governing the control, management and administration of the common elements and assets of the condo corporation. Fortunately, the Condominium Act gives us the option for Owners to petition for a meeting of the Owners where the Owners will vote on a written requisition from the Owners to amend or repeal a rule.
It is probably a good idea for the Condominium’s Rules and Regulations to contain a clause that models the Act and sets out the process by which the Owners can petition to make a rule to add to the rules of the Condo Corporation and/or to repeal an existing rule of the Condo Corporation.
Now let’s take it back to the Board and Executive Committee. We know from the Condominium Act that the rule-making power of the Board and Executive Committee is limited only to those rights that are implied through common sense , and for the purposes of maintaining the cosmetic, operational and functional integrity of the Condo. The Act does not give the Board and Executive Committee the authority to make rules entirely of their own personality, agenda, or whims. What about other circumstance that might affect the creation of a rule? Are the rules discriminatory?
Are the rules based on a wild exaggeration of a problem?
Are the rules understandable and easy to follow? A poorly worded rule is generally ineffective and causes unnecessary confusion amongst Owners and Tenants.
Do the rules inhibit a condo owner or tenant from carrying on their daily life activities? Though it may be well intended, there is no reason a rule needs to dictate the time of day that an Owner can spend time in their unit or on the balcony.
Does the condo have a rule prohibiting sunbathing on the balcony? Leaving aside the ambiguities of such a rule, the answer to the above question is yes.
Does the condo have rules prohibiting children from riding bicycles or playing games on the common element? The answer to the above question is yes.
Does the condo have rules prohibiting people from parking their bicycles on the hallway wall hooks? The answer to the above question is yes.
Do the condo rules say that an owner needs to deposit their hair down the hallway garbage chute with the brush on it to avoid blockages to the chute? Did I make that rule up? The answer to the above question is yes.
The rules and regulations for a condo should be clear, concise, effective, and most importantly enforceable. Though it might be fashionable to have rules that prevent Owners from replacing the light bulbs in their units, prohibit tenants from entering or exiting the building before 9 a.m., or punish the resident children for sliding down their own hallway bannisters, these types of rules are not reasonable, and are likely to cause conflict and resentment amongst the residents, while proving ineffective for the condo.