Quick – tell me the difference between a condominium by-law, and a condominium rule.
Now if you were successful, tell me you’re a real estate lawyer, otherwise, I simply won’t believe you…
Few condo owners know the difference between a by-law and a rule, nor should they be expected to.
But how a Condominium Board of Directors creates and enforces both by-laws and rules should be on your radar.
A colleague of mine told me a couple weeks back, “David, you’re so lucky you live in a condo!”
She’s currently embroiled in a nasty dispute with her neighbour.
My colleague bought a house that was somewhere between a “tear-down” and a “fixer-upper,” and when walking the grounds one day with her contractor, my colleague was approached by the neighbour who lives behind her.
The neighbour asked something to the effect of, “Since you’re going to bring machinery through your yard, we were wondering if we could use it to dig out our backyard for a pool? We don’t want to bring machinery into our backyard since we have a really nice front yard, and side yard, and it would wreck it. We could just use your yard to bring out all the soil, and maybe place a dumpster out front.”
My colleague, taken a bit aback by the request, simply told her neighbour-to-be that they weren’t going to use heavy machinery, since the renovation didn’t require it.
Three weeks later, however, they did require a small bobcat, just for a half-day, and when the bobcat appeared in my colleague’s backyard, the neighbour behind her came running out…..and was scathing mad!
“How DARE you lie to me about your renovation,” the neighbour said.
“We’re a community here,” she threatened, “and you want to stay on our good side.”
But the most amazing part was when she said, “And I bet you started this renovation early too…….since we weren’t looking to dig out our pool until mid-July…..”
Imagine that.
In any event, house-dwellers will envy those who live the carefree, low-maintenance lifestyle that condominiums provide, and condo-owners will always long for the freedom that only comes with a freehold home. It’s probably the constant in real estate: the grass is always greener on the other side.
The other day, I received the following notice in my email, and as is the case in my building it was also plastered on any surface that scotch tape would stick to:
The residents in the building are all appalled, and rightfully so.
We’re now going to be included in the less-than 1% of downtown Toronto condos where you’re charged to use your own elevator.
Hiring security? Really?
With two FULL TIME security guards at the front desk, all day, every day, you’d think that if there was a dire “need” to have a security guard stand by the moving elevator, then perhaps there’s a bigger problem in the building…
Anyways, I’m not going to dwell on something I can’t control, and this insane new rule isn’t the point of today’s blog.
But residents in our building are planning some sort of coup, and I’m not sure if they know their rights as condo owners.
In fact, I’m not sure if any of you know your rights, as condo owners, pertaining to condo “Rules” versus condo “By-Laws.”
So let’s define, explain, examine, and troubleshoot.
First, consider the hierarchy of condominium law, as follows:
1) The Condominium Act
2) Your Condominium’s Declaration
3) Your Condominium’s By-Laws
4) Your Condominium’s Rules
The declaration, by-laws, or rules cannot contravene or circumvent the Condominium Act.
For lack of a better description, and to quote Bea Smith from our new favourite show, Wentworth, the Condominium Act is “Top Dog.”
So from there, a developer needs to come up with a condominium “Declaration,” which is essentially the condominium’s constitution.
The declaration defines and legally describes each and every unit in the building, spells out their boundaries, and breaks down how their common expenses are calculated. The declaration outlines how the common elements and facilities are defined as well.
After the declaration comes the by-laws. By-laws are legally binding documents that are initially written by the developer, in the same way as the declaration, and they’re used to complement the declaration and address items that weren’t specified. Condominium by-laws might address how the corporation may spend money, or how many positions must be on the Board of Directors.
On the bottom rung, you have rules. Condominium rules are often simple, day-to-day matters like what time the gym opens and closes, and whether or not you can hang Christmas lights on your balcony.
There’s a bit of a grey area sometimes as to what constitutes a “rule” and what constitutes a “by-law,” and that’s where a large majority of disputes break out.
Reason being, of course, that the way to pass a by-law and the way to pass a rule are completely different.
So let me lay this out as simply as follows:
To amend the Declaration, the Board of Directors needs affirmative votes from 80% of condo owners. (90% is needed to change the proportion of common elements fees paid by owners)
To pass a By-Law, the Board of Directors needs affirmative votes from 50% of all condo owners.
To change a Rule, the Board of Directors can act as they see as reasonable. If residents object, 15% of residents must sign a petition to requisition a “special meeting,” whereby the rule change can be overturned.
And that is where things get tricky.
To pass a by-law, the board has to propose the change to the residents, explain it, promote it, and then gather enough votes or signatures to do so.
To pass a rule, they just go ahead and pass the rule.
They don’t need to ask residents.
They don’t even need to consult them!
And that’s why, in some buildings, we see insane things like charging residents to use the elevator, or telling concierge not to buzz in residents that they see every single day, when those residents are holding groceries and smiling and waving…
In theory, the Board of Directors should be able to enact minor changes in the building, without needing 50% of votes. After all, how often do you expect to get 50% of residents voting, let alone voting the same way?
But in practice, some condominiums experience the “Demigod Complex,” where Boards enact change where it might not be necessary, often just to flex their muscles.
Some boards enact change that isn’t in favour of residents, but that boards simply see fit. It’s that age-old political question: “who knows what’s better for the people – the people, or the person in charge of the people?”
So what do you do when a rule has been created that you’re not in favour of?
Well, it’s a long, uphill battle, and often – boards know this.
A board knows that 15% of residents must sign a petition just to requisition a “special meeting,” and if the board didn’t agree to the meeting, then in theory, the residents would have to litigate.
This can get really, really messy. Really, really quickly!
Consider a 500-unit condominium, where 75 residents have to sign a petition to requisition a special meeting, to appeal a newly-formed rule. Quite often, the board knows that with so many units being investor-owned, finding 75 people to sign that petition is damn near impossible.
This can have a major influence in a building where units are primarily investor-owned. Consider some of the CityPlace buildings, where, let’s say, upwards of 70% are investor-owned. Are you going to start calling Hong Kong to find residents who will protest the gym being closed from 12pm to 1pm for cleaning?
In a case like that, a Board of Directors can basically make rule changes without fear of reprisal, since a disgruntled owner will never be able to gain enough support to requisition a meeting.
Having said that, there are enough disinterested, or ignorant condo owners in most buildings in Toronto to carve an easy path for Condo Boards to do whatever they please, regardless.
Most residents are uninvolved in the governance of their buildings, and many aren’t there long enough to really care, or notice, what’s going on.
Some residents figure, “how does this affect me directly,” and don’t bother to make noise if the impact on their day-to-day life is minimal.
And others see rule changes that they dislike, but don’t know what to do about it, or do know, but are too lazy to act.
When it comes to changing by-laws, you might think that it’s near impossible for a Condo Board to gain 50% support, but they often have “proxy votes” from absentee owners, and since property management has access to contact information that other residents do not, those proxy votes will always go in favour of what the Condo Board wants.
If you’re a prospective condo owner, don’t let this scare you.
In most cases, by-law and rule changes in condominiums are rare, and when they do happen, they never have a material impact on the lives of residents.
But in some cases, you’re charged a fee to use your own elevator, and there’s nothing residents can do about it, no matter how hard they try.
The only surefire way to avoid all this nonsense?
Buy a freehold property.
But alas, then your neighbour wants to bring a backhoe through your backyard so they can dig out a pool, and you’re left wondering, “Maybe having the party room close at 12:30am instead of 1:00am isn’t the worst thing in the world after all……”
Boris
at 8:15 am
This was the policy in a building I owned in once. Basically, I just ignored it. The flip side of the coin for ‘rules’ is what are the consequences of breaking them?
In my previous building the concierge was good enough to unlock the elevator for me, and I would never actually book it. If I was caught, so what? This case sounds a little different. But if there are idiotic rules like “you can’t bring your dog through the lobby after 10 pm (I have seen that one), then what the hell, do it anyways, see what happens. If they do try to come down on you with some sort of fine, then you have just started your campaigning to launch the coup!
Are fines for breaching “rules” legally enforceable? Will they enter into a lien against your unit?
Appraiser
at 8:21 am
Oh look! Another record month for sales in the GTA.
http://www.theglobeandmail.com/report-on-business/top-business-stories/
The silence of the bears is positively deafening.
Boris
at 9:58 am
anyone else notice that sales in certain areas in the 1.6-2.3 mm range has stalled out? Forest Hill, Cedarvale, Kingsway… I see the same damn listings here every week in that range.
I have poked my head in several in my area as well that have been pulled from market since.
David Fleming
at 11:32 am
@ Boris
I’ve seen some strength in the $1.5M price range, especially in areas like Trinity Bellwoods, Annex, College – where “grand, character homes” are selling $200K over asking.
As for the $3M+ market, it’s weak. Not a lot is moving. Sellers are too stubborn to reduce in price or accept less, and buyers are waiting them out.
Kyle
at 8:09 pm
That’s a function of the neighbourhood not the price range. Those are nice neighbourhoods, but they are not “hot” markets. If that’s where you’re looking then you’re lucky. Houses in the 1.6 – 2.3M range closer to the core (High Park, Riverdale, Playter Estates, Dufferin Grove, Regal Heights, Summerhill, Deer Park, etc) routinely sell in days on bully offers in that price range.
Appraiser
at 10:33 am
@ Boris:
TREB data indicates that there were 604 freehold sales from January 1 to June 1, 2014, in the price range between $1.6M – 2.3M. For the same time period in 2015, there were 936 sales. An increase of 35%.
It would seem that the odds of your anecdotal observations being accurate are not strongly supported by the data.
Boris
at 10:47 am
Jan 1 to June 1 2014!?
Bud, I am talking about the last 3 months. March – June. 2014 is ancient history.
Guess what, Hitler invaded Poland.
Appraiser
at 12:21 pm
@ Boris
So let me get this right. The fact that the number of sales this year are 35% higher than last year for the same price range is irrelevant, and analogous to events of 1939?
Got it.
Boris
at 2:17 pm
Sales and price are not analogous.
Please post link to the data.
a) Are you looking at TREB or city of Toronto?
b) Price and volume are intertwined components.
I will show you one area, take Kingsway, and houses listed to a criteria accurate to what I have described. I will show you a shit ton of places that have been listed.
Shits getting hung, bud. I am looking in this price range.
Appraiser
at 3:04 pm
The data I provided is straight from the TREB MLS system, which requires Board membership and is password protected.
Not sure which “shit is getting hung,” but today’s market report from TREB indicates that detached homes in the 416 are up substantially year over year, as the quote below from the National Post illustrates.
“In Toronto, there is also no indication of any let up in the insatiable demand for detached properties. In the City of Toronto, not including the suburbs, the average detached home sold for $1,115,120 in May which is an 18.2 per cent increase from a year ago.”
Source: http://business.financialpost.com/personal-finance/mortgages-real-estate/toronto-housing-markets-matches-vancouver-strength-as-detached-home-prices-soar-to-1-1m-in-
I breathlessly await your “data” regarding the Kingsway. Please provide specific addresses and or MLS numbers, as I will wish to verify your assertions. Cheers.
Boris
at 2:55 pm
Appraiser – they happened to segment the EXACT price range I was citing?!!! Thats an INCREDIBLE coincidence.
Appraiser
at 3:15 pm
Boris – I can segment whatever price range, date range and neighbourhood you desire from the MLS. No need to be so defensive.
P.S. Why don’t you hire a pro to help you with your house hunting endeavors? I hear great things about David Fleming.
Boris
at 8:56 am
“I have the data, and its in a super duper secret vault! You can’t have it!” Right.
Over the years, there is one and only person on this board that is universally hated, typically wrong, and massively full of shit. And that would be Appraiser.
Stats, stats and more bullshit. Backward looking nonsense. You are talking out your little vagina, as usual.
BTW – Shit IS getting hung.
GFY
Jimbo
at 11:14 am
But isn’t May of 2015 only a 4% increase over April of 2014 ($1,072,xxx)? Not sure the over $1 million was that big of a news story until it just reached $1.5 million.
Appraiser
at 11:33 am
@Boris: Does someone need a hug?
Boris
at 2:05 pm
I need a hug like I need a rectal appraisal. I’d rattle off 3 dozen MLS #s for you here, but I think that David would get in trouble.
David Fleming
at 12:25 pm
@ Appraiser & Boris
I love the back-and-forth, but you guys gotta keep this clean!
A very nice 82-year-old woman emailed me and told me she loves my blog, and reads it every day.
I’d hate for her to read what you wrote…
Sly
at 6:00 pm
David,
You need to pass some rules or by-laws regarding posting comments on topic…as I don’t see how the sales data is related to the topic of condo rules.
Sarah C.
at 9:56 pm
Okay, I’ll bring it back to condos cause the off-topic scrapping is no fun. I’ve lived in two buildings downtown that had the “book an elevator, book a guard rule” for moving and at steeper prices than what David quoted. Actually thought it was standard, so I was pretty surprised to read the “less than one percent” stat. The first building was pretty rigid about it–and the hawk-eyed head concierge enforced booking times to the minute. In the second building, there was no on-site concierge and the building manager was way more laid back. We ended up moving gradually over the course of a month and never booked the elevator once.
That first building had a couple of other weird rules–no bikes allowed through the lobby or hallways and David’s favourite–no buzzing in residents. I got into a bit of a scrap about that one with the head concierge. He stopped talking or making eye contact from that point on. Ugh.
Chroscklh
at 11:41 am
I know post not really about hiring security guard for moving rule but what hell? This seem like busy-body board rule for make justify excuse to hold meeting, with pastry and coffee. Make me hire security, they better be prepare carry boxes too.
condodweller
at 12:03 am
Nicely summed up. I was aware the hierarchy of the various rules but wasn’t clear on the % of votes required to change them.
Martin
at 2:43 am
Congrats sis!!! Wait does that mean we might get to MEET????? I had no plans to go to Blogalicious, but since you’re coming to my town, I just might!! *lol* I’ll hit you up on email and we can disscus!MrsTDJ recently posted..