Real Estate

New powers coming for condo corporations

By Peter Small, AdvocateDaily.com Contributor

Imminent changes to Ontario’s condo laws will give unit owners new information and powers to control their corporations, says Toronto condominium lawyer John De Vellis.

“The changes are meant to provide greater access, and to make it easier for owners to vote and to get information about the corporation and people running for directors,” says De Vellis, a partner with Shibley Righton LLP.

The reforms of the Condominium Act come into effect Nov. 1 and are the first overhaul of the province’s condo law in more than 16 years, he tells AdvocateDaily.com.

They will give condo owners new powers to pass bylaws that allow voting by “telephonic” or “electronic means,” which could be fax, email, automated touchtone telephone system, computer or computer networks, De Vellis says. Previously, owners had to attend meetings in person or through proxies to participate. Details of how such voting will take place will have to be included in a condo's bylaws, he adds.

The legislation also imposes mandatory disclosure requirements on prospective and existing board members. They will have to reveal more personal information, such as whether: they own or occupy a unit; they've been convicted of an offence under the Condominium Act; they have an interest in a contract or transaction to which the corporation is a party; they are 60 days or more in arrears of common expenses; or if they, or an immediate family member, are involved in any legal proceeding involving the corporation, De Vellis says.

In addition, condo corporations will be allowed to pass bylaws requiring directors to disclose even more information, says De Vellis.

He wonders how far corporations will be willing to go with this new power.

“Will directors be required to provide extensive financial disclosure or have to reveal all criminal convictions?” And will they be disqualified for providing incorrect or incomplete information, he asks.

The new disclosure rules were designed to respond to concerns by owner groups that owners did not have enough information about board members, De Vellis says.

“People get on the board and you don’t know anything about them. They get elected and it’s very difficult to get them off once they’re on,” he says.

“Typically, what currently happens is you have someone submit their resume, they’ll speak for a couple of minutes, and then you have an election. You don’t really know that much about them,” he says. “Sometimes you wake up and your board is controlled by people who aren’t even owners in your condo corporation.”

Often, directors are acclaimed without a vote. Yet condominium corporations have considerable power, says De Vellis.

“We call them the fourth level of government.”

The new Act will give unit owners more information on which to base their decisions, he says.

Significantly, De Vellis says, the Act will also lower the voting threshold for passing certain types of bylaws. Previously, all new bylaws had to be approved by a majority of all units in the corporation — not just those represented at the meeting where the bylaw is being considered. As of Nov. 1, certain types of bylaws may be passed by a simple majority of owners present at a meeting, he says. Given that a quorum is normally 25 per cent of all owners, special bylaws could be passed by just over 12.5 per cent.

He says rules are being tightened for proxies, which must now be in a prescribed form and retained by the condo corporation for at least 90 days — longer if it receives written notice of actual or contemplated litigation.

“The new proxy rules are designed to avoid disputes about the validity of proxies and also curb abuse of proxies," De Vellis says. "In addition, new rules in place for condo managers will prevent managers from soliciting proxies. The purpose is to prevent managers from becoming involved in political matters, such as board elections."

The Act will allow condo corporations to enact other special bylaws, including those that govern the manner in which required information is presented at an owners’ meeting and stipulate how an individual may give notification that he or she intends to run for the board.

In general, the legislation aims to improve transparency and enhance democracy, De Vellis says.

“The amendments make it easier to participate in meetings without having to be there and attempt to make it easier to get information about the corporation and the people running it or those who want to run it,” he says.

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