Protecting Condominium Owners Act – How Condos are run
This marks another excerpt from the Ontario Governments web-site publications on this new act and what it means. To read the entire article, please click on the link at the bottom of this article.
The Condominium Act Review raised several issues related to condo governance. For example:
· many condo owners feel detached from their boards and building managers
· some condo board directors need additional training and support
· owners say they know too little about how and why decisions affecting their interests are made
· owners are calling for more transparency and accountability from condo boards
· fewer owners are attending condo meetings in person or by proxy
Threshold for passing condo by-laws
Regulations under the act provide a transition period during which corporations could change their existing by-laws with a lower threshold of required votes. This would enable condo corporations to align their by-laws with the requirements of the new act.
In line with the Stage 2 report, the act continues to give corporations flexibility to decide on term limits for directors. Corporations can include such decisions in their by-laws.
Improved communication with unit owners
One common thread running through the review process, the Stage 2 recommendations and the act is the need for improved communication and education in condo communities.
The amendments will require boards to issue regular information on topics such as the corporation’s insurance, legal proceedings, the names and addresses for service of the corporation’s directors.
Regulations will set out how and how often boards would have to issue these updates. The act states that some of the updates would have to be sent out as “information certificates.” An information certificate would be similar to a newsletter and be sent to the owners on a regular basis or at other specific times.
Board meetings by conference call
Under amendments to the Condominium Act, condo boards will no longer have to pass a by-law to allow for conference calls and similar off-site meeting technologies. This makes it easier for condo boards to hold regular meetings.
Regulations will set out more details for this rule. Also, condo board members would need to agree to hold meetings in this way.
The review concluded that “kickbacks” on contracts or payments made to maintenance companies associated with condo board members are a serious concern for some condo owners.
The Stage 2 report concluded that the best protection would be having a well-executed, sealed-bid, contract procurement process.
Because of this, the act will forbid condo corporations from concluding procurement contracts unless they fulfill certain requirements, such as a sealed bid process. Regulations will set out the procedures that would need to be followed and under what circumstances (e.g., for contracts exceeding a certain value).
Preliminary notice of owners’ meeting
Many condo boards already provide an informal “preliminary notice” of a meeting as a way of encouraging owners to nominate candidates for director positions or to suggest items for a meeting agenda.
The amendment will support this practice by requiring boards to provide a formal “preliminary notice” of a meeting of owners.
The notice would have to include:
· a call for anyone wishing to run for election as a director to notify the board in writing
· a call for materials (e.g., agenda items) from any owner wishing to include those materials in the formal notice of the meeting
· a request for information from “non-leased voting units” in the event of a vacancy on the board in the position reserved for voting by the owners of those units
· any other items that are set out in the regulations
The board would not have to include all suggested items in the final agenda, apart from those required by regulations.
A board would have to give preliminary notice at least 20 days before sending out the actual meeting notice.
Meetings requested by unit owners
One pillar of accountability in condo communities is the owners’ ability to call special owners’ meetings – known as requisitioned meetings – to address issues of concern, including proposals to dismiss board members.
Requisitioned meetings are part of the democratic process set out in the current act. For example, if owners wish to vote on a rule proposed by the board or to vote on certain modifications the board wishes to make to common elements, they have to requisition a meeting.
They are sometimes used to compel board members to account for their actions when owners believe that they are not acting in the best interests of the corporation. For example, if owners wish to call a meeting to vote for the removal of a director, they can requisition a meeting for that purpose as well.
At present, a board must call and hold an owners’ meeting if at least 15% of owners sign a petition (e.g., the requisition) calling for a meeting.
The Stage 2 report recommended keeping the current 15% threshold. But it proposed that the process for convening meetings and assessing the validity of a requisition be revised in the interests of clarity, speed and fairness.
The amendments will make it easier for owners to call a condo board meeting to deal with an important matter. It would also spell out procedures that the board would have to follow in the interests of transparency and communication.
The requisition application would have to be submitted on a standard form that would provide specific information to minimize any confusion about the process. The process following the submission of a requisition is also set out in the act, including time periods that the board members and those owners requesting the meeting would have to follow.
Voting at meetings
The act paves the way for wider owner participation at meetings by enabling a condo corporation to pass a by-law allowing votes at meetings to be cast by telephone or electronically.
Electronic delivery of notices
The act allows boards and owners to use electronic communication methods, if owners agree to receive formal notices in electronic form, such as emails. The corporation would be required to keep a record of these communication methods.
Achieving quorum at meetings
The Stage 2 report expressed concern that many owners do not attend condo corporation meetings, making it difficult to achieve quorum.
The amendments will relax quorum requirements for mandatory meetings.
At turnover and annual general meetings, quorum would be reached with:
25% of owners at the first and second attempts to hold the meeting
15% of owners at the third attempt and any subsequent attempts
Boards could not add an item requiring a vote to the agenda on the second or subsequent attempts to hold a meeting.
A corporation could pass a by-law mandating a 25% quorum, regardless of the number of attempts.
The regulations will also be able to set the quorum for any meetings where owners of “non-leased voting units” are exercising their right to vote in respect to a reserved position on the board.
If a condo owner is unable to attend meetings but still wants to have a role in the decision-making process, he or she may complete a proxy form. This gives another person who plans to attend the meeting (i.e. the proxy) the power to vote on the owner’s behalf.
The Stage 2 report recommended that proxies be standardized to avoid tampering and misinformation. Regulations under the act set out a new standard proxy form.
Examination of records
The Stage 2 report set 3 main goals for effective record-keeping by condo corporations. It recommended that the law should:
· set clear requirements for how long records must be kept
· financial records for at least 6 years
· other records as determined by regulations and by-laws
· ensure that corporate records are easily accessible
· ensure that personal privacy is protected and records are not used for inappropriate purposes
Regulations will set out procedures:
· for requesting access to corporation records
· for a board’s responses to such requests
· fees for examining and copying corporation records
· standard forms for such requests
Currently in condo properties where at least 15% of units (referred to as “owner-occupied units”) have not been leased during a certain time, one position on the board must be reserved for election by the owners of these type of residential units only.
This was designed to ensure that owner-occupiers have some direct representation on the board, especially in buildings with a large population of renters and absentee landlords.
Under the act, the owner-occupied elected position on condo boards would be retained in the interests of protecting an owner-occupier minority in largely rented buildings.
However, for greater clarity and accuracy, this type of unit would be renamed as a “non-leased voting unit.” This is because this type of unit would be characterized on the basis of whether it was leased during a certain time period and not whether the owner actually occupies the unit.
In addition, this reserved position would no longer be mandatory. Specifically, corporations would have to reserve the position only if the “non-leased voting unit” owners are a minority in the corporation and at least 1 of them requests an election of the reserved position on the board.
Director qualifications and education
The review process found that many condo board directors lack adequate skills for the job. In addition to training mentioned elsewhere, the Stage 2 report recommended that condo board directors comply with several extra conditions, such as disclosure and training rules.
Under the amendments to the Condominium Act, regulations will establish disclosure and training requirements for directors. The amendments will also make director qualifications and disqualifications consistent with other corporate statutes.
Updated: April 22, 2016 - Published: May 27, 2015
For the full article as published by the Ontario Government, please click on the link below