Can Condo Boards Pass Rules Without a Vote of Owners?
Last week we described the process for creating new condo by-laws. One of our astute readers asked: Is the process for passing rules the same as passing by-laws? Today, we tackle that question.
Before we dive into the process for passing rules, we should quickly answer another common question. What can rules be used for? Rules cover a variety of topics in condominiums, including parking on the property, garbage disposal, moving procedure (i.e. booking the elevator), use of the common elements and amenities (i.e. pools, greenspace), and noise, odours, and other nuisances.
Prior to explaining the procedure to be used to create a new rule, it is important to discuss the appropriate content of condo rules. Each of the declaration, by-laws, and rules has subject-matters that are exclusive to that particular document. For rules, the board must make the rules to promote one of two purposes permitted by the Act:
- promote the safety, security or welfare of the owners and of the property and assets (if any) of the condominium; or
- prevent unreasonable interference with the use and enjoyment of the units, common elements, or the assets (if any), of the condominium.
The rules must also be about "the use of the units, the common elements or the assets, if any, of the corporation". In addition, rules must be reasonable and consistent with the Condominium Act, 1998, and the declaration and by-laws. If the rule is inconsistent with the Act, the Act prevails and the rule is deemed amended accordingly.
The process for making, amending, or repealing (removing) condo rules is the same. The process is described in section 58 of the Condominium Act, 1998. To summarize, the process is as follows:
- Board Approval: Board, by resolution at a properly constituted board meeting, creates the new rule (or amendment or repeal of an existing rule). The board can create the rule on its own or with the help of the manager or lawyer.
- Notice to Owners: The condominium must send notice to the owners about the rule. There is no prescribed form for the notice, but it must contain: a) a copy of the proposed rule; b) the proposed effective date of the rule (a date that is at least 30 days after notice); c) a statement explaining the owners have the right to requisition a meeting and the rule becomes effective as described in subsections 58(7) and (8) of the Act; and d) copies of sections 46 and 58 of the Act.
- No Requisition Received: If the board does not receive a requisition within 30 days of the notice, the rule becomes effective the day after the 30th day (or a later date if the Board has proposed an effective date beyond the 31st day).
- Requisition Received: if the board receives a requisition within 30 days of the notice, the board must call a meeting of owners to permit them to vote on the proposed rule. The ordinary process for calling a meeting is used, except the preliminary notice is sent 15 days before the notice of meeting instead of 20 days like with the AGM. This still requires the board to move quickly when a requisition is received as the preliminary notice must be sent out within 5 days of receiving the requisition to ensure proper notice is provided and the meeting is held within 35 days as required by the Act (note: many condominiums are not able to meet the 35 days, so it is common for requisition meetings to be a few days late). The rule becomes effective if there is no quorum at the first attempt to hold the meeting or, if there is quorum, the owners do not vote against the rule at the meeting.
Rules proposed by the declarant before the registration of the declaration must be reasonable and consistent with the Act and the proposed declaration and by-laws. The proposed rules are effective until replaced or confirmed by later rules.
Where a rule has "substantially the same purpose or effect" as a rule that the owners previously amended or repealed within the last 2 years the Board must call a meeting of owners to vote on the proposed rule. The owners do not need to requisition a meeting to vote on a rule that is substantially similar to one they already amended or repealed.
Lastly, and perhaps the most controversial, subsection 58(5) of the Act states that "the owners may amend or repeal a rule at a meeting of owners duly called for that purpose." Some interpret this as suggesting the owners have the right to requisition a meeting to amend or repeal an existing rule (not create a new rule) without the board first approving the change as the board would in most cases where they are proposing a change to the rules. I support this interpretation. It provides the owners with the right to requisition a meeting to change a rule that no longer fits the community.
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