Confusion Over Condominium By-law Requirements
Earlier in the year we wrote about the different voting thresholds to pass condominium by-laws and described the process generally. We did not go over the extensive list of permitted subject matters or other requirements for a by-law to be valid. A recent case highlights the importance of ensuring the by-law complies with all requirements of the Condominium Act, 1998, so today we will explore the other requirements of the Act.
In a recent case the court was asked to rule on the validity of a by-law that contained conditions and restrictions on the rental of the units. The court found the condominium's by-law was valid as far as its restrictions on: controlling who may operate a rental program, charging a rental management and amenity fee, collecting refundable damage deposits, and imposing limits on the number of people who may occupy a rental unit. The court found that the restrictions on advertising and the requirement that the owners use a rental manager approved by the Corporation were unreasonable. The court ordered the unreasonable parts be struck from the by-law.
Most people are aware that by-laws must be approved by the board of directors and then the owners at a meeting. The by-law must be approved by either a majority of the voting units or a majority at the meeting, depending on the type of by-law. We explained this in greater detail in our January 2021 post. Using the process to pass a by-law does not guarantee that the by-law will be valid.
The Act contains a few other requirements for a by-law to be valid. The by-law must be consistent with the Act and the Declaration. Put another way, a condominium cannot create a by-law that attempts to change an obligation or right in its Declaration unless the Act or Declaration specifically permits by-laws to modify the obligation. This is often where a by-law would extend an obligation (i.e. increase the situations where owners may be responsible for insurance deductibles) as opposed to change or remove the obligation.
The by-law must also be reasonable. This requirement is harder to explain. The Act does not define "reasonable", but reported cases offer some guidance as to what may or may not be reasonable in a condominium by-law. Does it feel like the condominium is trying to regulate an activity that it shouldn't be? Is the by-law offensive? Is it targeting a specific owner? If the answer is yes, the by-law might be unreasonable (and possibly oppressive). If there is any doubt about the reasonableness of a proposed by-law the condominium should speak to its lawyer.
The last requirement to keep in mind is that the subject matter of the by-law must be authorized by the Act. Section 56 contains an extensive list of subjects, such as qualifications and disqualifications for directors, procedures for owners meetings, and standard unit definitions. There are other parts of the Act or regulations that authorize other types of by-laws, such as sections 21 (easements and leases of common elements) and 57 (occupancy standards). It is important that a proposed by-law fit within one of the permitted subjects or the by-law will be invalid.