Selling an Unused Superintendent’s Suite or Guest Suite

Some condominiums have moved away from live-in superintendents to contractors who provide the same services without the need for a superintendent’s suite. Some condominiums have guest suites, party rooms, or other amenity spaces that are only used near holidays, if at all. Condominiums are under increasing pressure to keep their monthly common expense payments low while ensuring adequate funds are set aside to properly maintain the condominium. Some creative condominiums are looking for ways of reducing their expenses or increasing their other sources of revenues. As a result, we have seen an uptick in condominiums asking us what they can do with these underutilized common elements. Today we will briefly explain some options and the legal requirements.


Unit vs. Common Element?

The first thing to consider is whether the space is a unit owned by the condominium, a common element space, or an exclusive use common element space. This can normally be determined by reviewing the unit boundaries in the declaration and description, but we recommend you review the by-laws for older condominiums as well since some amendments were done with by-laws before the current legislation came into force in 2001. The options available to a condominium depend on whether the space is a unit or part of the common elements so this step cannot be skipped.


Common Elements

If the space is part of the common elements, the condominium could lease it by passing a by-law under section 21 of the Condominium Act, 1998. The by-law would typically authorize the board of directors to lease the space on terms that it sees fit, but in some cases the by-law sets out specific requirements for the lease. This is the same process used to authorize the leasing of extra parking spaces or other common elements. Some newer condominiums have generic language in their by-laws that authorizes the board of directors to lease the common elements, but condominiums should still seek legal advice before proceeding with a lease of the common elements to ensure there are not other requirements that must be met even if the by-law requirement is satisfied with an existing by-law.


If the space is part of the common elements and the board wants to sell it, the space must usually be converted to a unit. This is not an easy process as it requires amendments to the declaration and description to create a new unit and the written consent of the owners of 90% of the units. It also requires municipal approval. The Land Registry Office will likely put the new unit in the name of the unit owners, not the condominium, so you will also likely need a court order to require the Land Registry Office to put the new unit in the name of the condominium.  


There is another process set out in the Condominium Act, 1998, for selling a portion of the common elements without converting it to a unit, but this typically reserved for other situations, such as for public transportation upgrades (i.e. a road expansion, subway expansion).  This process would result in the property no longer being part of the condominium so the owner would not be required to comply with the declaration, by-laws, and rules. As such, it is not used where a space would be sold and used in the same manner as the other units.



If the space is a unit, it is easier for the condominium to rent or sell the unit using processes like the ones used by other owners for their units (i.e. list it for rent or sale, enter into an agreement). However, the condominium would need to ensure there is proper authorization for the arrangement in the existing documents before doing so, such as a by-law authorizing the board to lease, sell, transfer, or dispose of the property and assets of the condominium. If not, the condominium may need to create or amend its documents or obtain the approval of the owners prior to any sale or lease of the unit. 


Other Considerations

Condominiums must also consider whether the proposed lease or sale requires notice to the owners under section 97 of the Condominium Act, 1998. Prior to making any addition, alteration, or improvement to the common elements, a change in the assets of the condominium, or a change in the services provided to the owners, the board of directors may be required to give notice to the owners and, in some cases, receive a vote in favour at a meeting. The requirements depend on the estimated cost of the proposal, but the board of directors could also deem a change to be substantial and require a vote in favour of the owners of 66 2/3 of the units.


Lastly, as the leasing or sale of common elements or units could attract tax liabilities, we recommend the condominiums speak with their auditors prior to starting the process so they understand the possible consequences before getting too far along in the process.


These decisions are not easy and there are many requirements that could trip you up. It will depend on the existing documents, the proposed cost, and possibly municipal requirements (i.e. zoning). As such, we recommend you speak with the condominium’s lawyer to obtain an opinion on the process that should be used in your specific circumstances.