Specific Legal Issues
Declaration vs Rules—What Boards Should Think About when Rules are Contained in the Declaration?
From the CCI Review 2021/2022-3 March 2022 issue of the CCI London Chapter
The condominium declaration and rules are both important documents for the administration and governance of a condominium community. Although these documents are usually separate, some condominium corporations have declarations that also contain rules. When this happens, the condominium rules are included within the registered declaration. When the declaration and rules are “merged” in this way, this can create unique challenges for condominium corporations, owners and condominium managers.
First, we need to understand the similarities and differences between the declaration and the rules. The declaration is written by the declarant (developer) and is one of the two legal documents that create a condominium corporation when registered with the Land Registry Office. The provisions in the declaration must be consistent with the Condominium Act, 1998 (the “Act”); however, the restrictions do not need to be “reasonable.” Once the declaration is registered, it is very difficult to change.
The first set of condominium rules are written by the declarant (developer), but they can be amended at any time by a simple majority vote of the Corporation’s board of directors. Unlike the provisions of a declaration, a Corporation’s rules must be reasonable and they must be designed for specific purposes, including: to promote the safety of owners and prevent unreasonable interference to the use and enjoyment of the units and common elements. Condominium rules are not registered on title to the units, but the Corporation must follow the process to pass a rule as set out in Section 58 of the Act.
The rules and the declaration are both enforceable by the condominium corporation in virtually the same process. As long as a rule meets the requirements of Section 58 of the Act, it is as enforceable as a provision in the declaration.
While the enforcement process is virtually the same, there may be differences when it comes to collection of costs incurred because of a violation. If you want to be able to add the costs to the owner’s common expenses, without an order from the Superior Court or the Condominium Authority Tribunal, this likely requires a strong indemnification provision in the declaration allowing for such recovery.
Where condominium corporations have rules contained within the declaration, the condominium corporation then has a duty to take all reasonable steps to enforce those rules. This creates a challenge where the rule is unreasonable, difficult or expensive to enforce, or, where the rule no longer matches the needs or desires of the community.
A rule is more flexible. It is easier to amend or repeal in future than the provisions of a declaration. This can be desirable as the needs of a community evolve over time. Where the rules are contained in the declaration, the condominium has limited options to amend the provisions of the declaration. Changing the declaration is more expensive and more time consuming than changing the rules.
There are two main options for the condominium corporation to change the declaration. The most common way to change the declaration is by making the change with consent of the owners pursuant to section 107 of the Act. First, the board would propose a change and have a meeting of owners. The corporation must then obtain written approval from at least 80 or 90 percent of the unit owners to approve the amendment depending on the type of provision that is being changed. The corporation must also give notice to all mortgagees and other interested individuals of the proposed change. Once all required consents and notices are in place, the Amendment to the Declaration can be registered on title to the units, which is required before it will be effective.
A considerable amount of work is required to change the declaration on consent. There are times where, practically speaking, it is impossible to achieve the threshold of unit owners’ written consent to amend the declaration. In these cases, the condominium corporation can consider pursuing a change to the declaration through an order from the Superior Court of Justice, pursuant to Section 109 of the Act. This requires a lawyer to initiate a court proceeding and make an application to a judge. The corporation must provide evidence to satisfy the judge that the amendment is necessary or desirable to correct an error or inconsistency that appears in the declaration or that arises out of the carrying out of the intent and purpose of the declaration.
Laura Gurr, JD is a partner with Cohen Highley LLP and provides risk management and regulatory compliance advice to condomini-um corporations, unit owners and property management companies.
Laura regularly writes and presents on legal issues affecting the indus-try.
Her affiliation with CCI as a Pro-fessional Member began in 2011, followed by her election to the Board of Directors at the AGM of 2016.
Laura energetically participates as a writer, instructor, presenter and trusted advisor. She shares her expertise with other chapters of CCI as well.
Cohen Highley LLP has offices in London, Kitchener, Chatham, Sar-nia, Stratford and Strathroy
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