Leases in Condominiums have Limitations

Gerry Hyman has another article for the Toronto Star.  Let’s discuss the questions raised:

Two questions raised were about renting a unit in a condominium.  As such, I am going to post both of them first and then comment on them together:

QUESTION:  The property manager is asking me to provide a copy of my lease agreement with my tenant. I think this is a private matter. Is there any legal reason that I have to comply?

ANSWER:  Section 83 of the Condominium Act provides that within 30 days of leasing the owner’s unit, the owner must notify the corporation that it is leased. The owner must also provide the corporation with the lessee’s name, the owner’s address and a copy of the lease or the prescribed summary form of lease. The lessee must, in turn, be provided with copies of the declaration, bylaws and rules of the corporation.

QUESTION:  The board in my condominium recently passed a rule stipulating that a unit could not be leased for a term shorter than one year. There was no minimum before, and I have been leasing it for a number of years for terms of not less than four months. Can my rentals be grandfathered?

ANSWER:  The rule could provide for grandfathering, i.e., state that the rule does not apply, for example, to any lease of a unit owned by a person prior to a certain date. There is no obligation for a board to include a grandfathering provision and the failure to do so would not appear to render the rule unreasonable and thus unenforceable.

In both cases, the Board and management are correct.  A unit owner who rents out their unit is obligated to inform the condominium that it is rented and who lives in the unit.  This is for safety reasons – for example, if there is a fire, the condominium knows who is and is not residing in the complex.  It makes it easier for doing a head count.

Also, requiring a six month (or preferably a one year) length for the lease is in the best interests of the condominium.  If tenants keep moving into and out of the condominium, it is easier for issues to occur and no one is responsible for the issue as the tenant has moved out.  Also, it’s for the safety of the condominium – it means less keys get out into circulation that could potentially lead to a break-in down the road.

Plus, having one longer term tenant is more cost efficient than continuing to have to find another tenant.

Another question raised was:

QUESTION:  I am on the board of our condominium and the directors would like to replace our property manager. Can the board vote for removal of the management company or must there be a vote of the owners?

ANSWER:  You must first examine the management agreement and if it provides that the corporation may terminate the employment of the manager without cause by giving certain notice of termination, the board may vote to give the required notice and a vote of the owners would not be required.

If the agreement states that the management services will be provided for a certain term and there is no provision permitting the corporation to terminate before the end of that term, termination may be impossible — short of a fundamental breach of the management agreement.

Of course there is a simpler option.  If you are unhappy with the assigned property manager why doesn’t the Board contact head office and request that the assigned property manager be reassigned.  If the property management company refuses, then the Board would be in its rights to terminate the contract.  And the refusal to reassign the property manager could argued to have caused a breach of the contract.

Of course, before the property management company is replaced, the Board should consult with the condominium’s solicitor to ensure that the Board is following the law with the change, especially if the Board would be required to wait until the expiration of the contract or be able to show a breach of the agreement.

But the question also raises the obvious need for condominiums to ensure that an opt out option forms part of the contract – or at least that it is clear that the condominium can terminate the agreement if a suitable property manager is not assigned.

Lastly, there is the following question:

QUESTION:  At our last annual general meeting, one of the candidates for the board withdrew his nomination and transferred all of his votes to another candidate who was then elected. Was this legal?

ANSWER:  No. If proxy forms completed by owners instructed their proxies to vote for a candidate, that candidate could not instruct the proxies to cast their votes for someone else. Owners attending the meeting can vote for any candidate. But the candidate for whom they voted could not instruct the scrutineers that votes for him are to be treated as votes for anyone else.

Of course, this again shows why proxies should not be allowed, or at least severely curtailed.  The candidate cannot simply ‘transfer’ his votes to another candidate.  Also, technically under parliamentary procedure, once nominated, a candidate cannot withdraw from the election.  The candidate can state that if elected that he would not accept election, which is perfectly acceptable under parliamentary procedure.

As such, in this case the election should be declared null and void, and a new election held to determine who the owners want elected.  It sounds like the candidate who withdrew his nomination was trying to rig the election in favour of another candidate.  Whether or not this was intentionally done or not is unclear based on the question, but it was not a fair election and a new election should be held to clear up the issue.

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