While the Condominium Act, 1998 permits owners to requisition meetings for certain business and for informational purposes, there are limits on what can be accomplished using this process.
Some owners at one of our smaller condo corporation clients recently submitted a requisition to amend the corporation’s general by-law to increase the size of the board from 3 to 7 directors and impose a new qualification that only owners are eligible to be directors. For the reasons that follow, this is business that cannot be requisitioned by owners.
Section 56 of the Act provides that by-laws may be made, amended or repealed by resolution of the board, then confirmed by the owners of a majority of the units and registered on title to become effective.
Nothing in the Act permits owners to make, amend or repeal by-laws themselves or to requisition or compel the board to do so. In other words, condominium by-laws cannot be made or changed unless the board chooses to pass a resolution to that effect.
Owners wishing to change their corporation’s by-laws must therefore convince the board to do so through other means of persuasion or, alternatively, they must elect directors who will pass the necessary resolutions. Submitting a requisition for the board to pass, change or repeal a by-law is not valid or effective and need not be followed.
Aside from being invalid, an owners’ requisition to increase the size of the corporation’s board and impose new qualifications for directors is probably not a good idea, for at least two reasons.
First, a 7-member board at a condominium with fewer than 100 units is unusually large and will likely result in paralysis or some other dysfunction. Another problem is that too few or no candidates might step up to fill vacancies in a future year, leaving the board without a quorum.
Second, unless there is a problem with non-owners serving on the board (which can ordinarily be resolved at the next election), unintended negative consequences may arise from requiring directors to be owners. This seemingly simple qualification would, for example, eliminate owners’ spouses as potential candidates as well as officers or directors of companies that own units, or tenants with extraordinary talents and commitment to improving their condo corporation (which is still their home, even if they don’t own it). Given that so many condominiums have difficulty attracting candidates to run for director positions, imposing unnecessary qualifications only makes that problem worse.
Imposing term limits is another example of a well-intentioned but poorly-advised qualification for condo directors. While such limits are created to prevent directors from overstaying their welcome, they create a serious problem when no candidates step up to relieve long-serving directors. This scenario arises not only from owner apathy, but when owners know that their condo has an outstanding board that should be left to continue its good work. For this reason, few condominiums set term limits and those who do will eventually repeal them.
Though there may be certain problems that can be addressed by tweaking or tightening directors’ qualifications, these changes must be made carefully so as to avoid future negative consequences. By-laws with strict limits or inflexible or overly simple wording may seem like a good idea at the time but cause unnecessary and potentially costly problems later. Obtaining expert legal advice is essential.
And while they may be legally invalid, requisitions for changes to a condo by-law should prompt the board to carefully consider the reasons why the owners filed the petition. These petitions often highlight concerns among the ownership that should be addressed and solved early to prevent underlying problems from growing and creating rifts in the community. Opening a dialogue and involving the condominium’s lawyers to explore those concerns might lead to a number of solutions that can address the problem without laying landmines for the future.
** This piece first appeared in the September 2014 issue of Real Condo Investor, a special supplement to Condo Life magazine.