Buying and living in a condominium is in some ways more complicated than in a single family home — and in other ways much simpler. You must understand what it is you are purchasing and whether the lifestyle will suit you and your family. Once you do the proper investigations and make your decision, you will find that the advantages of condominium living are many and you should find it a rewarding experience!

The legalese The term CONDOMINIUM applies to a type of property ownership rather than to any distinct particular style of building. The term "CONDOMINIUM" doesn't refer in any way to the physical structure of the building or building complex. Residential condominiums, which now account for one out of every three new homes built in Ontario, can be either high-rise or low-rise apartment style units, townhouses, (some known as freehold condominiums), detached houses, stacked townhouses — any configuration of housing you can imagine. Non-residential condominiums can be industrial, commercial or retail. What makes them "CONDOMINIUMS" is not their physical structure but the way in which owners have agreed to share the ownership of the common elements of the property, while retaining individual ownership of parts of the property which constitute their units. The condominium property is made up of the units and the common elements. Those parts of the property that are not specifically designated as units are known as common elements. Accordingly, condominium ownership has a dual nature; a condominium unit owner has freehold title to his or her unit and, at the same time, shares jointly with other unit owners, the ownership of the common elements. The unit owners share the cost of operating the property through the payment of their share of the common expenses. What do you own when you buy a condo? When you are buying a condominium, you are not only buying a particular parcel of property, but you are also entering into an agreement with the owners of all the other units. This agreement limits some of your property rights and delegates the decision-making to others. The Condominium Act provides for the incorporation of a Condominium Corporation upon registration. At the time of initial registration, the developer will nominate the members of the Board of Directors. Ultimately, the developer will step out of the picture. The unit owners will vote for the Board and assume control of the Corporation. This can work well or very badly, depending on those elected to the board. How is a condominium building managed? A condominium corporation is a method of property ownership. It is created solely to manage the affairs of the condominium corporation. A condominium's affairs are regulated by the Condominium Act and documents known as the Declaration, Description, By-laws and Rules. The declaration is the equivalent of the constitution of the corporation. It outlines the division of ownership within the corporation by identifying the units, the common elements and the exclusive use common elements, if any. It also sets out the percentages of ownership each unit has in the property and the percentage that each unit contributes to the monthly common expenses. The declaration will also indicate which costs will be the responsibility of the corporation and paid for by the owner's contributions to the monthly common expenses. The description is a detailed plan of the boundaries, layout and location of the units, common elements and exclusive use common elements in the condominium. The by-laws of the corporation indicate how the corporation will be organized. They deal with matters such as the Board of Directors, the officers of the corporation, the conduct of meetings, the collection of common expenses, occupancy standards, insurance deductibles and other matters as permitted by the Condominium Act, 1998. By-laws are made by the Board of Directors and approved by the unit owners. There are also rules of the corporation which regulate the owners' day-to-day living environment. The Board of Directors makes the rules. The owners are required to receive notice of the rules and have a right of veto and can amend or repeal them. The initial condominium documents, the declaration, description, by-laws and rules are prepared by the developer. The primary purpose of the condominium corporation is to manage the condominium property. The Condominium Act provides standards regarding the keeping of records and the conduct of business. The Act and the by-laws outline in greater detail procedures to be followed by the corporation, including the calling, holding and conduct of general and special meetings, as well as the election, removal and replacement of directors. Owners and residents are required to comply with the documents which govern a condominium corporation. The corporation or individual owners may enforce the Act, declaration, by-laws or rules either through mediation and/or arbitration or in some circumstances by going to court. The Act also provides, through an oppression remedy, the right to apply to a court where an owner believes that his or her rights have been unfairly affected by the conduct of either the Board of Directors or other unit owners. The corporation will be managed by a board consisting of at least three qualified Directors who will be responsible for conducting the business of the condominium honestly and in good faith. They are obligated to exercise due care with diligence, and exercise the degree of skill of a reasonable person in discharging their responsibilities. The primary responsibility of the board is to establish an annual budget. An assessment is then made and the unit owners are obliged to pay their appropriate share of the common expenses. Failure to do so, will result in a lien being registered against the unit. If it is not paid, then the lien may be enforced in the same manner as a mortgage. Typically, a board will delegate the day-to-day operations to a property manager. The board cannot delegate any of its essential tasks as specified in the Act. The Status Certificate When purchasing a resale condominium unit, you should ensure that your offer is conditional on receiving and reviewing a Status Certificate and the accompanying documents, as required by the Act. The certificate is the resale equivalent of a disclosure statement and you must review all the material that comes with the certificate to ensure that you are satisfied that both the condominium unit and the condominium corporation are suitable for you. This certificate, for which there is a fee of $100 inclusive of GST, must be delivered within 10 days of the request for it and the payment of the fee. It discloses whether the owner of the unit you are buying is current in the payment of common expenses as well as a picture of the condominium corporation's financial affairs. It is to be delivered with the documents which govern the condominium corporation and in some cases, a list of those documents which also affect the corporation but are not attached. Once the list of agreements is reviewed, you or your lawyer may also wish copies of some or all of them for review. There can be an extra charge for these documents. The STATUS CERTIFICATE should include this information: • composition of Board of Directors • constitution, by-laws and rules • common expenses • anticipated increases in common expenses • financial  statements, including the most recent audited statement, current budget and size of reserve fund • anticipated assessments to increase the size of the reserve fund • status of any legal actions and outstanding judgments • a list of current agreements • the owner’s compliance with the corporation’s agreements • number of units leased • certificate of insurance • changes proposed to the common elements A sensible Seller's agent will have their client order a copy of the status certificate before listing, and will have it available for immediate review by any interested Buyer. Only a negligent Buyer's agent would prepare an offer to purchase a condo without making it conditional on the Buyer's satisfactory review of the status certificate. Reserve Fund A reserve fund is a separate trust account which all condominium corporations are required to establish. A portion of the common expenses paid by the owners is transferred monthly to the reserve fund trust account. The reserve fund is the unit owners' savings for the major repair and replacement costs of the common elements which occur as a building gets older (eg. roofs, elevators, mechanical, electrical, plumbing systems, recreational facilities etc.) The contributions made to the reserve fund must be based on a reserve fund study which will establish the amount the Board of Directors must ensure is contributed. Under the Condominium Act, all condominium corporations must carry out a reserve fund study. If the reserve fund is inadequate, the Board is required to develop and implement a plan to 'top it up'. A healthy reserve fund is a sign of a financially healthy condominium corporation. Where the reserve fund is low, it may be because the corporation has done a lot of work recently and the corporation is starting to rebuild its fund. If the low figure in the reserve is not the result of major work having been recently completed, or if the information accompanying the status certificate indicates that there is significant work which must be done and the amount in the Reserve Fund appears inadequate, then you should do further investigation.

The Condominium Act

Read the Ontario Condominium Act here.

Condominiums are governed in Ontario under the Condominium Act, 1988. There are two necessary ingredients to a condominium:

1. the Constitution
2. the physical property (the individual condo units — the real estate)

These two matters are evidenced by the “Declaration and By-Laws”, commonly referred to as the constitution of the condominium and the “Description” which is a survey of the property. For example, you cannot register a high-rise apartment building as a condominium until it actually built. It must be constructed before registration. Once an Ontario Land Surveyor certifies that it is built, it can then be registered as a condominium and thereafter it is considered and treated legally as “real property”.

Each individual owner will hold title to a specific unit — the space inside the unit's walls — together with a percentage of the common areas. Access to the unit through common areas including the grounds, the lobby, the elevators, staircases and hallways are provided as outlined in the Constitution as a right shared with others.

In some condominiums, the unit may be entitled to the exclusive use of certain common areas including a storage space or locker, a parking space and the balcony accessible only through the apartment. In others, such areas may be deeded to the unit, and in still others, such areas (with the exception of the balcony) may be assigned to the unit on a first come first served basis. It is important to know that there are no hard and fast rules. Each condominium is different.

Who manages the property?

Usually, a property management firm, under the direction of the Board of Directors, runs the day-to-day affairs of a condominium corporation. Some condominium corporations are self-managed. The Board is responsible for carrying out the obligations of the Corporation as set out in the Act, the condominium documents (declaration, by-law and rules) and any agreements to which the corporation is a party.

While a property management firm under contract to the corporation normally makes the day-to-day management decisions, final authority for policy decisions rests with the Board of Directors of the corporation.

Directors are elected and can be removed by the owners. A director's term is usually three years. If the condominium corporation is unhappy with the agreements entered into by the developer on behalf of the condominium corporation, the Condominium Act permits the Board of Directors and/or the owners to terminate these agreements, with a few exceptions.

Do I have a say in what happens in the condominium?

Yes, you have the right to participate in the affairs of the condominium corporation.

Decisions made by the Board of Directors will directly influence the use of common elements and what you can do with your own unit. For this reason, you should be well-informed about what is happening in your corporation. The condominium corporation provides that some decisions are the sole responsibility of the owner- elected Board but others must be approved by a vote of the unit owners.

The Act contains provisions designed to allow unit owners a voice in the running of the corporation, even where the developer holds ownership of a large number of units. Once 15% of units are owner-occupied, the owners of these units have a right to elect a representative to the Board. Once title to 51% of the units is transferred to the purchasers by the developer, a meeting to elect a new Board of Directors to replace the developer's Board and to complete a 'turn over' of Corporation documents must be held.

In addition, the Condominium Act, 1998 ensures that all the condominium records are available for examination by any purchaser, owner or mortgage lender. Money paid by owners towards common expenses must be held in a separate operating trust account in the name of the condominium corporation.

I'd like to be on the Board of Directors. What should I do?

Let the people in your project know that you are interested and the qualifications you have to handle the job. If you are living in a new project, a meeting must be held 42 days after the developer no longer holds majority ownership of the units. A new Board, replacing the developer's Board, will be elected at that time. The Condominium Act requires that there be at least three directors on the corporation's Board. Your corporation's by-laws may specify that there are to be more than three directors. The owners electing the directors do not determine which person will hold which position on the Board (i.e. who is president, treasurer etc.); the elected individuals decide who will hold what position. Directors may be elected for terms of up to three years and may run for reelection. Ideally, the first directors elected serve staggered terms and thereafter three-year terms. That way, there will always be experienced individuals on the Board. The members who together own a majority of all the units may remove directors from office by a vote in favour of removal. If removed, the owners will elect other eligible persons to complete the unexpired portion of the removed directors' term. If a vacancy occurs on the Board due to a resignation or death, the Condominium Act allows the Board to appoint an eligible individual to fill the vacancy until the next annual meeting. Special rules for election and removal of an owner/occupier representative of the Board apply where more than 15% of the units are owner/occupied. Page

Are there restrictions on what I can do with my unit?

Yes, a condominium owner's rights of ownership are more restricted than other homeowners. The following examples indicate some of these limitations:

• A condominium owner must abide by all the provisions of the Condominium Act the corporation's declaration, by-laws and rules;
• No owner may damage or neglect his or her unit. To do so depreciates the value of the condominium property as a whole;
• Most declarations for residential condominiums specify that units can be used only for residential purposes in accordance with the zoning by-law and not for commercial purposes;
• Usually the owner is forbidden from any actions which could threaten the project's insurance coverage (like having a barbecue on the balcony, for example), making any structural changes to a unit or changes to the common elements without the consent of the condominium's Board of Directors.
• Examples of typical condo restrictions: a no-pet, or small-pets-only policy; a policy requiring white blinds or draperies; a policy prohibiting satellite dishes; a policy prohibiting For Sale signs, etc. Be sure to read your condo's bylaws for the rules affecting your building.

Can I decorate my unit any way I want?

Every condominium has varying restrictions which are set out in the declaration and the rules regarding what an owner can do with his or her unit. Usually you will be able to decorate the inside of your unit as you wish but you may not do anything that changes the appearance of the building or the exterior.

Some condominiums require that the exterior of all window coverings be white or off-white. Some prohibit laying carpet or tiles on balconies. Usually you cannot remove a wall, change plumbing fixtures, install appliances or replace flooring without the permission of the Board.

Can I make changes to the Common Elements?

If you want to build a fence, install a satellite dish or a patio or make other changes to the common elements, the Act requires that you must have the approval of the Board of Directors and/or the corporation depending on the change. If you wish to change the common elements, you will need the Board's permission. You will also have to meet the requirements imposed by the Board and sign an agreement which sets out your obligations with respect to the change. Many condominium corporations require that owners, who wish to make more than just cosmetic changes to the interiors of their units, seek permission from the Board of Directors.

Can I lease or rent the condominium unit I own?

Unless restricted from doing so by provisions of the declaration and/or the rules a condominium owner can sell, rent, lease or transfer the title of his or her unit as he or she chooses. Some corporations do not allow owners to sell or rent parking units to persons who do not live in the building. An owner who leases his or her unit must give the corporation the name of the tenant(s) and a summary of the lease or a copy of the lease. The owner and the tenant are both responsible to the corporation and the tenant can be instructed to pay common expenses for the unit if the owner fails to do so. If the tenant does pay the corporation, that amount can be deducted from the rent due to the unit owner. The tenant is bound by all the same documents as the owners. If a tenant does not comply with the Act and/or the condominium documents, the condominium corporation can take legal action against the owner and/or the tenant.

Who is responsible for maintenance and repairs?

Generally, repairs to common elements are the responsibility of the corporation; repairs to the unit are the owner's responsibility. For example, if the swimming pool in a condominium needs resurfacing, the condominium corporation must take care of this, with the cost paid from the common expenses. If a unit owner is responsible for maintaining and/or repairing the unit and/or a portion of the common elements, then the owner is responsible and if the owner fails to do it, the corporation can do it and recover the cost of the repairs from the unit owner.

Maintenance to parts of the common elements which are exclusively used by the unit owner — such as a balcony or a patio, may be the responsibility of the individual owner or of the corporation, depending on what the declaration provides. If repairs must be made inside your unit — if, for example, your sink doesn't drain — the responsibility for the repairs is normally yours. For this reason, it is a good idea, in a new project where appliances have been provided, to find out about the guarantees and warranties. Are you responsible for parts and labour costs? The builder is not responsible for such costs, nor is the corporation.