Are condo policies enforceable?
Policies vs. Rules in Ontario Condos: What Boards Can (and Can’t) Do
We all know about declarations, by-laws, and rules. Each of these governing documents has their own process to be adopted and sets the parameters for what condominiums, their owners, their boards, and their residents can and cannot do. However, as I am sure many of our readers will know, some condos also adopt “policies” to guide them when it comes to governance. So what are policies and are they enforceable?
If you want to skip reading this blog (but please don’t) the bottom line is this: Policies are not defined in the Act and cannot create new obligations or restrictions that owners must abide by. If a board wants to create or tighten an obligation on owners or occupants, it must use the rule-making process in section 58 of the Act. Two recent CAT decisions involving the same corporation drive this home.
Difference between rules and policies
What can rules cover:
The board may make rules about the use of units, common elements, or the corporation’s assets to promote safety, security, or welfare, or to prevent unreasonable interference with the use and enjoyment of units and common elements. Rules must also be reasonable and consistent with the Act, declaration and by-laws.
How rules are adopted:
Rules are adopted (amended or repealed) by the board of directors. Before the rule becomes effective, the new rule must be circulated with the owners. To do so, the board must give owners notice with
- a copy of the rule,
- the proposed effective date, and
- a statement about owners’ right to requisition a meeting. If no meeting is requisitioned, the rule comes into effect after 30 days. If a meeting is requisitioned, the rule comes into effect after the meeting unless it is voted down by a simple majority.
What about Policies?
The starting point is that the Act does not define or describe “policies.” It defines rules and prescribes how to make them; there’s no parallel framework for policies. Yet, policies are commonly adopted by Corporations. Interestingly as well, courts and tribunal appear to accept the existence and legitimacy of policies.
But what do policies do?
In our view, policies are valid if their purpose is to guide and systemise how the Board will interpret or apply existing obligations or processes. This ensures that similar requests or issues are handled in a consistent and systematic manner. Examples of this could be a policy dealing with owners requests seeking to modify common elements (adding a deck or door bell…) or a policy dealing with EV charger requests. By having a policy, the Corporation will be guided and the owners will be informed of the process and considerations that go into the decision.
Policies could also be set to establish a process for the owners to follow – for instance a policy on how to reserve the party room or a spot in the visitor’s parking; or how to reserve the elevator for moves…. etc.
What a policy cannot do, in our view, is impose additional obligations/restrictions on owners. This is done through governing documents – usually rules. In that sense and in our view, policies are not necessarily “enforceable” (strictly speaking) as against owners (at least not in the same way as a rule would be).
What the CAT has said about policies (twice)
In Zolis v WCECC 519, the corporation circulated a “Visitors Parking Policy” which, among other things, reinterpreted the existing restriction in the Rules of “three overnights per 7 days” into a 72-hour total.
The CAT held:
“a condominium cannot alter its rules by making policies. If a board wishes to change its rules, it must do so in the manner set out in s. 58 of the Act.”
The tribunal still found the underlying rule and the declaration valid and enforceable but flagged the corporation’s conflicting policies and communications as inconsistent with the rule’s plain wording.
A few months later, in Marazzato v WCECC 519, the same corporation was again before the Tribunal about this policy.
The CAT again confirmed the visitor parking provisions in the declaration and rules were valid but that the policy was unenforceable, as it was effectively an amendment to the rules without having gone through the formal process required by the Act.
Lesson: keep policies in their lane
1) Policies can guide how you work; rules govern what owners must do.
Use policies to systemize the Board’s decision-making process or for internal processes (e.g., how staff log incidents, what template a manager uses, internal escalation steps).
Do not use policies to impose additional obligations or restrictions on owners.
Also, do not use policies to amend rules. If the policy is not consistent with the Rules, or is really just doing what a rule should do, it won’t be valid.
2) If you want a stricter regulations, amend your rules
If you are seeking to modify rules or to regulate owners’ behaviour, adopt a rule by following the Act’s notice and circulation mechanics. This is the only path to create new, enforceable obligations on owners/occupants.
3) Keep a clean paper trail
If the validity of a rule is ever challenged, the corporation may need to prove that it was properly adopted. It is crucial that the Corporation keep records showing when the board adopted the rule; when notices went to owners; and when the rule came into force.
The takeaway for condos
The Act gives boards a clear process to make rules. This process includes notifying the owners and providing them with a process allowing them to provide input and oversight. That’s where enforceable obligations come from.
This does not mean there is no place for policies. Policies can be useful tools for internal administration, but they are not a “cheat code” to enforce rules without formally passing them.
It all goes to show that ensuring your governing documents are valid and in compliance with the Act is crucial to prevent future issues. When in doubt, check with your favourite condo lawyer when it comes to your governing documents.