Some of the terms used to describe condominium ownership may be unfamiliar or have special meaning. Here are definitions of some of these terms.
Board of Directors
Each condominium corporation is managed by a board of directors who are unit owners and who are elected by the owners. There must be a least three directors, although a greater number may be required by the declaration or, in older corporations, the bylaws, which may also set out required qualifications, method of election, and term of office. In general, the board is responsible for the upkeep and maintenance of the building(s) and other business matters, usually by supervising the actions of a property manager.
Bylaws are rules that state how the condominium will be run, how the property will be maintained, and how the common elements will be used. Bylaws are made, and can be changed, by owners who own 60 per cent of the common elements.
Common elements include the property remaining after the boundaries of the units have been defined. They are owned in common with all other unit owners and are for their mutual use and enjoyment, e.g., hallways, elevators, mechanical equipment, lawn, swimming pool, etc.
Common Elements Fees
Common elements fees are the monies paid each month to the corporation by the unit owners. The corporation’s budget indicates how much money is required to meet daily operating costs plus contributions to the required reserve fund. Unit assessments are made on the basis of the percentage allocated in the declaration, usually contained in a schedule attached to the declaration.
Common Elements Rules
Common elements rules are simply rules for the use of the common elements, e.g., the number of guests you can have in the pool, at what time, and on what days.
A unit is the part of a condominium property that is to be individually owned and occupied. Its precise boundaries are set out in the declaration and description. Before you buy a condominium, the declaration and description should be read carefully by you and your legal advisor.
The declaration is like a constitution of the Condominium Corporation. It is a legal document that is used to create a condominium. It defines the units and common elements and specifies the interest each owner has in the common elements. The declaration also gives the procedure for making decisions about the repair and maintenance of the property, the assessment and collection of common expense fees, and provisions about the Board.
The description details the layout and location of the whole development. It includes a survey of the land and building(s) and detailed architectural drawings of the construction of the building(s) and each unit.
An estoppel certificate is a binding statement prepared by the corporation at the request of a unit owner or purchaser. It indicates the standing of common elements fees and reserve fund assessments against the unit, whether they are up to date, paid in advance, or in arrears. The Condominium Act and Regulations specify which items must be included. For example, the certificate will also contain such items as the names and addresses of the property manager and the officers of the corporation, the financial standing of the corporation, the reserve fund balance, whether any major capital expenditures or increases in fees are planned, and if there are any law suits pending against the corporation. A copy of the most recent declaration and bylaws are to be provided with this certificate.
Limited Common Elements
Also known as "exclusive use common elements," they are portions of the common property that are designated for the sole use of one or more unit owners, e.g., balconies, patios, parking (in some cases), storage lockers.
The property manager is an employee of the corporation who is responsible for the day-to-day management of the property, which may include the collection and disbursement of common expense monies. The specific duties of the property manager should be contained in a written contract. Some condominium corporations may not have retained a property manager and are often self-managed by the board of directors.
The reserve fund is probably the single most important factor in the long-term financial stability of a condominium corporation. An adequate reserve fund protects the future of the condominium by making sure that sufficient money is set aside for major repairs and replacements as they become necessary, e.g., roofs, roads, landscaping, building exteriors, parking facilities, hallway carpets.
The Condominium Act requires every corporation of 10 or more units to have a reserve fund study completed. This study assesses the components of the common elements and develops a financial plan for the repair and maintenance of the components based on projected life of the items and anticipated cost of repair/replacement and their current condition.
A restrictive covenant is a legal requirement placed on a piece of land to describe any special requirements for the property. It may limit the kind of development on the land, or ban certain uses (clothes lines, etc.) For phased condominiums, a restrictive covenant would limit the kind of business or building that could be built on land intended for a phase of a condominium.
A special assessment may be levied by a corporation in response to an unforeseen major expense that cannot be covered by the reserve fund when unit owners representing 66 2/3 per cent of the common elements vote in favour of the assessment.