Area of Law: Real Estate Law
Answer # 0428
What is the difference between a declaration, a by-law and a rule?Region: Ontario Answer # 0428
Declaration and description
A condominium must be registered in order to come within the jurisdiction of the Condominium Act. In order to do so, it must register a declaration and description. The declaration and description can only be changed if over 80% of the owners agree to this change.
A declaration sets out various matters of condo ownership and should contain:
- the common interests of each particular unit,
- a list of the exclusive use common elements for particular condo units,
- a list of the common elements, as well as
- a statement of the shared common expenses for the common elements.
The schedules to the declaration must include, among other things:
- a legal description of the land,
- the boundaries of each condo unit,
- any specifics regarding unit boundaries, as well as
- the consent of those holding mortgages on the property at the time the declaration is registered.
A description is the survey plans and architectural plans of the building along with an architect’s certificate.
What is a disclosure statement?
A disclosure statement is a document compiled by a developer that tells purchasers important information about the newly built condos. It provides information about the future or existing condo property, and about the corporation, such as:
- the corporation’s first-year budget,
- the proposed or actual declaration, and
- the by-laws and rules
Currently, each condo declaration (and disclosure statement) can be different. Under proposed Condominium Act amendments expected to come into force by 2019, a declaration would follow a standard format and content that cannot be altered by developers. Standard content in a declaration would include unit boundaries, maintenance and repair obligations, and insurance requirements. A standardized disclosure statement summary would replace the current table of contents. These changes are intended to make the documents easier for the buyer to understand.
By-laws and rules
Matters that may be the subject of by-laws are specified in the Condominium Act. By-laws are passed by the board of directors. They are important for the administration of the condominium corporation and the management of the condominium building. For example, by-laws may restrict the use of common use elements by non-residents. There are also matters that are beyond the scope of the board, which if included in by-laws, may be challenged, even in court.
Rules are passed by a resolution of the Board and must comply with the Act, the declaration and the by-laws. A rule must be ‘reasonable’ and must be for the safety and security of unit owners and the corporation’s assets. In this regard, a rule may be instituted to prevent some interference with the use of the common element, or to ensure the continued enjoyment of the common elements.
A Board may create or repeal a rule, however, if there has been an amendment to a rule, or a rule has been repealed, a board cannot pass a rule with the same purpose, within two years.
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