CONDOCENTRIC: Ask The Pros - All About By-laws

Question:

The following is a two-part question.  (1) Can a condo pass a bylaw restricting the number of units an individual can own? (2) We have an individual who rents units from our rental pool, furnishes them and sublets them at an inflated rent.  Can a condo pass a bylaw to restrict the number of units an individual can rent from the rental pool with the intent to sublet?

ANSWER:

(1) There is no specific authority under the Condominium Act, 1998 that permits this type of restriction to be imposed by bylaw.  While the Act does contain many different areas that can be addressed by bylaw, these focus primarily upon the general operation of a condominium corporation, as opposed to addressing a condominium corporation’s “constitution” or “character”.  It is unlikely that such a restriction, contained only in a bylaw, would be upheld if a challenged in court.

Such a restriction would be better placed within a condominium corporation’s declaration; however, even so, care must be taken in the wording of the restriction.  The Act, again, does not specifically provide that a declaration can contain a restriction on the number of units an individual can own; however, the Act does provide that a declaration can contain conditions and restrictions with respect to the occupation and use of a unit; and with respect to leases and sales of units.

(2) Any meaningful answer to this question will ultimately depend upon the structure and makeup of the rental pool.  Is it entirely independent from the condominium corporation?  Is it run “independently” by the condominium corporation’s property management for the benefit of some unit owners?  Or, is it a service that was originally contemplated in the constitution of the condominium corporation, and reflected in the declaration?

I would also want to know what the mischief is that is being created by someone sub-letting a unit at inflated rent.  

A solution will depend upon the relationship of the condominium corporation vis-à-vis the rental pool, and what restrictions there are in the condominium corporation’s declaration regarding the use of dwelling units.

If there is any element of control by the condominium corporation the rental pool, it might be possible to amend the head-lease to prohibit the sub-leasing of units and/or the leasing of furnished suites; or alternatively, adopt of a policy of not renting to an individual who already sublets units.

If, as is more often the case, the rental pool is independent from the condominium corporation, the condominium corporation’s declaration must be reviewed for restrictions on the use of units. 

When units are furnished and sublet at inflated rates, this is often indicates tenancies are transient tenancies.  There are some condominium corporation declarations that will specifically permit this sort of transient tenancy to be carried on.  If this is the case, the owners would need to consider amending the condominium corporation’s declaration.

If, on the other hand, the declaration restricts the use of dwelling units to private single family residences, the courts have held this restriction prohibits the transient and commercial use of the dwelling units.  As an additional measure, it is advisable to put a rule or by-law in place which further defines the commercial and/or transient use that is being prohibited.  This type of rule or by-law has also been upheld by the courts.

Ultimately, the condominium corporation should seek a legal opinion as to its available options.

From “Condominium Manager (CM ACMO) Magazine" - Summer 2005 p.65

All of the information contained in this article is of a general nature for informational purposes only, and is not intended to represent the definitive opinion of the firm of Elia Associates on any particular matter. Although every effort is made to ensure that the information contained in this newsletter is accurate and up-to-date, the reader should not act upon it without obtaining appropriate professional advice and assistance.

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