Running A Meeting Of Co-Owners / Condo Law
|Écrit par Me Sébastien Fiset , LL.B., B.A.A.|
|Vendredi, 21 Janvier 2011 13:55|
RUNNING AN EFFECTIVE MEETING OF CO-OWNERS
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Under the terms of articles 345 and 1072 of the Civil Code of Québec, there exists an obligation for the syndicate of co-ownership to call a general assembly of co-owners at least once a year. Even though the board of directors makes decisions on behalf of all co-owners, the assembly has the right to be informed, and has a consultative right along with certain decision making authority exclusive to them. These are exercised during the general meetings of co-owners.
In addition to the annual general meetings, it is possible that co-owners may be convened to a meeting for a special purpose. Certain emergency situations or important events may, for example, necessitate the calling of a special or extraordinary meeting of the co-owners. Co-owners representing ten (10%) of the vote may also request a meeting (article 352 C.c.Q.).
While the Civil Code of Québec outlines provisions for the holding and the proceedings of meetings of co-owners in its chapter concerning legal persons (art. 345 and ss. C.c.Q.) and the chapter covering divided co-ownership of immovable (art. 1087 and ss C.c.Q.), the declaration of co-ownership may differ in some respects, if the meeting is biased, if any decision has been taken with the intent to cause prejudice to co-owners or is in contempt of their rights, that the rights of co-owners have been protected and that the number of votes required when taking a decision, as per the terms set out in articles 1096 and 1102 of the Civil Code of Québec, has been adhered to. When in doubt, it is critical to ensure that the rules and proceedings of a meeting are respected and to consult with a professional who specializes in the rights of co-ownership.
We will look hereafter for you at the general proceedings for a meeting and certain exceptions.
CONVENING THE MEETING :
Attendance at the meetings of co-owners is restricted to co-owners owning a fraction of co-ownership and, if stated in the declaration of co-ownership, each creditor holding hypothecs who noticed it to the syndicate. No other third party, relative, spouse, friend or other person will be admitted.
Normally, it is the board of directors who will call and give a notice to each co-owner. 
The Notice calling the meeting indicates the date, time and place where it is to be held, and the agenda (art. 346. C.c.Q.).
The Civil Code of Québec requires a minimum delay of ten (10) days, and not more than forty-five (45) days between sending the notice and holding the meeting. Verify your declaration of co-ownership which may stipulate a different delay
If all the co-owners (including those who are absent) are in agreement, it could be possible to waive the notice to convene a meeting :
Article 353 C.c.Q. :
« The directors or the members may waive the notice convening a meeting of the board of directors, a general meeting or a meeting of any other organ.
The mere presence of the directors or the members is equivalent to a waiver of the convening notice unless they are attending to object that the meeting was not regularly convened. »
It is also possible to replace holding an actual meeting by adopting a written resolution signed by ALL co-owners.
Article 354 C.c.Q. :
« Resolutions in writing signed by all the persons qualified to vote at a meeting are as valid as if passed at a meeting of the board of directors, at a general meeting or at a meeting of any other organ. »
For example, the co-owners may communicate amongst themselves and meet off site, or by going door to door, obtain the signatures required for a written resolution, which would have been prepared by the syndicate or one of the co-owners, and signed by all, outlining in detail the wishes of the assembly. Beware: certain fractions of co-ownership may be held by more than one co-owner; the signature of every co-owner is required.
DOCUMENTATION TO ACCOMPANY THE NOTICE TO CONVENE A MEETING
Under the terms of article 1087 of the Civil Code of Québec :
« The notice calling the annual general meeting of the co-owners shall be accompanied with, in addition to the balance sheet, the income statement for the preceding financial period, the statement of debts and claims, the budget forecast, any draft amendment to the declaration of co-ownership and a note on the general terms and conditions of any proposed contract or planned work. »
This provision ensures that all co-owners prepare themselves in advance on the topics which will be discussed at the meeting.
You are not able to attend the meeting ?
You should be aware that not being present at a meeting in no way exempts you from being governed by the decisions which were taken, if these were taken according to the rules.
Generally, a proxy form is included with the convening notice to be used by a co-owner who is unable to attend the meeting. If not available, or if the co-owner so chooses, he may also prepare his own proxy (written mandate to this effect). Make certain that you deliver it to the directors or to the officers of the meeting prior to the date of the meeting. This proxy gives permission to the person designated by the co-owner to exercise, for him and in his name, his right to vote despite his absence.
The agenda outlines the topics to be discussed during the meeting.
You would like to discuss something which is not on the agenda ?
It is possible to add a question to the agenda (art. 1088 C.c.Q.). You have five (5) days following receipt of the convening notice to make your request, which will allow the board of directors and/or the officers of the meeting to distribute to all the co-owners the new questions added to the agenda.
Unless otherwise stated in the declaration of co-ownership or elsewhere :
i) questions of interest for the legal person or its members which do not necessitate a vote;
ii) if all co-owners are not present and are not in agreement;
we are of the opinion that it is not permissible to add questions during extraordinary meetings.
PROCEEDINGS OF THE MEETING
In general the following items would be on the agenda :
1. Election of the officers for the meeting
According to the conditions outlined in the Building By-Laws of the declaration of co-ownership, a president for the meeting, a vice-president and a secretary are nominated.
Their functions are described in greater detail in our text « The Organization of a Syndicate of Co-ownership: Distinction between the Board of Directors and the General Meeting of Co-owners ».
2. Confirmation of quorum
Recording the attendance of co-owners may be facilitated by having a list showing the names of co-owners, their address, the number of votes related to their fraction of co-ownership and indicating if there is a proxy form.
Article 1089 C.c.Q. :
« Co-owners holding a majority of the votes constitute a quorum at general meetings.
If a quorum is not reached, the meeting is declared adjourned to a later date, notice of which is given to all the co-owners; 3/4 of the members present or represented at the second meeting constitute a quorum.
A meeting at which there is no longer a quorum shall be adjourned if a co-owner requests it. »
Quorum is not calculated according to the number of participants present at the meeting but rather the number of votes present or represented and should represent the majority of all the votes of all the co-owners who own a fraction of the co-ownership
3. Opening the meeting
A word of welcome and a notation of the time of the opening of the meeting of co-owners.
4. Presentation of the financial statements
This may be performed by the board of directors or by the accountant of the syndicate mandated to do this.
5. Presentation and consultation of the co-owners on the proposed budget
i) Expenses related to the co-ownership;
ii) Expenses related to management of the co-ownership;
iii) Allocations for the contingency fund , if applicable, and for the common portions for restricted use;
It is advisable to establish a budget for the current year and the two (2) years following.
6. Approval of the works by the assembly (if applicable)
The assembly is invited to make a qualified decision (50% of the co-owners representing 75% of the total votes of all the co-owners) regarding any alteration, improvements or enlargement which would affect the common areas (art. 1097(2) C.c.Q.).
7. Approval of any modification to the declaration of co-ownership (if applicable)
For any modifications to the Building By-laws (simple majority), a detailed proposed resolution would generally suffice and it would not be necessary to have a draft of the act drawn up by a notary or lawyer.
For all resolutions which would affect the constituting act, the destination of the immovable or the description of fractions (qualified majority : 50% of the co-owners representing 75% of the votes of all co-owners – art. 1097(4) C.c.Q.), it is further recommended to have the resolution drawn up beforehand by your adviser to avoid any ambiguity or legal invalidity which could prevent its publication.
8. Approval of the acts of acquisition or alienation of immovables by the syndicate (if applicable)
This requires the consent of the qualified majority (50% of the co-owners representing 75% of the votes of all co-owners – art. 1097(1) C.c.Q.) and will have at least an affect on the constituting act. The same remarks as stated above are therefore applicable.
9. Modification of the destination of the immovable
This requires the consent of the assembly according to article 1098 of the Civil Code of Québec :
« Decisions on the following matters require a majority vote of 3/4 of the co-owners representing 90% of the voting rights of all the co-owners:
1° to change the destination of the immovable;
2° to authorize the alienation of common portions the retention of which is necessary to the destination of the immovable;
3° to amend the declaration of co-ownership in order to permit the holding of a fraction by several persons having a right of periodical and successive enjoyment. »
We would advise discussing this with your legal counsel.
For further information on the subject of « destination of the immovable », we invite you to read our text on this subject.
10. Election of the board of directors
Contrary to popular belief, the assembly elects the members of the board of directors, however, unless otherwise stated in the declaration of co-ownership, they do not elect the executive positions (president, vice-president, secretary, treasurer, etc.). In actual fact, it is generally the responsibility of the members of the board to create the executive positions, if they so desire. (art. 335 C.c.Q.).
This portion of the meeting may be reserved for the questions which were submitted by the co-owners (within the delay of five (5) days as explained above – article 1088 C.c.Q.) and also to bring further clarification on any matter discussed during the meeting. Be careful: the topic « miscellaneous » does not permit taking decisions on subjects which were not included on the agenda as per the terms of article 1088 of the Civil Code of Québec unless all the members entitled to be convened are present and consent. Meanwhile, questions of general interest not necessitating a vote may be « discussed » with the consent of the co-owners (art. 348 C.c.Q.).
12. Adjournment of the meeting
Unless otherwise provided for in the resolutions which were adopted, decisions taken during the meeting take effect immediately. The time at which the meeting is adjourned will be noted in the minutes
Under the terms of article 1090 of the Civil Code of Québec, each co-owner holds a number of votes which correspond to the relative value of his fraction. Each co-owner therefore votes according to the relative value of his fraction of co-ownership. When there is more than one co-owner of the same fraction, each of these exercises his vote in the proportion of the undivided share established between them at the time of purchase. These are provisions which a declaration of co-ownership cannot change. It is important to know that parking spaces, for example, if they are considered private portions (with their own cadastral numbers) must also be taken into account when calculating the voting rights of a fraction of co-ownership.
The Civil Code of Québec meanwhile covers certain limitations when voting :
Co-ownerships made up of less than five (5) units
Under article 1091 of the Civil Code of Québec, in a co-ownership which has less than five (5) fractions and of which a co-owner owns more than half of the votes, the number of votes he holds at the meeting is reduced to the total number of the votes to which the other co-owners are entitled.
Co-owners who are in default of payment may attend the meeting but have no right to vote.
Article 1094 of the Civil Code of Québec states in fact that :
« Any co-owner who has not paid his share of the common expenses or his contribution to the contingency fund for more than three months is deprived of his voting rights. »
These co-owners, however, maintain their right to contest a decision (art. 1103 C.c.Q.).
The promoter / developer
Article 1093 of the Civil Code of Québec defines a promoter as :
« Any person who, at the time of registration of a declaration of co-ownership, owns at least 1/2 of all the fractions, or his successors, other than a person who in good faith acquires a fraction for a price equal to its market value with the intention of inhabiting it, is considered to be a promoter. »
Article 1092 C.c.Q. states the following in regards to the reduction of the number of votes :
« No promoter of a co-ownership comprising five or more fractions is entitled, in addition to the voting rights attached to the fraction serving as his residence, to over 60% of all the votes of the co-owners at the end of the second and third years after the date of registration of the declaration of co-ownership.
The limit is subsequently reduced to 25%. »
Proportional reduction of votes
The Civil Code of Québec stipulates that :
« 1099. Where the number of votes available to a co-owner or a promoter is reduced by the effect of this section, the total number of votes that may be cast by all the co-owners to decide a question requiring a majority in number and votes is reduced by the same number. »
Therefore, the total number of votes is reduced proportionally.
REQUIREMENT: SIMPLE MAJORITY, DOUBLE MAJORITY, SPECIAL DOUBLE MAJORITY
Each decision which needs to be taken during a general meeting of co-owners may be subject to different requirements as to the number of votes needed. It may be very difficult in some cases to determine the applicable regulation. For information on the broad guidelines, we would refer you to our text entitled « Voting during a general meeting of co-owners – required majorities ».
You are not in agreement with a decision ?
Any decision taken while not respecting the required majorities or taken with the purpose of amending the declaration of co-ownership in order to modify the number of votes required, contrary to that established by the Civil Code of Québec, is deemed unwritten (art. 1101 C.c.Q.). In the same say, a meeting which has been convened in an irregular manner may also be rendered void (art. 348, 353, 1087 and 1103 C.c.Q.).
Meanwhile, be aware that any decision which you would judge to be biased, or if it was taken with intent to cause prejudice to the co-owners or is in contempt of their rights, or if an error was made in counting the votes, may be nullified by the court if a legal action is instituted in the sixty (60) days following the meeting (art. 1103 C.c.Q).
Can a vote be taken in secret ?
Article 351 C.c.Q. :
« (…)The vote of the members is taken by a show of hands or, upon request, by secret ballot. »
In general, votes are taken by a show of hands. Beware : co-owners always vote according to the number of votes allocated to their fraction of co-ownership, not according to the number of co-owners who are for or against a resolution.
This having been said, it may be possible to proceed by secret ballot by taking such measures as, for example, indicating on the voting ballots the cadastral number and the number of votes allocated to it. After the count is made by the scrutineer, details would be kept sealed in the register of co-ownership in the event that a decision taken at the meeting was contested (or in the absence of a « decision » in the legal sense), it would be possible, with the help of the list of those in attendance and the ballots, to make the necessary verification of the conformity of the vote being contested.
Article 1070 of the Civil Code of Québec states that the syndicate keeps a register of the original of all minutes of the meetings of co-owners, which serves as a record of discussions, resolutions and detailed results of votes.
As decisions taken at the meeting generally take effect at the adjournment of such meeting (following closure of the meeting), it is important to be able to hand in the minutes without delay (handwritten notes by the secretary of the meeting of the decisions taken) and to transcribe these as soon as possible for distribution to all the co-owners (including those who were absent especially !), either in a draft form or in the form of an information bulletin, the information relating to the major decisions of the meeting. For more information, we invite you to read our text Minutes.
We have provided you here with a summary of the purpose and the proceedings of meetings of co-owners.
From a critical point of view, it has been determined that many meetings suffer from weak attendance of their co-owners, hindering the evolution of the co-ownership. This lack of interest by co-owners often cause harm to the common interest. Meanwhile, a board of directors who are « involved » and gestures such as offering snacks and beverages or incentives (attendance tokens, door prizes, etc.), generally have a favourable impact on the co-owners. Think about it !
The information provided on this page is general in nature and cannot compensate for the need to obtain legal advice specific to a particular situation.
 There is, however, an exception to the terms of article 352 of the Civil Code of Québec : « If they represent 10% of the votes, members may requisition the directors or the secretary to convene an annual or special general meeting, stating in a written requisition the business to be transacted at the meeting.
If the directors or the secretary fail to act within 21 days after receiving the requisition, any of the members who signed it may convene the meeting.
This article is often used in the event that a board of directors fails to act.
 Article 346 C.c.Q.
 Article 350 C.c.Q.
 Article 1088 C.c.Q.
 Article 348 C.c.Q.
 Article 1064 C.c.Q.
 Article 1064 C.c.Q.
 Articles 1064 et 1071 C.c.Q.
 Articles 1043(2), 1064 in fine and 1072(2) C.c.Q.
 Article 2729 C.c.Q. « The legal hypothec of a syndicate of co-owners charges the fraction of the co-owner who has defaulted for more than 30 days on payment of his common expenses or his contribution to the contingency fund, and has effect only upon registration of a notice indicating the nature of the claim, the amount exigible on the day the notice is registered, and the expected amount of charges and claims for the current financial year and the next two years.»
 Articles 1087 and 1096 (Building By-laws) or 1097 (constituting act and description of the fractions) C.c.Q.
 Article 1101 C.c.Q.
Mise à jour le Samedi, 16 Août 2014 17:02