Understanding the 10% Rule and When Owners Must Be Consulted
Under the Ontario Condominium Act, 1998, boards cannot make major decisions affecting the building, common elements, or finances without following specific legal steps.
These are called “significant changes.”
If a proposed project or policy meets this threshold, the board must notify owners, and in many cases, get owner approval before proceeding.
1. The 10% Rule: The Financial Test for “Significant Change”
Section 97(4) of the Condominium Act sets a clear rule:
If the cost of a change is greater than 10% of the annual budgeted common expenses, it is automatically considered a “significant change.”
Example:
- If the corporation’s annual budget = $1,000,000
- Any change costing over $100,000
- Triggers the significant change process
This means the board cannot approve the project on its own – it must notify owners, and in some cases, call a meeting and hold a vote.
Typical examples:
- A $1.2M boiler replacement
- A $1.5M window retrofit
- A $3M garage reconstruction loan
When these costs cross the 10% threshold, owners must be consulted.
2. Beyond the 10% Rule: Other Significant Changes
Even if the cost is under the 10% threshold, a project may still qualify as a significant change if it:
- Alters the use or appearance of common elements
- Affects owners’ access, enjoyment, or rights
- Involves long-term financial commitments
Examples:
- Turning a storage room into a rental gym
- Replacing all balcony railings with a different design
- Installing electronic key fobs and removing physical keys
- Redesigning lobby layouts or garage spaces
These changes impact how we live, use, or pay for the property, so owners still have a right to be consulted.
3. What the Board Must Do Under the Act
When a project qualifies as a significant change, the board has legal obligations under Section 97:
Step 1 – Notify Owners in Writing 📨
The notice must explain:
- What the change is
- Why it’s being proposed
- The total cost and funding source
Step 2 – Call an Owners’ Meeting (If Required) 📅
For many significant changes, the board must hold a meeting where owners can review details and ask questions.
Step 3 – Seek Owner Approval by Vote 🗳️
For changes exceeding the 10% threshold or those materially altering common elements, the Act often requires a majority vote before proceeding.
Failing to follow these steps is a violation of the Act and can be legally challenged.
4. Why This Matters to Owners
When the board ignores these rules, the consequences are serious:
- Your reserve fund can be drained without approval
- Special assessments can be forced on owners without consultation
- Multi-million-dollar projects can proceed with zero transparency
- Owners lose their legal right to participate in decisions
Understanding the 10% rule and your rights under Section 97 gives you the power to:
- Ask the right questions
- Hold the board accountable
- Protect your property value and financial interests
5. The Bottom Line
A “significant change” isn’t about small repairs or routine maintenance.
It applies when:
- The cost exceeds 10% of the annual budget, or
- The change materially impacts how we use, see, or pay for common elements
For anything meeting this threshold, the board must:
- Notify owners
- In many cases, hold a meeting
- Sometimes get a majority vote
If the board pushes through multi-million-dollar projects without consulting owners, they’re breaking the Act – and owners have the right to challenge those decisions.
📰 For more resources, rulings, and real examples, visit CondoTribune.com.
📣 Because knowing your rights is the first step to enforcing them.
👉 If you believe your rights have been violated, contact us confidentially through the Condo Leak Tipline at www.CondoTribune.com/tipline – your story matters, and you’re not alone.
📝 While we are not lawyers, we’ve spent years learning the Condominium Act, tribunal process, and case law – and we’re here to help point you in the right direction.
Disclaimer: This post is for general information purposes only and does not constitute legal advice. For legal guidance specific to your situation, please consult a qualified lawyer.
