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- Condos' Financial Structure
- Owners' Money Facts
- Owners’ Meetings and Voting
- Boards of Directors
- Owners' Rights and Responsibilities
- Managers and Management Companies
- Common Problems of Condo Living
- Condo Act, Declaration, Rules, and By-Laws
- What Should Be Done to Improve Condo Governance and Help Owners?
- FAQs About Your Building & Your Unit
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- Links and Bibliography
Boards of Directors
Posted July 27, 2015
If you know of anyone looking to buy a reasonable-size one-bedroom condo in the North York's Yonge and Sheppard area: 625 sq ft, priced to sell, near subway and all amenities, please send them this link:
It should be added that this condo has a good reserve fund, excellent management, and a hands-on board of directors, which is our topic below.
All condos have a board of directors or an equivalent group by any other name, such as a council, depending on the province and territory.
What Are Boards' Duties?
Boards of directors run condo corporations on behalf of owners: They represent owners. As an entity, they are responsible for making all major decisions regarding the maintenance of buildings and grounds, condos’ finances, and must uphold and enforce the Condo Act, the declaration, by-laws, and rules.
It is a prime board duty to ensure that rules and the declaration are applied uniformly and not just from time to time as suits directors or management.
Boards cannot refuse to enforce rules just because only one owner complains that a particular rule is not followed.
Failure to enforce rules fairly and consistently (and follow them) generally leads to problems down the road. These can result in a lowering of the standards of comportment in the building, degradation of civility and property, maltreatment of staff, abuse of power on the part of one or more board members, as well as financial problems—all potentially lowering the value of owners’ units on the real estate market.
(When boards fail to enforce or follow rules and the Condo Act, owners may be able to seek a court order forcing them to comply--under Section 134 of the Ontario Condo Act. However, it should be added that, unfortunately and unfairly so, the Act also permits the condo corporation to charge 100% of any legal fees incurred by the board and the owner in obtaining compliance. This is another example of a useless "right" that owners have in theory but which ends up costing them dearly in practice. Ths is why it would be so important to have a Condo Act that is overseen by a special agency to better protect owners.)
Boards of directors plan and oversee the fiscal health of the corporation and are responsible for hiring a management company to carry out the tasks associated with their duties and day-to-day work.
Boards have to ensure that the staff is humanely treated, is qualified, and actually works; that the management company collects all fees from owners in a timely fashion; that invoices are paid, proper records are kept, the budget is duly prepared, contracts are awarded after a tendering process, and adequate insurance is maintained. Reserve funds have to be sufficient, and annual general meetings carried out. Boards are also responsible for the reliability of status certificates.
Boards have to address residents’ legitimate complaints, make sure that their needs and rights are respected, and that they can enjoy their units peacefully, as per the Act. Boards are also responsible for communicating with residents, and particularly owners, so that owners are informed and feel empowered.
Boards should not turn into exclusive social clubs protecting directors or managers who fail in their duties. Rather, board members owe their allegiance to their condo, the Act, the rules and by-laws. Boards do not represent themselves nor the management: They represent owners and should be accountable to them.
It is the duty of boards to maintain dignity, respect for others and property, and general civility in a condo building or townhouse complex.
Since this website has been posted, countless letters of complaint have been received from owners and many board members regarding abuses on the part of various boards and particularly presidents. To read these letters, please go into the Readers Respond section, or click here for Issues with and then "Harassment" and "Defamation" Redefined.
As well, numerous complaints have been received about managers who refuse to help owners get in touch with their board. It is imperative that there be a special email address or mail box that allows owners to contact their board in each condo. Boards cannot refuse to be contacted. Furthermore, boards should allow owners to make reasonable complaints without threatening them with legal action.
A Good Board:
- Communicates with owners and residents on a regular basis, explains its decisions, openly discusses problems and victories, has a policy of transparency and truthfulnes. Postings on bulletin boards accessible to all residents are key in this respect. Information meetings may take place occasionally.
- Addresses residents' legitimate complaints/concerns/requests and respects useful suggestions.
Lack of communication and disregard for owners and condo assets are at the root of most condo problems. It's the main red flag and it is reflected below in many problems in the section on what constitutes a "bad" board.
- Follows and enforces condo rules consistently and for everyone: Board members have to follow rules themselves if they expect others to follow them and should not show favouritism.
- Exercises due diligence regarding contracts for repairs, maintenance, and staffing. In other words, a good board seeks tenders. When maintenance problems arise, a good board not only seeks advice from non-interested parties (to avoid conflicts of interest), but also asks if there is a better and less expensive solution than the one suggested by contractors. (Click here for Issues of Fraud, Kickbacks and Conflict of Interest for problems raised by readers.)
- Is constituted of members who have no axe to grind or a vested interest or a personal agenda.
- Always respects a condo's finances, assets, and owners' monies.
- Makes certain that the premises are well maintained and that the staff is competent and hard working.
In contrast, according to the letters received,
A Bad Board:
- Rarely communicates with owners on substantive issues and prefers to inform them as little as possible. This seems to be a key ingredient in a lowered quality of life in condos and is reflected in the many other problems that seem to accompany this issue.
- Responds dismissively or angrily when owners justifiably complain to them about problems (such as noise and broken rules) and lack of services (such repairs, cleanliness, garbage, recycling, and odours) or unnecessary expenditures.
- Or, yet, simply ignores owners' concerns.
- Threatens owners with legal action when they complain justifiably or make suggestions; or yet when owners complain about management, staff, and contractors. (See new letters in Abuse of Legal Letters and Liens)
- Mistreats, harasses, threatens, or refuses services to owners who have justifiably complained or made useful suggestions.
- Rubberstamps decisions made by the manager, administrator, superintendent or contractors without independently studying the issue. Does not get quotes for projects or services. (See the new section on Misuse of Funds and Fraud)
- Spends monies for upgrades just to suit themselves, contractors, or managers.
- Refuses owners' requests to view corporation records and documents.
- Does not supervise manager and staff sufficiently. As a result, the work and services may be of lower quality or very little work may be accomplished. Or, yet, the staff is actually the power in the condo.
- Forms a clique, often with management, against owners, and fails to understand that a board represents owners and not themselves nor the management/staff.
What to Do about a "Bad" Board?
Very often, there is not much that owners can do because there is no independent institution that regulates the implementation of the Condo Act.
- Owners can try to requisition a meeting to discuss the issues. (Click here for Requisitioned Meetings).
- If this fails, they may requisition a meeting to replace the board--a more difficult step because of the difficulties in getting votes, especially in condos that have a high percentage of owners who live elsewhere.
- When a board fails in many of its functions, especially in terms of not following the Act and misusing monies, owners can attempt to get a court order of compliance, under Section 134 of the Act. The problem resides in finding a condo lawyer who will be willing to take the owners' case; owners will not be able to count on the corporation's lawyer because he or she will likely side with the board.
How Are Directors Elected and How Many?
The number of directors generally ranges from three in smaller condos to whatever a condo’s declaration specifies. A common and functional number is five and a quorum would consist of three directors present at a board meeting.
When a vacancy occurs on a board because a director resigns, the remaining directors may appoint a temporary director to serve on the board until the next annual general meeting or AGM. At that point, the director has to become a candidate to the elections if he or she is interested in remaining on the board. (Click here for Owners’ Meetings and Voting)
Directors are always eventually elected by a condo’s owners at the AGM or at a requisitioned meeting. A board cannot "eject" or get rid of one of its members and neither can the corporation lawyer, unless a specific by-law exists on this issue--and such by-laws can be dangerous in terms of freedom of speech and can prevent honest directors from trying to fight a corrupt board. Only owners can "vote out" directors or an entire board at a special requisitioned meeting.
In Ontario, condos have one director who can be elected for three years by resident owners only (although the candidate does not need to be a resident owner). This is called “the owner-occupied position.” It should be more clearly named "position voted on by resident owners only." This position is more and more important in view of the large number of non-resident owners who often have little interest in the condo because, for them, this is just an investment.