The importance of the board of directors of a condominium corporation

Condominium Corporations are not run by a single entity. Currently, a Condominium Corporation has 3 heads of government: the owners, the board of directors and the Property Managers. The Board of Directors plays a crucial role in this relationship, as it essentially manages the Condo Corp on behalf of the owners. They represent the owners and are responsible for virtually all major decisions related to the finances of the condominium, maintenance of the buildings and grounds, defense and compliance with the Condominium Law, the declaration, as well as the rules and statutes. As a result, the assignment of the right board members is crucial.

What’s interesting is that no special skill sets, knowledge, or certificates are required to serve on the board. The Condominium Law simply establishes that the condominium corporation must be governed by a board of directors made up of at least three directors who are:

A.) At least 18 years of age

B.) Mentally competent

C.) You cannot be bankrupt

Not have a recorded lien against you that has not been discharged within 90 days prior to the election. What’s more interesting, and some would say downright surprising, is that someone with a criminal record could, in fact, become a director. For anyone considering condominium unit ownership, the level of competition on the board may be concerning to you. Don’t worry, you’ll have your say in determining qualified candidates.

Only owners can “vote up” or “vote down” on directors, or an entire board in rare cases. They would do so at the AGM (Annual General Meeting) or at a requested meeting (a special meeting usually called or requested by the owners, or by a single board member, or several members). When a vacancy occurs on the board, if a member were to resign, for example, the remaining members can nominate a “temporary member” to take their place until the next General Meeting. At that time, the designated member will become a candidate for election if he wishes to remain on the board. But the owners have the last word.

In accordance with the Condominium Law, the directors of a condominium corporation are subject to the standard of “the care, diligence and skill of a reasonably prudent person.” They are expected to act in the best interest of the owners and the building, and are expected to ensure that rules and statements are applied evenly and consistently. Boards cannot refuse to enforce the rules, even in the rare case of only one owner filing a complaint. Not enforcing the rules usually leads to a host of problems down the road, and financial problems are just one of many potential results. Ultimately, these issues can lead to decreased resale value of the owners’ units.

Since the requirements set forth by the Condominium Law are so vague and vague, owners may find themselves working with a “bad board” that does not appear to have the owners’ best interests in mind. One possible solution is for a condominium to pass a statute that provides details in terms of who can be elected to the board, as long as this statute is within the scope of the Act. For example, it can specify that “all directors must be owners” since the owners have a vested interest in the welfare of the condominiums.

When boards fail to enforce or follow the rules, owners can exercise their right under Section 134 of the Ontario Condominium Act, which allows them to seek a court order that would compel the board to comply. That being said, the Act unfairly allows the condominium corporation to collect 100% of the legal fees incurred by the board and the owner to obtain compliance. In turn, seeking such a warrant can end up costing homeowners an obscene amount of money.

Likewise, the Board of Directors is responsible for hiring a management company. Property managers can be thought of as the “arms” of the board of directors. They perform most of the tasks required to keep a building in order, including but not limited to: collecting all fees from owners in a timely manner, ensuring invoices are paid, keeping proper records, maintaining adequate insurance, providing policy and procedure related recommendations, carrying out compliance based on policies and procedures, handling tasks associated with maintenance, and much, much more.

Assigning the right board members is absolutely crucial to the success of the owners. The board represents the owners and, as such, is accountable to them. A good board will communicate clearly and openly with owners, address resident complaints, follow and enforce rules, maintain an orderly building, and ensure the fiscal health of condominium corporations.