Condo Board Infiltrated

Has Your Condo Board Been Infiltrated?!?

In recent weeks, the CBC & The Globe and Mail have written pieces on condominium boards and
governance that reveal some startling facts. 

While most are operating in an efficient and productive manner, it appears as though there are some boards and candidates for positions who are trying to work things more in their own favour than what’s in the best interest of the building & unit owners. 

Several individuals have been accused of aggressively trying to gain control of a few condo boards in the Downtown Core and this has made more than a few condo owners concerned for the future of their investment. 

What I think is more frightening is that there are many condo owners who are not fully educated on
how condo boards operate, what regulations they are required to follow or what as a unit owner, they are responsible for throughout their ownership. It’s scary to think with the average prices of condos at just above $500,000, that more people aren’t fully aware of the responsibilities of owners/boards or how to research a condo properly prior to making a firm offer. 

The Basics: 

In “Ontario, condominium(s) must have a elected board of directors that makes decisions on behalf of the owners. Board members must "act honestly, in good faith and exercise due diligence" and "disclose conflicts of interest in writing.” 1 

The Directors are required to abide by the Condominium Act and are never to put their own interests ahead of the condominium corporation. But it should be mentioned that there are currently no formal training requirements to be on a condo board, so generally the election is open to anyone who wishes to join the board and can secure enough votes from the unit owners. As we’re now seeing in Toronto, there are even a few boards that have elected directors who do not even own units in the subject buildings, which confounds me.

There is also no set limit on the number of terms a board director can serve in Ontario; but each time their term is up the director must re-apply as a candidate for election at the Annual General Meeting. 

The Annual General Meeting is held once per year and is the most important meeting of the year for a condo corporation. It is the opportunity for all unit owners to meet all the directors of the board, see candidates for election and ask questions/raise concerns about the operation of the condo with everyone in attendance, so it’s a vital meeting where every owner should try to attend. 

When unable to attend, proxy votes can be sent out in advance allowing owners to vote on by-laws or elections without being physically present; these votes generally also help keep above the quorum of 25% of the unit owners needed to hold a vote for a new director. 

But, what we are seeing today is a group of individuals who are director’s on a number of different boards now being found to have possibly lied, cheated and forged their way onto boards where condo owners are only now just realizing what has happened and it’s scaring owners. 

The Board has the capability of signing contracts for new major systems/upgrades, property management/maintenance teams, & building repairs which all can add up to costly increases in maintenance fees and can affect future re-sale value if not maintained correctly. The Board can make decisions that can affect your home/investment well into the future, so it’s certainly something you should be thinking about not only at the time of purchase but each and every year that your board holds elections. 

"It's probably the most significant purchase they'll ever make, and they shouldn't be surprised by anything going into it," Brian Antman says, "I see a lot of  people who don't do their due diligence up front, and are surprised."2 

Each condominium operates differently and many of them are currently run by boards with great experience and it might not be anything to worry about. It will however mean that you’ll need to take an active role in your board in at least knowing how things are progressing, where you are at financially and get involved in helping ensure that the important things get done to keep your building healthy and operating at it’s best. Who knows, one day, you might decide to take a board position yourself and maybe even become a Director.

If you still have questions, contact The Real JMcG today! Call me at 416.922.5533 or email me at therealjmcg@gmail.com now.

Sources:
1 http://www.cbc.ca/news/canada/toronto/element-condo-perfect-clarity-1.4116032
2 http://www.cbc.ca/news/business/condo-board-governance-tips-1.4121139
http://torontoist.com/2016/10/condo-boards-toronto-ontario/
https://www.theglobeandmail.com/real-estate/condo-board-battle-string-of-disputes-raises-questions-about-electeddirectors/article34985050/