What Should Be Done to Improve Condo Governance and Help Owners?

There is wide agreement among groups of owners, especially those who have encountered problems, that condos as a category of residence suffer from serious difficulties--as illustrated in the letters posted in Readers Respond.

The problems that plague condos largely depend on the insufficiency of Condo Acts.

But let’s be realistic here: before the Act is reformed, before the government provides oversight, before managers become professionals, and management companies meaningfully regulated ... years will elapse. In the meantime, more modest steps can easily be taken that would nevertheless be most helpful.

Stop-Gap Measures

There are a few urgent changes that could be implemented in the meantime and that do not depend on changes in the Condo Act. Various groups and individuals could act  upon them as stop-gap measures. Unfortunately, this depends on  good will.

Changes for Boards:

  • Boards of directors should be better informed about their legal duties and take them more seriously.
  • Turnovers within boards, for one president to another, should include information meetings between previous president and new president as well as between previous treasurer and new treasurer--as is the case for any large business, which condos are.
  • Owners should be informed that such turnovers have taken place with satisfactory results.
  • Boards should communicate regularly and truthfully with owners and be more accountable to them.

A shift in mentality on the part of boards and managers is needed so that owners are informed more fully and are allowed greater access to documents. Secrecy needs to be replaced by transparency and accountability. Boards and managers should understand that the monies they are spending are owners'!

Changes for Managers:

  • Management companies should become more responsive to condos’ needs and accountable to boards of directors and the corporation (owners).
  • Managers should act ethically, in the best interest of all owners, rather than simply protect their contract with a particular board.
  • Management companies and managers should disclose conflicts of interest regarding companies and contractors. Gifts from these contractors should be substantially reduced and monitored.
  • When there is a change from one management company to another, the new company should encourage its managers to first learn about the building, its past, its technology, its problems and strengths, so as to adapt management practices accordingly and move forward more quickly.

Changes for Lawyers:

We need more firms of condo lawyers servicing condo owners exclusively rather than condo corporations and management companies. This would greatly help reduce potential conflicts of interest. It would also increase owners’ access to legal help and their confidence in the legal system.

  • As well, there is nothing that prevents law firms from rethinking how they serve corporations, how some of their lawyers actually work against the good of corporations by standing by boards who are unethical and turning against hapless owners whose only fault is try to have their rights respected. (Click here for letters regarding Issues with Lawyers)

Legislative Changes Needed 

Below are 5 key changes that would require legislation, particularly via a new Condo Act, in order to effect mandatory changes that would not depend on the good will of boards, managers, management companies, and lawyers. Only the outline is presented here.

  1. What owners need is a Special Condo Board, or Office, or Ombudsman, to supervise and enforce the Condo Act. Lack of government oversight, regulation, and enforcement over the condo industry in general and lack of enforcement of the Condo Act is the key problem condo owners face.

As things stand, owners who encounter problems have no one to turn to for solid information and advice. When problems become serious, owners either have to suffer in isolation or consult a lawyer. And, as we see in many sections of Readers Respond,  consulting a lawyer is no easy matter for condo owners.

  1. The Condo Act itself needs to be updated and strengthened. It carries too many loopholes.
  2. The management industry should be regulated and accredited. In addition, managers should become  professionals and receive a proper formal education. They should be licensed.
  3. Condo boards of directors should become more accountable to their orporation and owners.
  4. Building Code standards should be improved and a new home warrantee program should be strenghtened — click here for How To Explain Noise Transmission?

The details for the above outline can be found in the next section on Legislative Changes Needed to Help Owners. Also see the Legislative Brief submitted to the government to strengthen condo owners' rights.

 

Peace Dove

 

Legislative Changes Needed to Help Owners

What Should Be Done?

We now return to where we left in the previous section where we enumerated 5 basic recommendations that would protect owners and their property.

1. Create Independent Condo Boards or an Ombudsman Office

In Ontario, the Ministry of Small Business and Consumer Services (and  equivalent Ministries in other provinces and territories) should establish an Office with powers to supervise and enforce regulations pertaining to all aspects of condo governance. It has been suggested by various groups that a Condo Ombudsperson position be created.

It has also been suggested that each condo owner pay $3 to 5.00 a month in order to support such an office.

It would be especially important that such offices be staffed by personnel who are not exclusively part of the various condo industries and their lobby groups. Otherwise, current problems will be perpetuated to safeguard these groups' interests to owners' detriments.

A Special Ombudsman Office  would:

  • Provide information to prospective condo owners, owners, tenants, managers, and boards of directors upon request, by phone, online, regular mail or in person.
  • Establish a clear-cut procedure that all parties would have to follow when a problem arises and existing avenues of communication within their condo have been exhausted. This would replace the wasteful and inefficient process of mediation and arbitration.
  • Remedy a situation and force concerned parties, whether a manager, a board of directors, an owner, or a group of owners, to follow rules within a number of days or weeks.
  • Set a body of financial penalties against managers and directors who do not comply with rules and ensure that the penalties are duly paid to afflicted residents or the condo corporation without anyone having to turn to a Small Claims Court. The threat of such financial penalties would go a long way to prevent many situations from arising in the first place. It would also prevent the special Office from being overrun with the arbitration of problems that would otherwise arise.
  • Penalties could also be levied against owners who refuse to follow certain rules, particularly noise, lack of cleanliness, and speed limits in garages. 

2. Strengthen and Update the Condo Act

The Ontario Condo Act of 1998, which became effective in May 2001, is certainly a vast improvement over the two previous ones. However, it needs to be readjusted as problems have been discovered. Changes are suggested based on the contents of the letters received.

Clarify and Strenghten Owners' Right of Access to Condo Documents

Although this right is already included in the Act, it is not uniformly upheld. Therefore, the Act should clearly specify that all owners have access to relevant condo documents, without their having to provide a reason for their requests.

As well, a specific time should be suggested, such as one week for documents that pertain to the current fiscal year.

Obligate Boards to Post Reports About Board Meetings

This suggestion is in reaction to the widespread problem of lack of information that afficts tooo many condos in Ontario--and other provinces. These reports should be informative rather than vague: They should include more than a list of items on the agenda but describe the decisions reached as well as the rationale.

Include Financial Penalties 

It does not help the situation that there are no financial penalties for boards of directors and managers who do not follow rules themselves or who do not enforce them. As things stand, many boards and managers are not even familiar with the rules of their condo. Others simply do not take them seriously because they are well aware that they can disobey them with impunity. Nothing will happen to them!

But if financial penalties were enacted, and individual board members and managers rather than the condo corporation were responsible to pay, then it is certain that this news would spread like wildfire—and compliance would be forthcoming. Owners would be better protected.

Penalties should apply, not only for the $500 for refusal of access to condo records, but for refusal to allow owners to requisition a meeting, for not posting information regarding board meetings, as instances.

It is doubtful that penalties would discourage people from becoming directors because, once penalties are well known and once a Special Condo Office would enforce rules, directors would simply comply. In fact, their duties would become more clear-cut and there would be less confusion among them and owners.

For instance, there already is a $500 penalty given to an owner who is refused access to condo records within a timely delay. The problem with this is that the penalty is paid by the corporation and not the person who refuses. Therefore, it is not an incentive for compliance. Furthermore, the current process is simply inefficient and too hard on owners: It is oppressive and discriminatory.

Oppression

 

In the Act, the onus to seek redress is on owners who have been deprived of their rights. This onus should be lifted from their shoulders because it is an unfair burden that owners of other types of homes do not have. In essence, it is discriminatory.

It is interesting to note that the Strata Act of British Columbia allows for small financial penalties when owners break rules. It would be helpful if this were applied in Ontario because rule breaking on the part of owners is a problem for managers, boards, and other owners. Rule breaking can threaten the civility of a condo. 

Clarify and Standardize Declarations

Currently, condo declarations, which owners may need to consult to see who is responsible for the replacement and maintenance of their personal-use common elements, are too difficult to read. In addition, they differ from condo to condo.

Instead, declarations should be written in plain English rather than the obtuse one or the legalese parlez-vous anglais that is current.

In addition, declarations differ from condo to condo. For similar types of condos, all declarations should be the same. Not only would this be helpful for owners but it would also make the life of managers easier. This would be particularly useful when it comes to deciding what is an exclusive-use common element and who is responsible for maintenance and replacement.

Delineate Condo Lawyers' Role

Here, one should refer to the many problems brought to our attention by owners whose boards or managers have used lawyers to oppress them. Or who were deprived of their rights at AGMs when a lawyer stands by an unethical board or prevents owners from using their right to free speech. Click here on Issues with Lawyers and Abuse of Legal Letters and Liens. The role and duties of condo lawyers should be more clearly delineated in the Condo Act.

As well, groups of condo lawyers should have practices with only condo owners as their clientele so as to avoid the many situations where lawyers' main clientele consists of boards and managers; owners then have no recourse.

Finally, a corporation lawyer should hear out an owner who has concerns about fraud, illegal practices, or other issues in the condo. The lawyer should then look into this situation and, at the very least, advise the board or manager accordingly.

Reduce Difficulties Faced by Owners When Trying to Requisition a Meeting

It has become too difficult for owners in large condos and, especially, in condos with less than 70% of resident owners, to requisition a meeting for various purposes. This issue is particularly difficult for owners who requisition a meeting with the purpose of changing a board who is not accountable.

  • The Act requires that a requisitionist obtain the signatures of 15% of suites' owners. This becomes nearly impossible in large condos, especially with a majority of absentee owners. It is suggested that this percentage be lowered to 10% depending on size and/or proportion of absentee owners.
  • Even if a meeting is successfully requisitioned, many boards and managers prevent them from occurring. A financial penalty should be imposed, paid by the individual directors and managers. Such a penalty would go a long way to prevent this situation from occurring.
  • When the goal of a requisitioned meeting is to remove a director or an entire board, an affirmative vote from a majority of all suites (not just those present) is required. In a condo with 300 suites, this means that a minimum of 151 affirmative votes has to be found. This is practically impossible to achieve. It is suggested that an affirmative vote from 66% of owners present at the meeting--whether in person or by proxy--be necessary instead,  provided that the same as for AGMs is required. This new calculation would require only 75 owners to be present and a 66% affirmative vote of 50 would settle the issue.

The burden of rectifiying a situation in a condo always falls upon resident owners.  It is only fair that these resident owners not be overly burdened with work and suffer from "political" hassles when time comes to requisition a meeting and obtain affirmative votes. Owners should not be so heavily penalized when they attempt to right a wrong.

The writers of the current Condo Act had certainly not anticipated that a large proportion of Ontario condos would be owned by investors rather than resident owners.

3. Management Should Be Accredited and Managers Licensed

This is discussed at length in the chapter on Management. Click here for What Should Be Done To Improve the Management Situation?

4. Condo Boards Should Become More Accountable to Owners

How to improve boards is discussed at length in the chapter on boards. Click here for What Is a Good Board? as well as What Should Be Done To Improve Boards?

5. Improve Building Code Standards

Particularly needed here is higher standards of construction in terms of protection against noise from other units and from mechanical rooms as well as elevator shafts and party rooms. Indeed, website pages on noise problems are one of the most frequently consulted.

As well, the quality of other materials, such as pipes, should be raised. Particularly worrisome are plastic pipes that are not strong enough and too small.

Problems with Liens

Below are suggestions that would help improve the situations regarding liens.

  1. The necessity to lien a unit in arrears in common element fees before the 3rd month expires should be extended. Condos should be able to recoup all arrears up to 6 months after they started. This would give managers more flexibility. It would also help owners who are under financial strain.
  2. The Act should make it standard that, in all condos, owners who do not do proper maintenance and repairs of their exclusive-use common elements and, as a result, force the corporation to carry these out, should be liened if they refuse to pay. As things stand with Sections 91 and 92 of the Act, the declaration of a condo has priority in this respect and this becomes an object of confusion for all concerned.
  3. It would also make matters easier if a lien could be registered against an owner who does not pay rental fees for lockers, guest suites, and parking spaces that belong to the corporation.
  4. Above all, we have seen in Abuse of Legal Letters and Liens that owners need recourse when unfairly liened. Therefore, the situations that can result in a lien should be more clearly delineated.
  5. One could even suggest that, when an owner is the victim of an improper lien, a simple recourse should exit and the offending lawyer should pay all fees with an appropriate penalty, which would then act as a deterrent.