Boards of Directors

  

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 Boards of Directors 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:

  1. 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.
  2. 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.

  1. 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.
  2. 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.)
  3. Is constituted of members who have no axe to grind or a vested interest or a personal agenda.
  4. Always respects a condo's finances, assets, and owners' monies.
  5. 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:

  1. 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.
  2. 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.
  3. Or, yet, simply ignores owners' concerns.
  4. 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)
  5. Mistreats, harasses, threatens, or refuses services to owners who have justifiably complained or made useful suggestions.
  6. 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)
  7. Spends monies for upgrades just to suit themselves, contractors, or managers.
  8. Refuses owners' requests to view corporation records and documents.
  9. 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.
  10. 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.

  1. Owners can try to requisition a meeting to discuss the issues. (Click here for Requisitioned Meetings).
  2. 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.
  3. 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.

What Are Directors' Qualifications?

In a nutshellf, very few qualifications are required, except for willingness to learn and honesty.

The Condo Act of Ontario only specifies that directors have to be 18 years or older, not in bankruptcy, and do not have a lien registered against them that has not been discharged 90 days prior to the elections. The other surprising aspect is that someone with a criminal record can in theory become a director.

Raccoon Thief

However, a condo can pass a by-law that will be more specific in terms of who can be elected to the board, provided that this by-law is within the purview of the Act.  For instance, a by-law may require that:

  • all directors be owners. This makes sense because owners are more interested in a condo’s welfare than non-owners would be;
  • or  all directors be either owners or the spouse of an owner, or the adult child of an owner, or the parent of an owner (many adults buy condos for their parents or grown children);
  • all directors be residents;
  • no director shall be an employee of the corporation, such as a superintendent, a manager, a security personnel, in order to avoid conflicts of interest and problems in the line of authority;
  • no two members of a same family be on the board.

However, in deciding to restrict who can be a board member, a board should be concerned that, in so doing, there will remain a sufficient number of interested owners. For instance, if, in a condo, most owners are non-resident, the third option above may present a huge problem.

It is generally very difficult for condos to find good candidates for boards.

In fact, often there is only one candidate for each vacancy on the board. In such a case, the candidate is "acclaimed" at the AGM, not actually elected. These are elections by default! This also makes it easy for a bad board to bring in its own candidate and perpetuate itself, to owners' dismay and feelings of powerlessness.

Perhaps a more relevant question to ask is, What is a Good Board?

Officers' Duties

The difference between directors and officers is this: Directors are board members elected by owners. Officers are persons appointed by the board to fulfill certain functions--they generally are directors. Hence,  usually all officers are directors, that is, they are appointed from within the board elected by owners.

A director who is an officer can be removed as officer by the board; he or she can then decide whether or not to remain on the board as a director. However, boards cannot remove directors unless they requisition a meeting of owners for this purpose.

A condo corporation must have three officers: a president, treasurer, and secretary. This is the minimum. Many also have one or more vice presidents. In Ontario, of these officers, only the president has to be a board member elected by owners.

A board member can combine two functions. For instance, a president can also be the treasurer, as these two functions complement each other. Or the secretary can also be the treasurer.

A board can appoint officers who are not on the board when directors do not have the time or the willingness to be treasurer or secretary. It is preferable that all officers also be directors: External positions can present problems of confidentiality.

The PRESIDENT’s role resides in the general supervision of the business and affairs of a condo corporation. Efficient presidents are “movers” who present issues and projects to their board, develop policies for board approval, communicate with residents and owner, are faithful to the declaration and rules, and inspire boards to move ahead with projects and solve difficult issues.

In other words, efficient presidents are leaders on behalf of their boards and owners. They inspire trust among owners and board members. They also try to establish links with various organizations in their neighbourhoods. Presidents oversee managers’ duties and activities. As well, they chair board meetings and owners’ meetings.

One aspect of the potential duties of a president that is little known is that he or she can become the condo’s manager when a board decides not to hire a manager or when a condo is too small to afford one. (Click here for Self-Management)

However, a president or a director who becomes the manager may want to hold only the position of manager in order to avoid conflicts that could arise in being both the employer and the employee.

The VICE PRESIDENT may perform some of the president’s duties if they so agree and replace him or her when absent. Similarly, the vice president may chair meetings during the president’s absence.

The TREASURER is responsible for the finances of the condo, including making sure that the financial statements are accurate, the budget is done in a timely fashion, and the reserve fund is sufficient. The treasurer may also be responsible to present to the board a plan for the investment of funds.

Budget

The SECRETARY is generally the custodian of the corporation’s records. The secretary is responsible for minutes taken at meetings (although he may not be the one who takes them), and for notices sent to residents for the annual general meeting. In actual practice, this role of secretary is often partly carried out by a president or a manager.

Board Meetings

Boards should have meetings regularly, preferably monthly. It is not advisable for factions on the board to meet unofficially and exclude some members. Decisions made during such “meetings” are not valid

Similarly, when directors resign and no quorum exists, new decisions can no longer be made and the remaining board members need to requisition a meeting for the purpose of electing directors. (Click here for Requisitioned Meetings)

When one board member is absent at a meeting and a vote is a split one (half for a motion, half against), then the motion is defeated and cannot pass.

An occasional board meeting may be held via email or teleconferencing, but only if there is a quorum of directors and if they participate simultaneously.

When an email vote takes place between board meetings, the issue voted upon should have been discussed at a previous meeting. For instance, a board may have agreed to go ahead with some structural repairs but decided to postpone the vote pertaining to the choice of a contractor pending more information obtained by the president. When this information is available, it is sent via email and a vote can take place.  This vote is then appended to the next set of minutes.

At times, a director cannot attend a meeting. He or she may tell the president that he is voting for (or against) a particular issue that will be decided at the meeting. The board, fearing the consequences of displeasing this director, then adds his vote to the count. This is not a valid procedure.

Board meetings are for directors. Managers generally attend to provide information, present their report in person, and receive directions. However, managers’ attendance is strictly a board’s decision—not a manager’s prerogative.

In Ontario, owners may attend board meetings only with permission of the chair. This varies in other provinces. For instance, in British Columbia, owners may attend council [board] meetings as observers. 

Documents and Agenda

According to the Act, a notice of a board meeting with the agenda has to be sent to directors 10 days before each meeting. But this isn’t exactly realistic and most boards receive the notification package a few days before because dates for meetings are often scheduled a few months in advance or at the end of each meeting.

The usual documents accompanying this notice are the agenda, the minutes of the previous meeting, the latest financial statement, a manager’s report, and photocopies of bids when contracts are discussed, as well as correspondence addressed to the board.

The agenda is fairly standard and contains items such as: approval of the minutes of the previous board meeting, business arising from these minutes, question period and approval of the latest financial statement, business arising from this statement, manager’s report, other business (such as contracts, budget), and correspondence received and sent.

Can owners read the minutes? Yes, absolutely. Click here for Right of Access to Condo Records. Unfortunately, this is easier said than done: Being refused access to condo documents, such as board minutes, is one of the most frequent complaints made by this website's readers.

Condo Acts should actually require that boards post a report of each of their meetings summarizing their decisions and the rationale. This would increase transparency and accountability. It would also normalize owners' right to information.

Decisions Reached

When motions are moved, seconded, and voted upon, each board member has only one vote, including the president. A simple majority carries. The vote generally proceeds with a show of hands. However, secret ballots can be held when requested by a director.

A board member who believes that a decision is made without due diligence or in bad faith may request to have his or her objection or dissenting vote recorded in the minutes. This is actually important in the event of arbitration or a law suit or if owners requisition a meeting to vote directors out based on a board decision that lacked due diligence.

Once a decision is reached, a member who disagrees has to rally behind the board: This may not apply if the other directors acted in bad faith, such as refused to follow rules or took a decision that benefits some groups over others, or did not do due diligence, such as took a decision without proper documentation or a tendering process, or, yet, when a board votes to write an offensive letter to an owner who puts forth justifiable complaints. In such cases, a dissenting board member certainly should have his dissent recorded. Or that director may resign or yet requisition a meeting to inform owners or find another way of informing owners—which is not easy.

The fate of the one or two board members who justifiably disagree may not be a pleasant one. There have been cases of board members who make the life of a dissenting director very unpleasant, who go behind his back, who instruct the staff to refuse to give him usual services to which any owner has a right, and who may spread rumours about him or her. When it is the president who is the dissenting party, he or she has just about the same unpalatable options...!

One president had to sell his suite and move out because, after he resigned from an unethical board, the manager instructed the staff to be unpleasant to him and his wife; remaining board members would stare at them in the elevators and even openly laugh at them. Other residents who were trying to secure favours from the board joined in this maltreatment. The amazing end of this pathetic story is that he and his wife moved to another condo where they knew that the board was ethical. Eventually, he became the president of this condo... and lived happily thereafter... while the other condo suffered a series of material damages as a result of the lack of due diligence on the part of that board and the divisiveness among owners. Some sort of “poetic” justice!

For additional problems pertaining to boards, see letters in Issues With Boards of Directors.

Despite these problems, overall, having boards of directors who are owners run condos is still the best solution because owners are the best persons to represent their own interests.

However, boards' duties should be more specifically spelled out in the Condo Act; especially, the Act should provide more safeguards so that owners are better informed by their boards and so that these boards are more accountable to owners.

In other words, both owners and directors could use some help from the government to prevent problems of governance from occurring (click here for What Should Be Done to Improve Boards? A Condo Ombudsman would be especially useful.)

What Should Be Done to Improve Boards?

To begin with, the Condo Act has to tighten up the rules of who can become a director on condo boards. After all, condos are multi-million-dollar businesses, and the Act does not even require a background check to root out persons with criminal past. One can well imagine that, at least in theory, condo boards would be tempting positions for persons with fraud on their mind or in their past, or other proclivities that may be known to the police.

What would improve boards of directors' efficacy, ethics, and respects for owners' rights are:

  • Better government regulations, support, and enforcement--such as a Condo Ombudsman
  • Better understanding of condo rules, owners' rights, and financial issues by directors
  • Penalties to act as deterrents
  • Regulated management companies
  • Professional and licensed managers who are educated accordingly
  • More information given to owners about their rights and responsibilities

There is actually nothing inherently wrong with boards of directors that more oversight and better protection of owners would not cure. In fact, there is a lot of good with boards and this is a great civic commitment. They need more structure and institutional support. 

See also What Should Be Done to Improve the Management Situation. and Condo Political Action for Legislative Changes.

Other Questions About Directors

Is Being a Director Much Work?

It depends on the type and size of the condo and on the qualifications of the manager. Generally, directors attend one meeting a month. Preparing for and attending the meeting takes about three hours. That is all that is required of directors who are not officers.

The secretary may need 1-2 hours a month to do the minutes unless the manager is contracted to take them. The treasurer requires a couple of hours a week. The president needs to spend a minimum of 5-6 hours when there is a mature, ethical, and experienced manager who can do the planning as well as the day to day duties--and does not have conflicts of interest that could be costly to the condo.

But, with a less experienced manager, or a less conscientious one, presidents spend 10 to 15 hours a week and more when special projects are being researched and planned. (Click here for Problems of Conflicts of Interest, Accountability, and Qualifications). Again, a president’s hours are purely his or her own choice—nothing is set in stone. However, a canvassing of presidents has revealed that, on average, they spend 9 hours a week on their duties.

Is It an Interesting Position?

Being a board member is certainly interesting but only to the extent that each person on the board makes it so. There is a great deal to learn (about rules, the mechanics of the building, what contractors do, and legal issues) and this makes the work challenging.

It is a volunteer position. Studies have found that volunteering one’s time for a worthwhile cause is actually good for a person’s mental health.

It can, however, become unpleasant and stressful when colleagues on the board stand only for their vested interests or egos, are quarrelsome, aren’t interested in achieving anything, or are uninformed. It can also be darn right unpleasant when there is a lack of leadership and residents are “all over the map” making demands and refusing to act responsibly. 

The downside of being a director on a condo board is that one becomes a volunteer in one’s place of residence rather than in an outside agency. As a result, animosities often arise. Directors’ lives can become unpleasant in condos that have a lot of problems. And directors can also make some residents’ lives very unpleasant, indeed.

Overall, most problems, when they exist, arise because of a lack of proper communication. Boards who communicate effectively, respectfully, persuasively, and regularly with owners generally experience few, if any, problems.

Are Directors Paid?

Not generally because being a director is volunteer work. If a board wants to be remunerated, a by-law has to be enacted and voted at a meeting by a majority of owners of units in the condo. Such a by-law is valid for only three years and has to specify the remuneration level to prevent abuses.

Take-outs, dinners, and social occasions for board members paid by the condo also have to be set in a by-law. For instance, board members in some condos go to restaurants together with their spouses a few times a year... at the condo’s expense. So far, few dare to complain openly and it is surprising that auditors have not caught on more often, perhaps because "petty cash" is used for these occasions.

Much of the rewards one gets as a board member are intrinsic. That is, it’s a form of altruism and one feels psychologically rewarded for doing a good deed and contributing to the community. This does not mean that directors can’t get together with their spouses and enjoy great dinners—provided they pay for them.

Do Directors Have Privileges?

Being a director is a privilege and an honour. However, inasmuch as directors have access to confidential information and have a say in how their condo turns out, then these certainly are privileges that other owners do not have.

In some condos, abuses occur--often by the spouses of presidents or treasurers--and some are detailed in the new section on  Misuse of Funds and Fraud. Others are found in the letters in Readers Respond.

Examples of abuses:

  •  A president uses the boardroom to meet his business associates.
  • A treasurer has a room repainted by the condo’s painter and this goes on the invoice of a painting job that is ongoing.
  • A president uses the condo lawyer to go on a witch hunt against owners who may disagree wth him.
  • A board member uses the guest parking “because it’s easier” when he returns home from work (residents are not allowed to use visitors’ parking).
  • The president's spouse redesigns the lawn in front of their unit--even though it is a common element.
  • A treasurer has the superintendent come to his suite regularly and free of charge to change light bulbs, paint touch ups, wallpaper hanging, etc.
  • Another president's spouse builds an elevated deck in the common element backyard, which intrudes on the privacy of the neighbours.
  • A president has the security personnel tell him about the whereabouts and activities of some residents he particularly dislikes. This goes against privacy laws and is a misuse of the security cameras.