Issues with Boards of Directors

60% of the letters received are about problems caused by boards. But just over 50% of these also mention the manager as part of the problem. Most of the letters posted in the other sections are also related to issues surrounding boards (and especially managers).

Letter: Hello, Can you please let me know if it is legal for a board to keep running large budget surplus, like $475,000, and each year the fees go up at the rate of 10% even though there is all this cash in the bank that does nothing except serves as a piggy bank for “small” things that the board decides to spend on that they haven’t budgeted for and this happens several times a year even though our budget is sufficient and the reserve fund is excellent. By the way our budget is $1.1M and by now our fees are the highest on the block. We are starting to have problem selling our units because the fees are too high. Appreciate your time.

—September 2013, Ottawa area

Letter:  One question that I hope you will have the time to answer. We are not rich people living in my condo but the fees are increasing by about 7% each year even though the board is sitting on a surplus of over $375,000 for a 100 or so units condo. Every year they increase this surplus because they spend it on luxuries that we don’t need and that they don’t put in their budget. They don’t know how to budget or they don’t care, I don’t know, but this is not fair to us because our lobby looks like it belongs in a catalogue for the super rich, for instance, and the gym that only the board use is another designer place full of gadgets. Many owners want to sell but they can’t because our fees are way too high. Isn’t there a law that prevents this? 

—September 2013, Toronto

Letter: [This is an abbreviated letter that was sent by an owner to the Minister of Consumer Affairs with a copy to this website. This letter describes a dishonest board and manager.] The Board ... together with the property management has absolute control. People say, "run for the Board." But it has been my experience that the Board only allows people that they can control win. For 15 years I have asked for the monthly financial transactions. I was told such information did not exist. I know now it does... It is difficult to obtain minutes of Board meetings, even though they are heavily censored and contain no financial information. Asking for financial information puts you in the firing line of the Board and Property manager. I have been harassed, intimidated and called derogatory names by the on site manager, the Board and the property manager [he told the Minister that he was called "a piece of shit" by the manager.]

The Board has lied to the owners about the costs of major renovations.The Board has not followed proper procedure in spending 100's of thousands of dollars on cosmetic renovations.The Board has not followed proper business practice in awarding contracts. An example of this was the repaving of the parking deck at a cost of over $300,000 in 2005. I asked for the three tenders. They gave me the contractor that got the contract but the other 2 were false because I checked. One of the contractors they gave me for a major paving job was an eaves trough installer.

[sentences skipped] the president and past president loaned the corporation 50,000$ each at a higher interest rate than the bank. Between 1989 and 2005, 3 roofs were put on this 14 story building. When asked about guarantees, there was no reply.There have been at least 3 roofs put on the pool building. The pool building exterior wall has been replaced 2 times in the last 10 years.When there are major costs for renovation the Board has circumvented the borrowing restriction by borrowing from the contractor at high rates -8.5% rate of interest.

Many people have moved because of the actions of the Board—intimidation. The Board uses its well paid legal team to thwart any action. It also uses threats of legal action even when not legal. It is difficult to live in a building when you never know when the manager might show up and call you names. [sentences skipped] I have reported my concerns to the Ministry. The Ministry did call but said they had no mandate to intervene. There is no doubt that self-regulation has allowed Boards to control every aspect of the condominium corporations. The fact is that they are not accountable to the owners under the present system....

Do I believe that besides the poor business practices evidenced in this building that there is a pay off under the table to the Board, the building manager and the property manager — YES. Why do I believe that?

1. The property manager has lied about availability of financial statements.
2. The property manager told me in his office that he would do whatever it takes to stop me from gaining the financial information that it is my right to see.
3. The Board goes along with him. They impose a cloud of secrecy aver all operationsof the Board. If you volunteer for a committee--like beautification--you are sworn to secrecy about all deliberations.
4. The on site manager asks for kickbacks if you want a contract to do work here. I can prove that if we ever get to court.

—January 2013, London-Windsor area, ON

Letter:I am new on this BOD and I want to do well by the owners that elected me and I have a question. The BOD wants to pass a by-law that would ensure confidentiality (we would have to sign a confidentiality agreement), meaning that no director can talk to owners about what we discuss at meetings or else be thrown out. To me this means that I can’t inform owners of anything that they should know and actually they have the right to know and they can get the board minutes. There seems to be a contradiction here and with the Condo Act. The other by-law that has been presented to us by this CCI lawyer would allow the board to get rid of a director that is disruptive, or such other t term. I understand that it can be difficult to have a disruptive director but I also feel that I could myself come to be seen as “disruptive” if I decide to go against these propositions and decide to ask some serious questions, also because this board is spending a lot of money on upgrades, way too much and the lawyer is backing this up, and this board doesn’t believe in supervising the manager and the staff so they do pretty much as they want and this is detrimental to our money.I think that this board thinks that they will be well judged if they spend money.Lots of worries here.Can you advise me?

— January 2013, West of Toronto

Answer: This seems to be a new trend with one law firm in particular and you are correct in both points....A few lawyers are getting bolder and bolder: I see it in the letters I receive.Only owners should be able to get rid of directors they have elected. These by-laws are meant to divide and conquer: they will create conflicts within boards and with owners, and what a windfall for the law firm that pushes these by-laws!I have also noticed that the few condos so far that are doing these by-laws also have other problems with their boards, generally with the president: Problems rarely come in isolation.Vote against it, try to convince others to do the same, and if you lose, stay calm and, at the next AGM, try to find someone else to take the place of the one or two directors whose terms may be coming up and who are forcing this—someone with a good sense of ethics and a duty to owners. Seems that your board is trying to leave a “legacy” of spending!

Letter: I am a former condo president and several months after I was elected I discovered by accident that our manager had been let go by another condo for taking kickbacks and had been transferred to us by her same management company. So I started to carefully review our invoices but couldn't see anything because I am no expert, but at the same time I could see that she was thick and cozy with someone in the company that she had suggested as our main contractor to install new [deleted]. A lot of money was involved so I talked to another president I used to see occasionally at political meetings and he gave me the cold shoulder. [several sentences skipped] Then I learned from someone else that this same president's son had been a manager that had been let go at another condo for padding up invoices and then had started a management company of his own.

— January 2012, Mississauga, ON

Letter: My condo has a president (and an entire board, it seems) that are very divisive. Because they just don't seem to do their duty and force the manager and superintendent to work harder to keep the place clean and odor free and other issues, such as not spending our money on additional staff when the ones that we have can't even work. Can't they see this? And when we owners ask the board to do reasonable things at the AGM, what they do instead is have their wives and husbands and themselves try to bash the former president with silly defamatory accusations that they make in sneaky ways in the president report or during the question period. I am sure that their few friends are delighted with this but this is backfiring for a lot of us as we used to appreciate the previous president and we see through this. Very few owners participate in anything that this board tries and especially few of us now attend the AGM because we really don't trust this board; besides, it seems that it is the manager and not the board that is running the show along with the suppliers. I guess that their motto is Divide and Conquer. But all they are doing is lowering the value of our property and our quality of life. Who are they kidding?

— January 2012, Toronto

Letter: My condo has 3 members on our board and two are married to each other and live in the same unit. Is this legal because it gives too much power to a couple that runs the condo as if it was their medieval kingdom?

— January 2012, London, ON

Answer: Unfortunately, it is legal unless your condo has passed a by-law preventing two members of a same family from being on the board. But it does not mean that this is a desirable situation: The potential for a conflict of interest is too high. Owners should present another suitable candidate whenever one of these positions ends. This is a more common occurrence than I would have thought and the results are never good.

Letter: I was elected to the Board and was the first new member that this Board had had in 8 years. They never accepted me, never considered what I had to say, had meetings without me and I was totally isolated especially as this Board was very proud of the fact that they have a close relationship with the manager and all the contractors and even the lawyer; in turn, the manager seems to be fused with the staff and takes their side so that there is really no line of command. It's all of them against owners and no one can make any criticism or suggestion without getting either them or the manager very angry. It's all childish and far from business like. They are very vindictive.

I told them that it was good that we all (except for me) get along well with each other but it's not our duty as Board members to be friends with all these people, rather we are supposed to see to it that they do their job well and serve the corporation and owners as they should. Right now, it seems to me that owners are there for them and not the way around as should be. My remarks were met with contempt and of course they told the manager with predictable results. I had to resign because I also objected to a lot of expenditures that I thought were baseless--and I should add here that I am a successful business woman, which is more than I can say for some of these Board members. This friendship with everyone is leading manager and staff to slack off and contractors to take advantage of us and they don't understand this. After I resigned, they began rumours against me and honestly I am too busy to start legal proceedings. So I just ignore everyone but I must tell you that it is difficult but I am lucky that I have enough money to pay the fees that will keep rising because all the Board does is simply ratify what the manager and all her minions suggest and these are lazy and wasteful people.

— January 2012, 905 area, ON

Comment for Readers: This letter relates to the one below. It is also a common occurrence, regrettably. Such situations, even if the intentions are good, lead to conflicts of interest, failures to represent owners and their interests, and leave the door open for kickbacks and even fraud, as seen in another section of letters.

Letter: Our board of directors has many problems but the one I want to mention is that they hang together as a clique: it's them versus us owners. If anyone complains or questions what they do or don't do, they close ranks, refuse to hear us out, and tell us that they have to be loyal to their board. My understanding of the Condominium Act, and this is reflected in your website, is that directors' loyalty and accountability is to the corporation and owners. Question mark.

— August 2009, Markham area, ON

Answer: What you write about is unfortunately common. On the one hand, it is really nice when directors can trust each other: Some boards are always fighting among themselves and this is a waste of time. This said, boards are there for the corporation and are elected by owners. This is where their allegiance should be—their duty. For instance, they should not allow one of their members, even if it is the president, to engage in unethical practices. But, often, they find it easier to stick their heads in the sand and let it go to preserve their little group and their own standing in this little group—some do this for the sake of being re-elected. Better education of directors regarding their duties as per the Condominium Act would remedy some of these problems. So would a few penalties! For more information, please read Boards of Directors

Letter: We have had the same president and treasurer for over 9 years and they are a catastrophe and very nasty and superior-types. What I don't understand is that every so often, we elect a new board member that is actually a very nice and competent person. Once these persons become board members, they seem to change entirely: they no longer respond to us, they don't even keep the promises they made and they all become like the other two so that in the end, we always have a very noncommunicating, non accountable and threatening board that writes us nasty letters as soon as we try to explain our concerns as owners. How can we stop this cycle of waste of good persons?

— February, 2011, Mississauga, ON

Letter: At the AGM, the president in his report mentioned that the board had revised the rules and added a new by-law. He said that owners wanting to have the package of new rules and by-law can get it for $5.00 at the office. Do we have to pay for this?

-- February 2011, 519 area, ON

Answer: Wait a minute! First of all, rules approved by the board have to be proposed to owners who have 30 days to requisition a meeting if they disagree. Please read the section on Requisitioned Meetings and then the one on What Are Rules for? Second, a by-law has to be written with the help of the lawyer who also has to register it after it is approved by board and owners. There is nothing that says you can't pay $5.00 but, at this point, this is premature because the due process has not been carried out. As well, rules and by-laws, when properly approved by owners, will then have to appear in future status certificates.

Letter: Myself and another Board member don't agree with what the others and especially the president are deciding because they're just throwing money at problems that could be solved with better communication and a bit of leg work on the part of our staff. But the two of us just vote with them, in my case because I am afraid of reprisals, especially from the president and the lawyer because it's been made clear to us that if anyone disagrees with a Board decision and mentions it to owners, we'll be sued; and the other because she doesn't want to bother and likes the perks, especially the favors she gets from the Manager and the Superintendent. Can we be held responsible if the Board makes the wrong decisions? This is a possibility because they don't have much knowledge and good judgement and aren't ethical. What suits them and the manager goes.

— February 2011, Toronto

Answer: Your letter highlights the fact that your board of directors is riddled with problems and functions under a great deal of misinformation, which keeps the "fear of God" in you. In theory, if you strongly disagree with a board's decision because it is either unethical or a waste of owners' money, you should request to have your abstention or negative vote noted in the minutes. Indeed, you and the other board member could be held responsible for a costly and wrong decision and the liability insurance would refuse to pay because due diligence was not carried out. Unfortunately, the chance of this ever occurring is minimal... unethical boards are protected by the simple fact that owners are not generally well informed about their rights and do not understand what is going on. Were you in a less threatening situation, I would suggest that you requisition a meeting of owners to throw this board out... but I do appreciate the legal threat under which you are labouring. This is unfortunately a fairly common situation. Note: Readers may want to read other letters in the section on "Harassment" and "Defamation" Redefined.

Letter: When we ask a question about the budget at the AGM, the president says, "So and So is a great treasurer and has worked hard." If we ask about any (usually) ill conceived project that they bring forth, he says, "we are a very concerned board and you've got a great manager" and doesn't answer really. If we push for an answer, he'll say, "We're volunteers & you've got to respect our hard work." They always shut us up by turning anything we ask into an issue of personalities, using gilt trip, never addressing issues. They keep saying that they totally "trust and respect" each other, which is very nice but we have no proof that these people are trustworthy or worthy of respect from the results we see. And to keep repeating how they trust and rely on our manager makes us shake our heads because we know that this person doesn't have much between her two ears. To add insult to injury, the lawyer sits there ready to pounce if we insist on a question and brings up back "to order." Finally, the minutes of the AGM never show our questions and they always skip the motion to accept the minutes.

— February 2011, Mississauga, ON

Letter: For several years our condo had a wonderful president who knew his job and was fair to all. He brought in all kinds of changes that helped save huge sums of money for the budget. He was a real whirlwind of activity despite our having rather poor managers but no one ever noticed because he more than made up for it. He didn’t stand at our last elections, another board member became the new president and things started falling apart. [sentences eliminated] We have heard that one of the reasons why the new president is so ineffectual is that he has refused to consult with the previous president and as a result he really doesn’t know what he is doing.

The lesson that I would like you to convey to your readers is that things are very fragile in condos. A condo that is a success for a few years can degenerate into a very worrisome place to live in just within a year as a result of a good president leaving. The Condominium Act should mandate a transition protocol as businesses have because condos are businesses. What I have described are examples of really poor business practices that would not be tolerated anywhere else.

— August 2009, Kitchener area, ON

Letter: We have a pretty reasonable set of directors on our board but one gent has put his name for candidacy and he is the type of person that always threatens management and board with his lawyer when he has to pay for the maintenance of his common elements, for example, to clean his parking space that is deteriorating because of oil, to clean the corridor carpet in front of his door where they have dropped some greasy substance right in front of another owner that was walking by and saw it happen, to clean the carpet downstairs where his dog urinates. He is always threatening legal action and as a result he frightens the manager that does not want to have too much work and stress and he never ends up paying. I don’t want someone like this on the board with me, and I should mention that he has a very arrogant personality.

Comment: This person fits the description of someone who might abuse his power once on the board in order to serve his own interests. Added January 2012: In fact, see letters in Issues of Fraud, Kickbacks and Conflict of Interest.

Letter: I am one of the five directors on a new condo's board and I am the one out: I am a mature person and the other four are twenty and thirty something. All we (they) do at board meetings is sit, gossip, joke and laugh and they dismiss the paperwork that the manager brings and tell her to deal with it. Then they go on about relaxing rules concerning noise, cleanliness pool hours, proper attire in the common elements and want to upgrade the place to make it look "cool" and "with it." They just want to have a good time and already the noise level has increased and people take the elevators in their bathing suits and others run in and out of the party room at 3 a.m. and noise complaints are not being addressed because they are basically caused by the directors and their troop. Some families and mature persons are already moving out and some have said that the building doesn't have "any class" anymore and I agree. It's like a university dorm. The manager seems competent and I brought this up with her and I gathered that she is also very concerned about all of this but her management company told her to get along with the young and brash president and this means making concessions to our rules and even declaration. We are thinking of moving out even though I love the location.

— October 2009, Ontario

Answer: Your board colleagues don't seem to understand that they have a multi-million dollar business on their hands. However, when this board gets tired of partying and begins facing owners' questions (which, regrettably, takes a long time to occur because owners are often too polite to complain or don't even know that they have the right to), they are likely to fold like a tent in high winds. But the damage will have been done. It's regrettable that your manager is employed by a management company that caters to presidents rather than take a firm stand on behalf of owners and, for that matter, the Condo Act.

Letter: I have just moved into my 2nd condo and there are all kinds of committees that have been formed and everyone seems very excited about this. But all these committees are making all kinds of decisions that appear in the newsletter that another group is putting out. But we never hear a thing from our BOD. Do committes have the right to make decisions that a Board should be making because all the decisions they make require money? Second, do these committees have the right to make decisions regarding things that owners should vote on such as new rules?

— February 2011, 905 area, ON

Answer: Committees can be a great thing. They can organize social activities for which they have to raise their own funds and they can be given the task of researching energy savings initiatives. But they need board approval because of issues of insurance, for instance. A committee that is being asked to look at security issues, as another example, will present a set of recommendations to the board... and should do so before they write about it in the newsletter. It is also the board who will approve the funds, request tenders, and choose the security company that will install cameras, etc. So, yes, any and all decisions made by a committee have to be approved by the board. No, they can't spend condo monies without board approval. And they can't make rules: They can propose changes for the board to study and for approval; but, then, after the board votes to approve the changes, this board then has to post the new rules: At that point, owners have the right to requisition a meeting if they do not agree with the new rules or want to retain rules that have been eliminated. Committes cannot take the place of the board; nor can a newsletter take the place of communications from the board--unless it is put out by the board and accessible to all owners.

Issues of Power and Ego

Letter: Our Board of Directors resembles mafia like boards controlled by a godfather president. The president of my condo has controlled the board for 20 years. He highjacks the integrity of the election process to the board of directors for qualifying people by collecting the proxies of old people by threatening to withdraw services. As well, he has installed the soviet style politburo cronies who don’t ask questions and only raise their hands when asked. Some board members are intimidated and usually resign, enabling the board to appoint more submissive replacements until the next annual meeting. The president acts [sentence skipped] ignores owners who dare to question his decisions. Those who are prepared to take action do not have the funds to hire a lawyer.

— January 2012, Toronto

Letter: Why don’t you just come right out and say it the way it is? Nearly half of all boards of directors include people who don’t know what they are doing, don’t even know that the condo act exists, while others just go on boards as an ego boost, to get a feel of power over others, something to brag about with their friends, some because they have nothing better to do, while others are out to get something for themselves. I don’t think that paying people to be on the boards would change this.

— August 2009, Ottawa

Letter: From what I see where I live, being a Director is a way for persons that never had much power in their lives to exercise it over others and that’s why these people would need clearer guidelines in terms of what they should do and what they can’t do, otherwise they abuse the situation and it becomes difficult for us mere mortals to avoid them because we live amongst them.

— August 2009, Toronto

Abuses by Board Members' Spouses

This section has been added in 2012 because several letters on this topic were received in the previous year.

Letter: There is a condo problem that you don't mention and it is the husbands and wives and significant others of some board members. In my condo, the president's wife is certainly the power behind the throne and she is uppity, stuck up and especially likes to come up with issues that make her husband look good at the AGM but most people don't notice this conflict of interest because they don't know who she is and the lawyer treats her deferentially. The main problem is that she has had the gardens redesigned to suit her taste and I have seen her dig out some of our plants, put them in her car and probably brought them to a family member or friend. She has also redesigned the pathways so that it doesn't come so close to their unit and she has had new furniture bought for the lobby that we don't need and I know from the manager that the board has never approved this. The manager doesn't say much because she would lose her job for sure but she tries to stay away from her.

— January 2012, north of Toronto

Letter: Please help us. One of our board members is a person that seems to be leading the pack but she is not the president. She gets into everyone's business and her husband spies on us for her. For instance, the other day we were chatting with a couple of other residents in the lobby and he came to us and told us that we don't have the right to "hold meetings" in the lobby. Another time, he knocked on our door and I didn't open because I was alone and he started banging and saying real loud that he knew that I was in there and he had to tell us that we are breaking rules when we play loud music at night. I was confused because we go to bed at 9 p.m. because we have to get up at 5 a.m. to start our flexible shifts and we never even listen to television or music at night. Then one day his wife wrote us on behalf of the board and threatened us with a legal letter if we didn't stop breaking rules and pestering the board and the manager with false accusations. I am not sure what she meant but perhaps her husband overheard us talk about the fact that we think that this board spends way too much money on renovations rather than on the basics, I mean renovations that we don't need while the basics such as caulking, cleaning and window washing are not attended to. What can we do?

— January 2012, Hamilton, ON