The loan

The property had several repairs that had to be done in 2006 and in 2007 and they were duly noted in the Reserve Fund Study. They were:

1. Repairing the roof
2. Waterproofing
3. Repairing windows and mould
4. Repairing baloneys
5. Cladding
6. Plumbing and replacing risers
7. Lighting

2005 AGM
A representative from Maxium Financial Services  explains that  the loan will be handled as a line-of-credit with up to $500,000 a year available for a three year period. Interest will be charged only as the money is withdrawn.

The annual contributions stated in the Reserve Fund Study confirms this is the the plan. The engineers caution the board to makes the repairs as per their study because the roof replacements are going to be expensive.

Special Owners Meeting
On Saturday 17 December 2005, the owners voted in favour of Bylaw # 9 which called for a loan of $1,500,000 to fund major repairs and replacement projects according to the Reserve Fund Study.

Manzoor had quotes for the following work that he presented to the owners at the Special Owners Meeting:
Garage ramp $125,000
Garage repairs 50,000
Roof replacements 555,000
Balcony repairs 400,000
Brick repair 100,000
Hallway carpet replacement 200,000
Roof exhaust fan 20,000
Driveway repairs 100,000
Total $1,650,000

A representative from Maxium explained the details for the loan and then vote was held. The result was 82 in favour and 17 against. For the loan to go forward, 89 votes were required.

Monzoor then stated that the seven needed votes could be received by proxy and that any persons who voted against the motion could change their vote. In that case the board could sign the assessment tomorrow.

A few directors and owners left the meeting and come back with eight proxies approving the loan. Manzoor then made a motion to accept these additional proxies and the motion was seconded by an owner. The motion was adopted by the quorum present.

The registered Bylaw # 9, dated 20 December 2005 states that the loan will have a five-year term and the amortization period will not exceed ten years.

Signing a deal
At the next board meeting, Manzoor tells the board that they can get a loan from the TD bank or Maxium. Both offer the loan as a line of credit and will, upon receiving approved invoices, will pay the contractors directly to prevent misappropriation of funds.

In late January 2006, he tells the board that the TD bank will not give them a loan and he urges them to sign with Maxium because if they went with another institution the only difference would be in the interest.

Manzoor moves a motion to approve a ten-year loan with a twenty-year amortization. The motion is passed.

There is a problem
At the AGM, the Maxium representative said that the loan would cost each unit owner approximately $70 a month. The board's two newsletters distributed in December said that the loan would cost each unit approximately $50 a month.

The owners would not vote for any loan that had a term longer than five years. A longer amortization allows borrowers to lower their monthly payment and qualify for a larger loan at the expense of paying more interest over their mortgage period.

Bylaw # 9 states that the loan has a five year term. However the monthly costs for such a short term would be about $300 a month while a ten year term would drop that to $100.

Something had to give as most owners could not afford to pay an extra $300 a month.

Bylaw #10
In 2007, a newly elected board reviewed the documentation that authorized Bylaw # 10. The documentation shows the following.

On 02 April  2006 the board past a resolution changing the term of the borrowing from five years to ten years and called for a Special Owners Meeting for 29 April 2006. The signatures of two directors are on the resolution.

On 07 April 2006, Manzoor sent the owners a two-page notice, meeting agenda, a draft of proposed bylaw and proxies for this meeting.

Channel also provided the minutes for the Special Owners Meeting. The three pages describes, in considerable detail, the business conducted at that meeting. Manzoor Khan and his recording secretary are the only guests at that meeting.

The owners passed Bylaw # 10 by a combined vote of 91 to 7. The signatures of two directors are on the bottom of the third page.

The bylaw was then sent to Fine and Deo who registered Bylaw # 10.

One slight problem
The paperwork was all there and it was complete and in order.

However, there was one rather minor bureaucratic technicality. Only the signatures of the president and the secretary on the Schedule A, signed on 30 April 2006, are authentic. All the other paperwork for Bylaw # 10 was fictional. There was no resolution from the board and there was no Special Owners Meeting. The bylaw was duly registered but it was based on deceit. The director signatures were forgeries.

The owners, and apparently the directors, were unaware that Bylaw #10 existed.

When the new board discovered that this bylaw was registered some months later, they fired Fine and Deo for doing so and hired a different law firm to sort through, and put to bed, the legal issues that Manzoor Khan created.

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