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charged only as the money is withdrawn.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.