Chapter 10
The condominium corporation (abridged)

The Condominium Study Group examined condominium corporations and came to several conclusions and had advice for new boards and existing directors on how best to carry out their duties.

Records and information
It is virtually impossible for a group of inexperienced individuals to step in as members of the board and commence running a corporation. Great assistance is necessary at the initial stages from the developer, who also has a vested interest in ensuring the project's success, It was repeatedly mentioned by condominium groups that one of their serious problems was the lack of information which could assist the new Board of Directors, about the project itself including such items as who the maintenance contractors are, what warranties are available, what mechanical and electrical systems are in the project, and who is available, if anyone from the developer's business for assistance. Because of difficult start-up problems with developers, many owners may be over-anxious to remove the developer's influence entirely from the board as soon as possible. This can be a mistake. As the person who put the project together and who has access to all those who were involved in it, he can in fact, be of valuable assistance to a board. As some board members have indicated, any of the owners who were most satisfied with condominium living were in corporations where the developer-purchaser relationship was co-operative and informative. Greater emphasis should be directed towards this end by the parties involved.

Problems with "sweetheart" contracts
It is not uncommon for a development firm to contract with its own subsidiary company to provide services to the condominium corporation at highly favourable rates to these companies, an excessive cost which must be borne by the corporation until the contract expires.

The developer may sign a contract with a service company that gives the corporation incompetent or uneconomical services. Any time a developer makes a bad deal with a service company prior to registration, the condominium corporation is stuck with a business relationship it' probably would not have approved if its Board of Directors had been in control at the time of contract negotiation.

Responsibilities of the board
Once the board is in place and all the information has been turned over by the developer, the board must clarify its responsibilities and obligations in terms of The Condominium Act and the documents governing the corporation. The following arc the major duties and responsibilities of the board:

1)	Ensuring proper maintenance of the common elements and facilities.
2)	Keeping proper financial records.
3)	Preparing budgets and setting common expense fees.
4)	The formulation of rules and regulations and by-laws.
5)	Approving any legal action against owners who fail to pay their common expense fees or who do not abide by the condominium documentation.
6)	Enforcing compliance with the documentation.
7)	Choosing a lawyer and recommending an auditor (see chapter on Financial Management).
8)	Employing qualified property managers, independent contractors or employees, and supervising their work.
9)	Appointing committees and assisting them in their tasks, particularly in larger corporations.
10)	Overseeing the development of recreational and social programs to meet the needs of the owners.
11)	Ensuring adequate insurance coverage.
12)	Notifying owners of assessments and meetings which require the owners to vote.
13)	Ensuring that all employees of the corporation are fidelity bonded.
14)	Representing the interests of the owners in matters dealing with common elements.
15)	Communicating with the owners so that the corporation's business is conducted in an atmosphere of openness and trust.

A newly elected board should define the responsibilities of its officers and elect its members to the offices for which they are most qualified.

President
The president is the senior officer and presides at all meetings of the board and owners. The vice-president takes over the president's duties when the president is unable to fulfill them. The secretary is responsible for transcribing and distributing minutes of meetings, keeping an accurate minute book, maintaining the official records of the corporation, handling proxies assigned to the board, ensuring that notices of meetings are given, filing of amendments to documents and communicating board activities to the owners. As soon as possible after the election of a board, the secretary should notify the owners of the names of the names of the board members, committee chairmen and their addresses and phone numbers.

Treasurer
The treasurer, before the beginning of the corporation's fiscal year, is responsible for preparing the annual budget which is presented to the board. It is his responsibility to ensure that the corporation operates within its budget.

The treasurer should maintain the financial records of the corporation and prepare the monthly statements of receipts and disbursements, including a list of delinquent owners and ensuring that action is taken against them. The treasurer should also arrange for the annual audit of the corporation and generally be able to bundle all inquiries of a financial nature.

Attracting replacements
The board of directors also bears responsibility for "grooming" new talent and this can best be achieved by utilizing the "farm system". By this method the board creates committees to assist the board in its daily operations (for example, the finance and social committees). From this committee system the board can find other owners within the corporation who are prepared to actively participate in the ongoing affairs of the corporation. The committee system serves a dual purpose. It trains those who might eventually be prepared to
undertake a role on the board of directors and it provides an opportunity for an existing board to gain the assistance of interested owners.

Condominium meetings
The operation of a condominium corporation requires owner participation at various  levels. Owners must learn to co-exist in a community in which their daily lives are somewhat regulated by a statute and subordinate documents. Owners who feel a responsibility towards the condominium corporation attend general meetings of the owners to vote on issues brought before them by their board of directors or other  owners. Many  owners who play a more active role in the condominium's operation become members of the board of directors and attend directors’ meetings.

At the public hearing and in briefs presented, many directors and owners said that  confusion often existed at meetings because owners were not familiar with methods of running meetings. This is understandable, especially in the early stages  of a corporation's existence, since most owners would not be exposed in their daily lives to meetings requiring clear structure and efficient procedures.

Many corporation briefs, for example, expressed concern over owner apathy. They claim it is nearly impossible to get owners out to meetings to deal with issues only they  can vote upon and which require high voting percentages. The condominium owners'  participation to date seems  to be reactive to particular issues, rather  than one of ongoing interest in the community in which they live. However, owners are far from  the only group at fault, for problems also arise from disarray within a board or interference from a developer.

Since the Study Group was charged with bringing forth a package of measures to improve condominium living, many of the comments here are not properly the subject of legislative amendments. Rather, they are often designed to give guidance to those corporations experiencing difficulties. For this reason, it is worthwhile to outline the conduct of directors’ meetings, owners’ general meetings and annual meetings.

Directors’ meetings and annual meetings
The frequency of board meetings should be deter­mined by its members. This  decision will depend on the size of the corporation, the type of corporation and the amount of work to be done by the board. For every board meeting, the owners should be notified of the time and place and be invited to attend, except for discussions of disciplinary actions, when  necessary. Such notification not  only allows owners to exercise their right to participate, but encourages an atmosphere of open communication, which board members should always  strive for. Convincing owners that they are needed at meetings is crucial. Owners must be shown that their participation will pay off in the long run.

As well as personal communication, a corporation newsletter, for example, is a very effective means of communication between boards and  owners. A newsletter can be used  to publicize the agenda for the board meeting in advance and request owners  to submit  in writing any matters they  might wish the board to discuss. Once owners know they are welcome, the board should use its best efforts to make the experience rewarding for those who do attend.

In the case of annual meetings, advance publicity of the meeting and of the names and qualifications of those seeking election may stimulate interest and attendance. Again, the newsletter or personal ­communication are both useful.

The following procedural guidelines might be consi­dered for both directors’ meetings and annual meetings:

a)	start punctually.
b)	ensure Directors have had an opportunity to review the agenda and any  back-up materials so that they are informed for discussions.
c)	call the meeting to order.
d)	secretary reads the minutes of the previous meet­ing and deals with business arising from them. (A good idea is to distribute the minutes prior to the meeting for review: time can also  be saved by a motion to dispense with reading of minutes and to them  as written.)
e)	report from the treasurer.
f)	report  from  the property manager.
g)	report  from  the auditor (I assume this is the internal auditor—editor).
h)	committee business (either standing or special committees).
I)	deal with new business.
j)	comments from owners.
k)	adjournment. (It is a good idea to set a definite time for adjournment at the beginning to encourage moving the meeting along in a business-like way.)

Board members should try to deal with the business at hand as quickly and thoroughly as possible. Otherwise a prolonged, non-productive meeting will discourage owner and  even board member attendance. The quality and length of a board meeting will depend largely on the effectiveness of the chairperson. Those chairing the meetings should become familiar with Robert’s Rules of Order and Wainberg’s Company Meetings including Rules of Order. (Now Wainberg’s is named Nathan’s Company Meetings.—editor)

Meetings of owners
To stimulate interest and create an environment of communication and trust between boards and owners, information concerning issues to be dealt with at meetings must be provided to all owners at the time notice of the meeting is given.

Since the condominium concept is predicated on decision-making by the owners, it seems only reasonable that any choices made by them be informed ones. For instance, where a vote is put to the owners, they should have the opportunity to study the background information submitted. This approach coincides with the principle of full and open disclosure and communication between owners and boards.

Renting units
The study group recommended that an owner's right to lease his unit should remain intact but that the owners be fined if they fail to inform the corporation that they intend to lease the unit and give the corporation information on who was living in the unit.

The study group also recommended that leased units pay an additional 10% in common element fees to offset the higher maintenance costs associated with high-tenant occupancy. (Recommendation No. 83—editor)


top   contents  chapter  previous  next