May 2024
It is shocking that individuals can be empowered to make decisions on a multi-million-dollar asset when they lack any level of expertise, knowledge or training. Yet this occurs daily in some condominium communities.
Miscues of incompetent condo boards threaten the safety, security and comfort of homeowners as the value of their homes decline. With condominium living being Toronto’s largest and fastest growing form of housing, this state should not be allowed to exist.
In one community, the president of a condominium community declared that water from a washing machine on the ground floor of the building travelled up four storeys to cause a water leak on the fourth floor. At the same time, the board placed a bin on the ground floor to capture water from the leak and placed blame for the fourth-floor water leak on the owner of the ground-level washing machine. Water damage spread as water was allowed to leak for eight days and Canada Post suspended mail delivery because of the condition of the lobby. Perhaps the laws of gravity didn’t apply to this building.
When they finally investigated, the leak was found to have originated from a hallway pipe on the fourth floor. One owner sustained $11,000 in water repair costs because the board failed to fulfill its obligation to maintain common areas and repair the leak when it was first identified. Damage costs to common areas are unknown.
Condominium corporations are legal entities governed by a condo board with responsibility to owners (shareholders) who entrust them to manage assets and budgets in the millions of dollars. The Condo Act mandates that elected directors act honestly and in good faith, in the best interests of the condominium corporation. They are expected to act with care and in the way a reasonably prudent person would act in comparable circumstances. No education, skill or experience is required, nor is any degree of common sense.
Individual directors can be incompetent, biased or operate with personal agendas. Many directors are simply people with time on their hands who desire the prestige of being a board member. They enjoy the power they have in making decisions and spending other people’s money. These people are a danger to their communities. Owner apathy allows this state of affairs to persist as their buildings degrade. Attendance at annual general meetings is low. Nobody scrutinizes board decisions or how money is spent.
Those in power tend to get re-elected as costs spiral out of control and major problems recur. Necessary projects are deferred. Important building matters get ignored until crises exist while these condo lords violate laws and best practices. Risk management – preventative maintenance and proactive initiatives to prevent problems – is nonexistent.
There comes a point when the operations budget and reserve fund can no longer sustain the level of incompetence. Monthly condo fees increase. Assessments require owners to fund “unanticipated” major expenditures with little notice. Condo loans become necessary. Nobody seems to understand what went wrong or why they should pay more.
Nothing protects a condominium community where there is apathy, and problems escalate when nobody is watching the decision makers. No laws or protections are enforced where owners are unaware of problems or unwilling to take action. The best protection for any community is to understand their governing documents including the Condo Act, and to be prepared to take action when these are not adhered to.
