Authorized Signing Authority – Letter to the Editor

July 2024

I am a director – Treasurer for over 15 years in the building where I reside.

If a Board member with signing authority and President are absent at the same time for a number of weeks, who has signing authority?

We learned that our property management company took it upon themselves to sign cheques.  In our building, signing authority is restricted to three board members.

Is it legal for the property management company to take it upon themselves to sign cheques?  As the Treasurer, I was never consulted nor aware of the invoices or cheques.


Response from Toronto Condo News

We cannot state if this is legal but can provide guidance on how to proceed.

If someone not authorized to sign cheques is doing so in your condominium corporation, there is a risk that fraud is occurring.  If this is the situation, you should be contacting the police as a first step.  Your corporation’s legal counsel may be able to advise on how best to proceed.  Before jumping to this conclusion, some additional research needs to be undertaken.

Signing authority is based on arrangements made with your bank.  If the bank is allowing improperly signed cheques to be processed, speak with your bank manager to identify who has signing authority.  If cheques are being signed by someone not authorized to do so, the bank can probably provide advice on how to proceed.

Check your contract with your management company.  Perhaps you have given them authorization to act as a signatory when others are not available.

If your property management company has been signing cheques without proper approval, and these cheques were for proper invoices, it may be best to handle this as an internal matter.  Inform them in writing that they have no authorization to sign cheques, or give them notice and find a management company you are better able to work with.

It is a best practice to have one person prepare cheques based on invoices, and for another (usually the treasurer or, in their absence, the president) sign them after re-checking the invoices.

From your description of the problem, at the very least there is a breakdown of communication and poor accounting practices that are occurring.  This is something that should be looked into as quickly as possible to ensure no fraud is occurring.

Best of luck.