April 2021
Boards prefer to do their work without the distraction of dealing with owner questions, requests or inquiries. They have undertaken a big responsibility requiring extensive work and are volunteers. Yet owners feel entitled to more information than what is available to them. Boards that fail to balance these interests struggle.
One condo owner and former director, frustrated with actions of their board, is asking local politicians to become more involved in curbing abuses taken by some condo boards and directors by making “monthly minutes and monthly financial records free, automatic, and fully transparent”.
Toronto Condo News, after speaking with the owner, delves into the specific concerns leading to their decision to approach politicians. Practicality of what has been suggested, reasonableness and current legislation are considered. We have agreed to not disclose the condo owner or their building to avoid possible retribution.
While attempting to do what is expected of them, condo boards must balance conflicting interests.
Transparency
What one considers to be “transparent” may be an unnecessary or costly burden to others
Transparency, while desirable, is imprecise and means different things to different people. What one considers to be “transparent” may be an unnecessary or costly burden to others. The Condo Act and Condominium Authority of Ontario have sought to balance conflicting views by designating a range of reporting and disclosure requirements without being overly burdensome.
Inexperienced Condo Boards
Experience is not a requirement for serving as a condo director
Effective condo boards implement procedures to deter financial mistakes and fraud. They research issues and rely on consultants for advice before making decisions based on available information.
It is not surprising, as claimed, to have identified more than $20,000 per year in loss due to double billing, duplicate cheques and other activities. Such errors and financial losses are not uncommon among inexperienced condo boards.
Experience is not a requirement for serving as a condo director, or more specifically in this case as a treasurer. Condominium managers may have financial experience and be able to compensate for an inexperienced board.
Some consider allowing inexperienced individuals to serve as directors to be a failing of the Condo Act. Others feel that owners have the right to elect unqualified individuals as directors if they so choose, and to pay the costs of doing so. Put differently, condo owners have the same right to mismanage their finances as do owners of single-family housing.
Condominium Manager unaware of what information owners are entitled to
Experienced condominium managers have a better understanding of the job. Those with less experience command a lower salary. The condo board decides which balance of compensation and experience is desirable.
Meeting Minutes
Meeting minutes are not intended to inform condo owners
Meeting minutes are not intended to inform condo owners.
Meeting minutes are a legal record of decisions made at a board meeting reflecting all votes. They are typically brief and to the point while recording motions made, by whom, any seconding of the motion and outcome of a vote.
Any owner, purchaser, or mortgagee of a unit can request and is entitled to access meeting minutes. Keeping them simple and unbiased helps maintain the integrity of board decisions and the corporation.
Management Report
The Management Report is not typically available to owners
This is typically a monthly written or verbal report to aid boards in governing the corporation. It is not mandatory, nor are there specific requirements or standards in place as to what should be included in the report. Its content is based on the board’s requests and desires. Much of this information is not for presentation to owners.
The Management Report is not typically available to owners. Apparently, this report was requested and provided without redaction or fee until a large expenditure for work in a director’s suite was noted. It remains unclear if this work was justified or a benefit from serving as a director which, if so, would be an improper expenditure. Charging a $60 redaction fee since this time, as reported, appears excessive and of questionable purpose.
Concern that a 10 percent annual increase in maintenance fees is unsustainable
A 10 percent annual increase in maintenance fees is unsustainable. It is also not unreasonable if costs are escalating at this rate.
A 10 percent annual increase in maintenance fees is unsustainable. It is also not unreasonable if costs are escalating at this rate as is currently the situation when one considers utility, contractor and material costs over the past couple of years. As buildings age required maintenance increases. Lower condo fees in past years create financial shortfalls that must be funded.
Without further information it is not possible to determine if the reported 10 percent annual increase in maintenance fees is correct, reasonable or the result of poor management.
Free access to monthly financial statements
Available information may not be sufficient for some owners. What is available balances owners’ rights to access information regarding their condominium corporation with board management obligations and condo owner rights.
In the submission to local politicians, the author states “Transparency is the heart of a condominium board’s ethical standards. So why would any association keep records and financials secret?” It was further suggested that fees for access to financial information requested by owners wanting to keep apprised of how their community is being managed is actually a “money grab” and attempt to “hide information”.
Records maintained by a condominium corporation include personal information on residents and owners, and financial information on the corporation. Some records are available to owners following a process established by the Condominium Authority of Ontario.
Budget and approved financial statements are “core” records available at no cost if delivered in electronic format. Printed information is available at nominal cost.
“Non-core” records are other records the corporation is responsible to maintain. These are available at a cost based on actual costs incurred by the corporation. Monthly financial information, for example, can amount to hundreds of pages each month and it is unclear that this information is available to owners. While it may provide useful information, it may also contain details that are confidential and pertaining to day-to-day management. This is information for use by the board and management. It is not a reasonable disclosure to owners.
Available information may not be sufficient for some owners. What is available balances owners’ rights to access information regarding their condominium corporation with board management obligations and condo owner rights.
Why some records and financials are unavailable
Much of what is discussed at meetings and in documents is not intended for owners. Making this information available invites owner input on matters under purview of the board.
Condo boards are tasked with management of the corporation. Much of what is discussed at meetings and in documents is not intended for owners. Making this information available invites owner input on matters under purview of the board.
“Legislation can never cover every foreseeable situation” explains Stephen Ilkiw of CondoHive, who consults to and works with condo boards. “Effective condo boards do many things well. They go beyond mandated disclosure and communication requirements, implement a range of policies and systems, and ensure owners are well-informed of plans. Other condo boards may do the minimum possible and seek ways to “work around” legislated requirements”.
It is up to condo owners to ensure capable and willing individuals are elected to represent their community as volunteer directors.
