CONDO ARCHIVES

Condo Board Authority Not Absolute

April 2025

It has been nearly three years since the Auditor General’s Value-for-Money Audit: Condominium Oversight in Ontario (2020) reported that over half of all condominium corporation reserve funds are underfunded.  The situation has continued to worsen with others also estimating that condominium corporations will need to increase their reserve fund contributions by 50 percent to make up for past underfunding.

Reserve fund balances, while not the only area of concern, are more easily quantifiable because of the requirement that a reserve fund study be undertaken every three years.  It is one way to identify past errors and predict future problems.

Reserve fund studies, and their estimated funding requirements, are easily manipulated by scheming or ignorant condo boards that may be operating with ulterior motives

The most common motive is to keep condo fees lower than they need to be

Reserve fund studies, and their estimated funding requirements, are easily manipulated by scheming or ignorant condo boards that may be operating with ulterior motives.  The most common motive is to keep condo fees lower than they need to be.  Reserve fund requirements can change dramatically by adjusting the estimated future rate of inflation, modifying the projected lifespan of individual items in the reserve fund study, changing the estimated replacement costs for line items and other tactics which are entirely legal and prudent if undertaken with proper consideration.  Too many condo boards employ these tactics to manipulate current condo fees, delay or speed up certain replacements of personal interest, or make the current reserve fund balance appear stronger than it is.

Condo boards can employ tactics to manipulate current condo fees, delay or speed up certain replacements of personal interest, or make the current reserve fund balance appear stronger than it is

Condo owners only see the effects of financial shortfalls over time.  A building may not be as clean as it once was.  Water or elevator problems occur with increased frequency and last longer.  Operational costs increase to maintain areas, systems or equipment that require replacement.  One day, these growing problems overwhelm the financial resources of the community.  There are dramatic increases in condo fees or a large special assessment that everyone must pay.  Rarely is there an attempt to understand why this has occurred and how to prevent it from happening again.

Condo Owners should Regain Control

It was about 150 years ago that workers created unions to fight corporations instituting unreasonable working conditions and paying substandard wages.  People died over these disputes.  The end result was a more balanced arrangement between employers and employees.

Some believe that condo owners should “unionize” to protect their rights.  There is no reason for condo owners to organize in the form of a “union”.  They have more authority and power than any union could ever hope for.  They can require the condo board to implement, revoke or update rules, by-laws and even possibly the declaration.  They elect their directors.  When dissatisfied with decisions, they can force a condo board to reverse them or have directors refusing to do so replaced.

Condo owners have an enormous amount of power and, as a general rule, choose not to exert their authority

Condo owners have an enormous amount of power and, as a general rule, choose not to exert their authority.  This requires a majority of condo owners to support something and be prepared to do the work necessary to enact change.  This is spelled out in the Condo Act.  When too many owners are apathetic, ignorant or unconcerned about an issue, it may not be possible to achieve the 50 percent support required to enact change.

Control begins with education.  Read the financial information provided to you.  Understand when something does not look right.  Ask questions and demand explanations from your Board.  When explanations are not provided or sound suspicious, this is a sign that all is not right with your community, and that change may be necessary.

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