August 2022
Failing to read documents prior to affixing a signature is a dangerous practice.
It is common for vendors to be paid by cheque. Cheques are often prepared in advance then provided to a condominium manager or director for signing. Signing cheques without verifying invoice amounts and authenticity allows for fraud as well as innocent mistakes. Once payment has been made, it is likely errors will never be noticed or corrected. Far better to review each invoice before signing cheques.
When it comes to dollars, double and triple check before affixing a signature to any document. Failure to do so is embarrassing and expensive. One condo corporation attempted to sue a builder for $60 billion dollars. This typo was missed by lawyers, condominium management and directors. In another situation an auditor presented the corporation with an audited financial report that was qualified – meaning concern about information provided to the auditor – that the board presented to owners as unqualified.
Through the course of a year many corporation documents are signed by one or more directors. That signature means the information in a document is correct. Without reading and understanding a document, signatories can be providing false, misleading or incorrect information. Signatories or the corporation may be held responsible for damages or financial losses incurred by those acting on this information
While owners don’t sign corporation documents, the importance of reading is equally crucial. Failure to read and comprehend numbers is the only explanation for directors that get away with reporting a strong reserve fund and corporation without acknowledging recent annual deficits or insufficient funds to pay for upcoming major repairs.
