Governance

October 11, 2019 Published by Toronto and Area Chapter - By Josh Milgrom

The Ideal Condo Board

From the Fall 2019 issue of the CCI Toronto Condovoice Magazine.

With thousands of condos in Ontario, and a board of at least 3 directors for each one, directors are responsible to govern over 1.3 million homes.

These directors are tasked with managing a budget, enforcing their governing documents, complying with the Condominium Act and other relevant legislation, attempting to satisfy the owners (or at least most of them), and for many condos, directing a manager to facilitate the dayto- day operations of a complex and everevolving condo community.

How do you make sure that your board has the skills, the tools, and the support necessary to succeed? How to you put yourself in a position to sit up at the head table at your next AGM with pride to share the year’s worth of accomplishments with the owners at the AGM – and to have them applaud your efforts?

Starting Point

Each director should be operating within the confines of and be guided by the Condominium Act. This establishes the legal boundaries and sets the stage for the board to make all of its decisions.

At a bare minimum, a director must act honestly and in good faith, and exercise reasonable care, diligence and skill while performing their role.

Directors should become familiar with their condo’s governing documents. And while a director doesn’t need to be able to recite the Condominium Act or the declaration on command, they should know what types of issues are covered in the documents so they know where to look when an issue arises.

Sometimes boards play years’ worth of broken telephone, transferring bad habits from one board to the next. Rather than fall in the same trap, it’s important to think critically about the long-standing assumptions that may be guiding a board down the wrong path by asking questions and satisfying yourself that the assumptions are grounded in the governing documents.

Whether an item, such as a fan coil unit or a window, falls within or outside the boundaries of a unit, or whether a particular exterior portion of the common elements falls within the shared facilities, are issues that can be often misunderstood and incorrectly applied. This can go on for years unnoticed, with a corporation spending substantial funds unnecessarily. In the majority of cases, a board would not be required to continue making the same mistake over again, but rather can learn from their mistake and correct them moving forward.

Communicate

Communication is a critical element of having a successful board. The discourse surrounding communication is often focused on how best to communicate with owners: and while much can be said about tailoring the type, style, frequency, and medium of communication to a community, two critical aspects of communication tend to receive less attention.

First is the importance of two-way communication. In order for communication to be effective, owners need to be – and feel – heard. A board that circulates quarterly newsletters, sends out eblasts, and posts notices, but doesn’t listen to or value owners comments and concerns is destined to struggle. Owners may become disgruntled, frustrated, and unappreciative of the board’s efforts, regardless of the board’s accomplishments. Town hall meetings and other ways to solicit feedback, such as surveys, are great tools that can be utilized by boards to improve communication and, importantly, owners’ level of satisfaction with the communication.

Second, communication amongst the directors should not be overlooked. Internal board politics and quarrels can quickly occupy valuable meeting time. Set expectations for communication and workload, delegate tasks, establish boundaries, and constantly communicate to make sure that each director is participating as expected and are working cohesively.

While email is a great tool to converse between board meetings and to share information, it is no substitute for a comprehensive discussion and debate at a board meeting. Email should be reserved for situations where substantial discussion or back and forth is not necessary, except in extenuating circumstances. Items can be lost in a chain of emails, tone of voice can be misinterpreted leading to conflict, and the Condominium Act does not permit board decisions to be made over email.

Act Swiftly

When an issue arises, take swift steps to tackle the problem head-on. Whether it is an owner complaining about smoke migrating into a unit, a director who is improperly liaising with contractors or disclosing confidential information to owners, or learning that your condo is in store for a substantial special assessment, issues have a tendency of escalating and getting exponentially more difficult to resolve once left festering.

Whether that means engaging professionals, convening a special board meeting in the event of an issue which requires urgent action, or calling an owners’ meeting, condos that have failed to act swiftly have been found by the courts to be in breach of their obligations under the Condominium Act.

Boards should take advantage of opportunities to be proactive. Put in place preventative maintenance programs, engage professionals to diagnose and resolve issues, and update your governing documents to make sure you have the tools to address problems when they arise. A condominium corporation with a strong set of by-laws and rules is substantially better situated to address problematic owners and residents than one with outdated and basic governing documents.

Adapt

Condos go through different stages – from turnover through to aging buildings. The challenges that arise in each stage vary; so too should the board’s actions and solutions to those challenges.

When it comes to litigation and enforcement issues, encourage your fellow directors not to get too set in their position, or to make decisions based on emotion. The ability to consider different perspectives, evaluate the situation, and maintain an open mind can lead to substantially better outcomes, particularly in litigious matters. Litigation is a costly, potentially divisive, and time consuming endeavour. To the extent possible and reasonable, settlement outside of the courtroom should be strongly considered throughout the course of litigation and as new information or changing situations arise.

As directors are still getting accustomed to the legislative changes, including mandatory training, and the introduction of CAO and CAT, the ability to adapt to changes is even more important in today’s constantly evolving condo environment.