Governance

July 19, 2017 Published by Toronto and Area Chapter - By Murray Johnson

Mandatory Education for Directors

From the Summer 2017 issue of the CCI Toronto Condovoice Magazine.

Many of us in the Ontario condominium community wished for an update to the Condominium Act. Many of us wished for more accountability by condominium property managers and directors. Well, it looks like we're going to get what we asked for. Massive changes to the Condominium Act, licensing for condominium managers and mandatory education for directors. So, what's wrong with this picture? NOTHING!

Will it be easy? Clearly the answer is no. Will there be growing pains? Of course. Will everyone benefit from the proposed changes? Absolutely! But let's focus on the benefits that will be derived from properly and formally educated directors.

First and foremost, we cannot proceed any further without expressing that CCI has the best, by far, director education available in Ontario today. Even if others were to come into our province today and start to develop programs for directors, they would take years to catch up to the extensive and carefully thought out programs developed for directors by CCI.

Directors are typically people from varied working backgrounds. But the one thing that the vast majority have in common is a willingness to contribute boundless time and energy to oversee the protection of their single largest asset - their real estate investment. Rarely do we see a professional property manager sit on a board (let's leave work at work) so this means that an overwhelming number of directors have no experience in property management or the legal intricacies of the Condominium Act and associated building legislation and regulations.

Let's step aside for a moment from the director and look at the asset that the mostly inexperienced board is obligated to oversee. It is not uncommon for a Toronto condominium building to have as many as 300 suites and perhaps twenty-five or more floors. With the entire building replacement value often more than thirty or forty million dollars (sometimes even more), we are expecting inexperienced people to assume responsibility for multi-million dollar assets. In other industries this would be akin to asking an inexperienced person to walk into the CEO position of a multi-national company. Same dollar values, vastly different educational requirements, same expectations.

In this context formal training seems like a natural prerequisite, so why are we even discussing this? Shouldn't this be a legislated requirement? The law and common sense aside, your personal involvement in protecting your real estate asset should dictate that formal education for directors, at least at some rudimentary level, be an absolute must.

Changes to the Condominium Act will require that directors take a free, minimum entry level, three or four hour course, but will this be enough? Mandatory education may someday prove to be an obstacle to getting volunteers to put their hands up to be a director, but let's face it, three or four hours over the course of your first year as a director, available online in the comfort of your living room is not such an onerous thing. But will it be enough?

Would the CEO of a large $60 million per year business be successful with three or four hours of education? 2017 will prove to be a year of tremendous change and the group of lay volunteers charged, by election, with overseeing the success of the condominium, really need more than three or four hours' education.

As a property manager I have attended somewhere in the range of 3,000 to 3,500 board meetings and well over 1,500 AGMs during my career. I have seen directors at all levels of education and by far the best decisions are arrived at in relatively short order by those directors who invested the time to seek further education. Less time trying to figure out what a decision might mean and more time spent on arriving at the right decision. -

Knowledge is power, and this is no more true than in a condominium boardroom. Everything from best practice governance to condominium law can be learned with formal education. When education is presented by industry professionals, there should be no expectation of a sale or extra business, only a raising of the bar for the quality of life in a condominium.

Education for directors (and managers) takes on many forms. The CCI educational sessions often include mini trade shows, sponsored dinners (with door prizes - no one ever said learning shouldn't be fun!) One of the year's biggest learning and networking opportunities is the Annual CCIT/ ACMO Condominium Conference. Some of Ontario's (if not Canada's) top experts come together to offer educational opportunities on the day's most critical issues while affording delegates time to visit Canada's largest condominium trade show (typically over 200 vendors).

Directors might want to consider that the manager also forms part of the governance team and the board may be wise to allow time for managers to update their education as well as join the directors when they attend seminars and educational classes.

Take it from me, a long time outsider who has had the privilege of looking in for so many years; you will make your life better, the owners' lives better, and protect your investment, all from a little bit of continued education. You will be with people who want to be there, who are willing to share and who will hold instructors to task to make the best of volunteer time. Here's to getting what we wished for!