Is your condo board above board? Tips for evaluating condo governance

Condominium governance is in the spotlight after an investigation by CBC Toronto reporters unveiled questionable practices at a series of downtown Toronto buildings.

Owners and property managers in those buildings say a group of people have aggressively sought control of the boards and budgets of multiple condos. The allegations include voting irregularities and contentious contracts.

• Condo clash: Court battles, forgery allegations and questions over who controls Torontohighrises
• Condo board approved energy contract that benefited a member's colleague
• Questionable proxies shut down Charles Street condo election, sources say

If you're wondering whether your condo board is operating in a trustworthy manner or if you simply want to get a better grip on how your condo works here are a few tips from experts in the field of condo governance.

Learn who runs the place

Not just anyone should sit on the board of directors of a condo corporation, experts say.

"You want people who are financially literate, who have some business experience, preferably," said Audrey Loeb, a lawyer with Miller Thomson who specializes in condo law.

"You don't want the board of directors managing the building, you want the board of directors overseeing the manager."

That property manager should be independent of the board, with a good reputation, Loeb added.

• Sellers offer trips, freebies as Calgary condos sit empty

Condo board directors should own a unit in the building, and ideally live in that unit, said Loeb. If not, that's a potential red flag for owners.

Conflicts of interest on condo boards are another red flag, according to BrianAntman, who audits condo boards as a partner with accounting firm Adams and Miles and serves as a director of the Canadian Condominium Institute's Toronto chapter.

Board directors shouldn't have any financial interest in transactions with the property manageror their vendors, Antman said. Directors, he added, should also sign and follow a code of ethics.

Put on your reading glasses

Condo owners ought to take the time to read their building's declaration, said Antman.(A declaration is essentially a condo's charter or constitution.)They should also read any bylaws and rules instituted by the board, according to Antman.

Potential owners of new condo buildings need to read the disclosure statement provided bythe developer, and should have it reviewed by a lawyerwith experience in condo law, Antmansaid. (For resale condos, a "status certificate" replaces a disclosure statement.)

"It's probably the most significant purchase they'll ever make, and they shouldn't be surprised by anything going into it," he said. "I see a lot of people who don't do their due diligence up front, and are surprised."

Communicate with the board, and participate

"The best way to tell how well-run your condo isis to ask for documents, and see if you get them," said Loeb, the condo lawyer.

Minutes of board meetings are a common record that a board should share.

"If you get them in a timely fashion, ask for the monthly financial statements," said Loeb."Any owner is entitled to see that stuff."

Most condo board meetings are closed, but Loeb said owners should absolutely take the time to attend annual meetings.

If owners can't attend an annual meeting but still want to vote on condo issues by proxy, Loeb recommends electronic proxy voting, by which proxy documents are emailed directly to owners.

If a condo owner is concerned about their condo corporation's board, they can try to shake things up.

"If they're unhappy with the board, or a board member even, they can requisition a meeting to replace the board or the board member," said Antman.

The owner can even try and join the board themselves, if they feel up to the task.

"This is their biggest investment, and if they want it to be run properly maybe they need to get involved,"Antman said.

• Montreal landlord fined for condo listed on Airbnb without his knowledge

Be warned, though: sitting on a condo board can be "a hugely time-consuming job, if it's done well," said Loeb.

"People have no clue what hard work it is, especially in the first two years of a condo's life when you're just trying to figure out what's going on," she said.

Make sure professionals are involved

Good condo administration often requires professional expertise, said Antman, an auditor.

"The [condo] corporation should hire a solicitor, an auditor, an engineer who's doing the reserve fund study," he said."And all of these people that you're hiring should be people that are experienced in the industry."

• Demand for Vancouver-area condos, townhomes pushing up prices

A solicitor is especially important when things go wrong, said condo lawyer Audrey Loeb, who described how condominiums have become "verycomplex entities" over the years.

"My philosophy has always been that the condo is the fourth level of government," said Loeb. "After the feds, the province and the city, you've got your condo [corporation]."