As the spring AGM season draws to a close, hundreds of newly-elected condo directors are just starting to settle into their roles, usually with very little orientation or training.
As a small way to help ease the transition into condo directorship, we offer this short welcome letter submitted by Stephen Kurtz, a former condo director in Windsor. Thank you, Stephen, for submitting this piece and for your years of service on your condo’s board.
On behalf of the collective owners of our readers’ condominiums, thanks to all of you who have recently joined your condo board, for giving your time and effort in service to your community.
Dear New Board Member(s):
I wish to extend my congratulations and gratitude for accepting what is a major responsibility, that is, serving on the board. The purpose of my letter is to offer some words based upon my own experience over the past four years.
In the first place we are well-served by our Property Manager. This person is well qualified to secure the necessary quotes (for work to be done) as well as to provide you with the facts you need for proper decision-making. Sometimes you may have to do your own research; this is a good idea,it shows your commitment to the task. The Property Manager is competent to advise the board but it must be stressed that all decisions are made by the board and not by the Property Manager. The board employs the manager, it is not the other way round.
To aid in your decision making I would recommend that you familiarize yourself with the documents that govern the corporation. In order of precedence these are the Condominium Act, the Declaration and By-laws, and the rules. As you will discover, not all of the Act applies to a well-established condo like our own but you must be aware of the law in regard to the prudent person rule, the condo’s money, meetings, proxies, and Reserve Funds. It is also important to understand how the board may or may not be liable for its actions. We retain an excellent legal counsel to advise us if we have questions regarding the interpretation of the Act or other matters of concern.
The Declaration is our constitution. The Act takes precedence over the Declaration but the day to day operations of the corporation are governed by the Declaration. Such operations include tendering, the duties of the board’s officers, and the duties of the Property Manager. To change the Declaration requires a 90% approval from the owners (this being a requirement of the Act), therefore any change must be carefully considered as to the likelihood of its approval. Our Declaration is straightforward but does contain significant sections dealing with the roof, the positions of property manager and president, and the tenure of officers.
The rules of our condominium are clear and explicit. If there is any problem with the rules it lies in the fact that they have not been reviewed in some time. A number may be obsolete and perhaps new ones are necessary. The enforcement of the rules will depend upon the philosophy of the board.
As a board member one of your crucial functions deals with the budget. The Property Manager prepares the budget but it must be passed by the board. The budget and the Reserve Fund contribution result in the monthly fees. A board must sift carefully through the numbers to arrive at reasonable fees and at the same time bear in mind future costs. Owners are always concerned about fees and the marketability of their unit.
The cost of major replacement and repair (as the Act says) of the elements and assets of the condominium are dealt with in the Reserve Fund Study. Revised every three years this document provides the best possible estimate of how long these elements will last and what the estimated cost of replacement may be at that time. Reserve Fund Studies base their lifespan estimates on knowledge of the building elements and base their dollars on average inflation rates as well as average interest rates.
Lastly, as far as required reading material goes, I would recommend looking at The Institute of Chartered Accountants of Ontario "Guidelines for Accounting and Auditing of Ontario Condominiums." This document, when followed, ensures that all appropriate procedures involving the owners’ money is properly accounted for.
If your board is not already a member of the Canadian Condominium Institute they should join and send a delegate or delegates to their meetings. CCI provides a wealth of information, the meetings are stimulating and the interchanges of ideas with other boards and meeting professionals in the field are invaluable.
For free you should check out the Ontario Condo Law Blog on the net. This will keep you updated about laws, precedents, and other features of the legal aspect of condos in clear language.
Lastly, be conscious that the board’s business is to run the corporation as a business. The owners deserve conscientious, detail-minded governance in order that this building maintain its structure and retain its value to the owners.
Congratulations again, thank you and good luck.