As more condominiums rise up across Ontario, boards play an increasingly vital role because they oversee the operation, both physical and financial, of these communities.
Governance has been scrutinized since the first condominium in the province went on sale in 1967. Some have argued that boards form a fourth level of government, with directors having almost absolute power over the affairs of their condominium corporations. This level of authority eagerly invites the need for accountability, which is essential to ensure transparent governance, ethical decision-making, ongoing economic viability and for maintaining trust in the condominium model within the province. The vibrancy and viability of all condominium communities, including the broader housing market, depend on it.
Common issues with condo board accountability
Lack of transparency
One of the most common complaints from condo owners is the lack of transparency in decision-making. The Condominium Management Regulatory Authority of Ontario (CMRAO), which oversees condo managers, has said that board decisions are a top complaint it receives, despite having no jurisdiction over board directors.
Some boards fail to provide clear communication about financial matters, renovation projects, or major repairs. Owners receive annual budgets and audited year-end financial statements, but these documents merely group revenue and expenses into high-level categories. Owners can be left in the dark about the specifics of how their fees are being spent, which can lead to mistrust and frustration. In extreme cases, boards have been accused of concealing important financial details or approving questionable expenditures without consulting owners.
Abuse of power
While most condo boards refrain from abusing their power, some have been known to overstep their authority, imposing rules or penalties on owners without following the proper legal processes.
Some boards may attempt to control every aspect of condo life, from withholding renovation requests or dictating renovation timelines, to inconsistently enforcing rules about pets, parking, or even how units are decorated, all based on their personal and subjective preferences. This type of behaviour often creates a hostile living and working environment, where owners, tenants and staff do not have certainty for how their actions will be treated; they can feel powerless and harassed.
Conflicts of interest
Board members may also act in their own self-interest rather than for the good of the entire condominium. This manifests in various ways, such as favouring certain owners over others, hiring family members or friends to provide their condo with services without competitive bidding, or pursuing personal agendas that do not benefit the wider community.
These issues and the level of accountability and oversight were surely tested in the value-for-money audit, which was conducted by Ontario’s Auditor General in 2020. The report was presented by the standing committee on public accounts to the House in February 2023.
There were many recommendations, which the Condominium Authority of Ontario (CAO) and the CMRAO have since adopted. Currently, the scope of disputes and issues the CAO’s Condominium Authority Tribunal (CAT) can weigh in on is limited. The CAT cannot look into issues relating to board decision-making or governance, unless they relate to noise complaints, smoke migration, pets and records requests.
Aside from taking steps to call a special meeting of owners for the removal and disqualification of board directors, there is no other recourse available to owners to address board governance and decision-making problems, other than making an application to the Superior Court of Justice, which is a costly and time-consuming endeavor.
It is extremely difficult to remove or otherwise hold directors accountable, even if they have eroded the trust of the community. More interestingly, the standing committee recommended that the ministry of public and business service delivery should work with the CAO to include an array of key areas, such as board misconduct and fraudulent board elections.
Arguably, the writing is on the wall: the jurisdiction of the CAT will likely expand to include alleged board misconduct. Regulatory amendments and their proclamation into law can take time as they grind through political and administrative government processes.
In the meantime, condo boards should try to adopt and promote good governance practices by following these three simple steps:
Foster transparency
Owners’ allegations about a director’s abuse of power and misconduct often stem from poor communication and asymmetric information. Board directors have all the information about their condominium’s operations, maintenance, repairs, capital projects, and spend. Owners receive practically none of this information, unless a board actively shares it.
Transparency requires more than just sharing board meeting minutes, which are brief and don’t capture details about discussions or the “why” behind the decisions being made. Transparency also requires more than sharing records because records don’t contain project plans, timelines, or priorities of all the requests and maintenance work the board is tasked with.
In fairness to boards, fostering full transparency isn’t easy. Traditionally, boards don’t have a central place to keep all their records, project plans, and operational work. To improve transparency, get organized and locate all your condominium’s operational information in one place.
Engage ownership
Good governance requires boards to engage with owners regularly and in a manner that allows owners to be heard. At a basic level, engagement requires boards to share information actively with owners. This includes maintenance records, spend, opinions and updates from vendors, reasons for decisions, and how they are prioritizing requests that owners and tenants are making.
At a more advanced level, engagement requires boards to have a communications strategy, which ensures owners appreciate the intent and nature of the message. Communications should not be a check-the-box type exercise. Finally, the best engagement comes when owners have the ability to ask questions and have a dialogue with the board or their property manager in a friendly and non-adversarial setting.
Director qualifications and professional board members
Condo boards are responsible for managing the affairs of their corporations, which includes making decisions and carrying out duties relating to financial, mechanical, structural, social and legal issues. To achieve good governance, board members must have a combined skill set that covers these areas. Otherwise, they are left with voids that may affect their decision-making and actions.
While it’s possible to fill gaps by hiring property managers and vendors (which is undoubtedly done and is the norm in the industry), a board with these skills across their members will have more success and encounter fewer issues because they won’t have as many blind spots.
Over the longer term, there is growing consensus in the industry about the benefits of furthering the oversight of condominium boards across Ontario. Some recommendations have included:
Stronger enforcement of the Condominium Act
Bringing the condo governance disputes into the CAT’s jurisdiction as per the standing committee’s recommendations would be an altering change of the Act’s self-governance model. The ministry of public and business service delivery should offer protection for condo owners and buyers by providing the CAO with inspection, investigation, and enforcement powers to ensure compliance with the Act.
Amalgamate the CAO/CMRAO
Both organizations are already intertwined with information sharing, education, and registries. The value-for-money audit suggested that the CAO and CMRAO could be combined into one authority, with an estimated annual cost savings of up to $753,000. This move would establish a one-stop shop for all things related to condominium governance and management.
Expand further on education
With the seven-year anniversary of the first wave of directors’ training expiring, education should be strengthened to focus further on governance and interpersonal relations. During the time of the audit, more than 6,000 directors (more than 13 per cent) had not completed their training within the prescribed period of time.
Accountability in condo board governance is crucial for the well-being of any community and for stability of the housing market in Ontario, more generally. By fostering transparency, setting clear policies, encouraging resident involvement and ensuring that board members are trained and equipped to handle their responsibilities, the board can build a community based on trust, fairness and mutual respect. The government has an opportunity to act by adopting the recommendation from the value-for-money audit.
Implementing these suggestions can help prevent conflicts, protect a property’s financial and physical health, and maintain a high quality of life for all residents of condominiums in Ontario.
Val Khomenko, RCM, OLCM is a Regional Condominium Manager with TSE Management Services Inc., providing full-service property management and consulting services in the Greater Toronto Area.
Salim Dharssi, BASc, JD is a two-term condominium board director and Founder & CEO of Managemate, a SaaS solution used by condominium boards and managers to reduce costs by centralizing their maintenance, capital project and record keeping processes.
