Condos are ideally designed to operate with relative simplicity and in a well-managed complex there is a measure of security and community. But this doesn’t happen organically.

Good governance is truly the life blood of successful condo corporations and requires effective and enforceable provincial and jurisdictional legislation, a thoughtful and transparent board of directors, an active ownership group and a well-informed professional management company.

Condos can face devastating circumstances from serious construction deficiencies going unseen for years and insufficient annual contributions to the reserve fund, to a board of directors reluctant to share the results of engineering investigations and make difficult decisions. It only takes a couple circumstances to attract the attention of major mortgage lenders and mortgage insurers, who are increasingly raising red flags and declining to participate in purchase transactions.

A number of commercial condo insurers have dropped out of Alberta’s market due to huge losses, largely related to relatively recent natural disasters and the staggering number of water damage insurance claims. Commercial insurance premiums have increased as much as 400 per cent over the last few years, triggering cash calls and/or devastating monthly contribution increases.

Mortgage lenders and commercial insurers are increasingly concerned about the renter-to-owner ratio, external financing/loans being necessary to complete major repairs and conversions. In response, an increasing number of private/specialist lenders have popped up and are waiting in the wings for a condo to fail and need a large cash infusion.

In addition to hands-on governance/management, condo owners should be well protected in provincial legislation over condominiums’ standards and practices. Some jurisdictions do much better than others in this regard.

Here in Alberta, there are few industry or community-based organizations to guide new board members or new condo owners in their rights and/or their responsibilities.

Only recently has a system been implemented to regulate condominium managers (who can hold an enormous amount of money in trust), provide ongoing education, issue or withhold licensing and keep them accountable to some form of legislation. Government or community-based resources are increasingly online and if you are of a generation that wasn’t born into our current technological landscape, you can feel left behind. The best approach is multifaceted.

Owners need to be inspired to be interested in the corporation’s documents and its business generally. There’s a lot of information if you want to go and look for it, but how to motivate owners and buyers remains a struggle. Most jurisdictions have implemented some type of dispute resolution/conflict tribunal for easier and less expensive access to justice and settling disputes. Owners in Alberta are crying out for this type of tribunal because their only option is to file a court case.

Court cases can be very expensive, time consuming and difficult to win because judges ultimately determine that a board of directors “made up of volunteers is doing the best they can”. Conflict resolution tribunals can be made up of a combination of lawyers steeped in the legislation, members of homeowners’ associations (HOA’s) and owner/buyer advocates. A modest $2 to $5 annual contribution from every condominium door in the province would fund this tribunal, but Alberta has yet to respond to the dire need from the ground level.

Condos are hot; they are always going to buy and sell fairly quickly and will remain a very popular option but they will always require a measure of pro-advocacy and proactiveness.In order to protect homeowners from a blind side cash call or major construction project, a few simple rules can be very helpful:

• Turn up at annual general meetings and information/townhall meetings when convened;
• Vote your opinion on various condo matters that require input;
• Insist on clear and transparent communication from the board;
• Read meeting minutes as they come out;
• Familiarize yourself with cash flow projections in reserve fund studies (which present a long-term view of the corporation’s needs with regard to current and future natural repairs/replacements);
• Volunteer for a term on the board of directors and see the business from the other side of the table;
• Understand your jurisdiction’s legislation and/or an individual condo corporation’s bylaws with regard to the owners’ ability to convene special or extraordinary general meetings to hold a board accountable; and
• When necessary, gather information from provincial legislation over the condominium industry and understand that provincial legislation supersedes bylaws

Confidence is in the details, but only rises to the level in which you are invested and participatory. Harmonious community living is enhanced by a relatively shallow dive into the business of the corporation, supportive legislation and an understanding that when you take your hands off the wheel, you can end up in a ditch.

Good management and governance is key in group ownership endeavours. Recommendations from a study of best practices by the University of Alberta highlight easy accessibility to information, implementation of dispute resolution services, working across all available platforms to engage and communicate with both owners and consumers and providing clear and transparent information in plain language and targeted to the appropriate groups.

For potential condo buyers, the best protection might be a comprehensive review of the corporation’s required disclosure documentation and candid opinions and discussions with appropriate professionals about the state of affairs from both financial and physical perspectives.

Owner apathy and lack of participation can devastate a condo and its owners.

Sharon Blondin is the President and Owner of CondoQuest and a director of the Condo Owners Council of Alberta.