June 13, 2017

Do Condo Board Members Need to Be Owners?

A recent CBC News Toronto investigation regarding condo board governance serves as a cautionary tale. According to the investigation, a group of men have allegedly been hijacking boards at about a dozen highrise Toronto condos over the past few years. The men are generally not unit owners in the buildings in question, according to the report.

This kind of activity sometimes leave condominium owners at a disadvantage, as non-residents may make decisions that are not in the best interests of the building community. For example, in one instance costs to unit owners rose by $100,000 after the board signed an energy deal that allegedly benefits a board member’s associate.

Get To Know Your Neighbours

Marc Bhalla, second vice president of the Toronto & Area Chapter of the Canadian Condominium Institute, says the stories emerging from the CBC investigations underscore the importance of condo owners participating in the community and getting to know their neighbours. The best opportunity to do so is during the annual general meeting, he suggests.

“If you look at how those types of concerns can be avoided, the easy answer is by people actively participating in their annual general meetings, not using proxies and not missing that opportunity to get to know the people who are interested in running for their board,” Bhalla said.

Who Can Be On a Condo Board?

Legally speaking, there are only three qualifications that an individual must meet in order to be able to join a condo board. He or she must be over 18, mentally competent and not bankrupt. Living in or owning one of the units is not required.

A condo corporation has the option of implementing a bylaw that requires board members to be residents or owners of units within that building. But Bhalla said it might not be in everyone’s best interests to do so.

“For most people, running for the board is a volunteer position, and some condominium communities don’t have an awful lot of people who are willing to volunteer their time to govern the community,” says Bhalla.

“So the way the legislation is structured is because they didn’t want to raise too many obstacles for people who are interested volunteers.”

Plus, Bhalla adds he has seen cases where non-owners have been very helpful contributors to condo boards. For example, a board member may sell his or her unit but wish to stay on the board in order to fulfill their obligation to the community.

“It’s not necessarily the case that a non-owner is a bad director,” Bhalla said. “It just raises questions as to why somebody would want to do it, and that’s something that can be addressed at an annual general meeting when you cast your ballot and get to learn a little more about the people who are running for the board.”

It Pays to be Engaged

Having actively involved unit owners also empowers the board by making it easier for them to pass new bylaws. That’s because in order to pass a new condominium by-law, a majority of all unit owners comprising a community must vote in favour of the new by-law.

“Basically, by owners being actively involved, not only will they be able to understand who it is who’s running for the board and try to elect the people that they feel are the most capable of making the best decisions for the overall community,” says Bhalla. “But they also do things like enable the condominium corporation to consider adding bylaws that would restrict who can qualify.”