This is the first of four posts addressing the suggestions made by the expert panel with respect to the financial management of condominiums in Ontario. Many of the suggestions address serious issues that cost owners millions of dollars each year, ranging from financial mismanagement to outright fraud and theft. This post will describe the suggestions made regarding the average owner’s lack of education and information.
The expert panel made various suggestions to ensure owners are better educated and informed in the area of financial matters. The suggestions are too numerous to list them all, but they include:
- An online course should be offered to owners on financial statements, common expenses, special assessments, and access to records;
- The ministry should create a guide that informs owners that they can requisition a meeting at any time;
- The auditors should be required to advise the owners if the board has approved the investment plan;
- The board should be required to notify owners of spending not within the budget, even if they do not require approval of the owners to spend the funds such as an ordinary repair; and,
- The owners should be informed that they can obtain insurance to cover deductibles charged back to them under the condominium’s policy.
Although all of these recommendations should improve the knowledge of owners, I believe the fourth item will be the most likely to reduce conflict in condominium communities. I have been at countless meetings where owners are annoyed that the board undertook costly repairs without notice to them. Most owners do not understand that section 97(1) of the Act currently allows boards to complete any necessary repairs or maintenance without notice to the owners as long as they are obligated to do so (i.e. a provision in the declaration requires the condominium to maintain or repair the item) and they do so using materials that are reasonably close in quality to the original. A requirement that the board provide notice of any such repair or maintenance before beginning any work should improve the relationships between the board, property manager, and the owners.
The other suggestions, such as the online course and condo guide, will only be successful if owners are willing to put in the time to educate themselves. In my experience, this is only a small percentage of owners. Hopefully all of the time, effort, and expense put into this amendment process will improve the participation rates of owners in educational activities and organizations such as the Canadian Condominium Institute (CCI).
Up next week #2 – Financial Management: Reserve Funds & Reserve Fund Investments