I’m often asked to give advice to new directors, especially first time directors. It is a difficult question to answer because the advice depends on a number of factors, such as the experience level of the director, whether or not the condominium has a manager, and the age of the condominium. In hopes of reducing the anxiety of a few new directors, here are my top ten suggestions to newly elected directors:
1. Review the condominium documents – it is important for directors to review the declaration, by-laws and rules shortly after being elected. You are not expected to be an expert, but you need to have a basic understanding of the key provisions, such as repair and maintenance obligations, restrictions on the use of units, and shared facilities. Familiarity with the documents will make for more efficient board meetings and more informed decisions.
2. Know your role – sometimes new directors overstep their role and engage in activities that are not appropriate, such as instructing contractors without first discussing it with the other directors. Other times new directors are too timid and afraid to express any opinion at all. Educating yourself about the role of directors, managers, owners, and others will reduce conflict on the board and make you more confident in the execution of your duties.
3. Education – all directors elected or appointed after November 1, 2017, must complete mandatory training through the Condominium Authority of Ontario (CAO). This training is completed online and takes 2-4 hours for most people to complete. Failure to complete the training within six months of election or appointment results in the automatic disqualification of the director. The training through the CAO is very basic so I suggest you consider additional educational opportunities, which can be found by joining your local chapter of the Canadian Condominium Institute (CCI).
4. Watch out for conflicts of interest – the Act and its regulations require directors to disclose certain matters within specified time frames. Most disclosure obligations relate to areas where a potential conflict of interest arises, such as where the director (or a family member) is a party to legal action involving the condominium or the director has a material interest in a contract or transaction involving the condominium. Be aware of the obligations to disclose these materials and the time frame for doing so.
5. Comply with qualifications and disqualifications – the Act includes basic qualifications and disqualifications for directors, including the disclosure and training requirements discussed above. A condominium’s by-laws may include additional qualifications and disqualifications, such as attending a certain number of board meetings every year and signing a code of ethics. A new director should be familiar with these requirements as the failure to comply with one of them could result in the automatic disqualification of the director from the board.
6. Conducting business – the Act requires condominiums to conduct business at properly constituted meetings where a quorum of the board is present. Ideally, all business would be conducted at board meetings after proper notice of the meeting is provided to all directors. In reality, most (if not all) condominiums conduct some minor business via email. If you feel the matter is controversial or it is important, such as initiating a legal proceeding, a director should request a board meeting to discuss the matter and vote on it.
7. Duties – the primary duty of the directors is to manage the affairs of the condominium on behalf of the owners. In doing so, the directors must ensure the condominium satisfies its duties and objects, including managing the common elements and assets of the condominium and ensuring owners and others entering on the property comply with the Act, declaration, by-laws and rules. Additional duties can be found in many by-laws. There are countless duties found in other legislation, such as the Human Rights Code and Employment Standards Act, as well. Directors are not expected to know all of their duties; they should rely upon their professionals for advice when needed.
8. Standard of care – The Act describes the standard of care expected of directors. All directors must act honestly and in good faith in carrying out their duties. They must also exercise the care, diligence and skill that a reasonably prudent person would in comparable circumstances. As a lifeline to volunteer directors, the Act also states that directors are not liable for damages caused by a breach of their duties if they relied, in good faith, upon the advice of certain professionals. Directors should rely upon their experts to ensure decisions are well informed, but also to protect themselves from personal liability.
9. Keep calm and carry on – there will be disagreements on the board and possibly between the board and owners. Keep calm. Don’t resort to name calling, yelling, or foul language. Be respectful and demand respect in return. It is likely that you will be criticized for some decision you make during your term. Try not to take it personally and focus on the facts; keep the emotions out of decisions. Continue with the required action, even if it is unpopular.
10. It’s not a popularity contest – Your role as director is to make the tough decisions and implement a course of action that is best for the condominium. That might include levying a special assessment (even if you can’t pay it yourself) or sending a letter to an owner because he refuses to comply with the rules. Having a manager implement the unpopular decisions can act as a buffer between the board and owners, which is important when you vote to send a letter to your neighbour because they refuse to pick up after their dog or continue to park in your parking space.
There are several other points that could have made the list, like communicating regularly with the owners, reviewing financial statements, and ensuring necessary filings are completed by the manager or other professional. The list could easily reach 100 with more time. While the role may seem daunting, many directors find it extremely rewarding as well and come back for a second or third term on the board.
I’d like to hear from directors on this post. What advice do you have for newly elected directors? Anything you would do differently the second time around?