Can Your Condo Opt-Out of the Act?

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I have heard of situations where a condominium wants to avoid a requirement of the Act for one reason or another. Often the desire is to avoid the costs associated with the requirement. Other times the desire appears to be to reduce the number of administrative tasks. Whatever the reason, Section 176 of the Condominium Act, 1998, clearly states that the Act “applies despite any agreement to the contrary”. This means you cannot contract out of the Act.

Notwithstanding Section 176 of the Act, there are parts of the Act that a condominium can override by making changes to its declaration, by-laws or rules. There are also parts of the Act that a condominium can opt-out of if certain requirements are met.  Continue reading

Don’t forget about the Auditor!

“What does the line that says ‘Repairs and Maintenance’ mean?” “Why does it say we spent more out than we received?” Did the corporation file a tax return?” No one is better equipped to answer these questions than the auditor. While not mandatory, fortunately it is industry practice to have the condominium’s auditor present at annual general meetings to present the financial statements and report to the owners. The attendance of the auditor can be required by the condominium or an owner, but the auditor must be given a reasonable fee for his/her attendance. The auditor also has a right to insist upon his/her attendance at the meeting.

The above is probably not news to most of you. But, how many of you are sending the auditor the notices the owners are entitled to receive? Subsection 70(2) of the Act requires the corporation to provide notice of all owners’ meetings to the auditor. The corporation must also provide the auditor with any attachments, such as proposed amendments to the declaration, by-laws or rules, substantial change notices, requisitions, and any notice related to amalgamation. These are just a few notices that must be provided to the auditor. Subsection 60(4) also requires the corporation to notify the auditor of his/her appointment immediately after the meeting when he/she is appointed.

“Now I ask for a motion to approve the audited financial statements”. No you don’t! Never. The owners do not approve the audited financial statements, the board does (see section 66(3) of the Act). Same goes with the budget – the owners should never be asked to approve it. What happens if they won’t approve it? The only motion that should be made at an annual general meeting related to the audit or auditor is the appointment (or very rarely removal) of the auditor. The motion should be clear and precise. I suggest the following:

“I move that we appoint Mr. Smith of 123 Auditors Inc. as auditor for the fiscal year ending December 31, 2014 with remuneration to be set by the board of directors.”

The owners can also fix the remuneration of the auditor, but the auditor may not be willing to complete the audit for the amount fixed so it is usually best to have the board set it after negotiations with the auditor. In the alternative, the board can ask for quotes before the meeting and report to the owners before the motion is made.