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Should condo board candidates be owners?

A debate has broken out over whether condominium directorships should be restricted to unit owners following allegations that several condo boards in the Greater Toronto Area have been taken over by outsiders, says Toronto condominium lawyer Armand Conant.

CBC Toronto reports that several men have been elected to numerous condo boards in Toronto and Mississauga, giving them control over multi-million dollar budgets and reserve funds. In many cases, the men were not registered owners of condos in these buildings and didn't live in them, the CBC says.  

Some residents in the buildings where the men were elected as directors allege that the boards wouldn’t allow them to attend meetings or reveal information about how service contracts were awarded. They also say their buildings have fallen into physical and financial disrepair, the CBC says.

The turmoil uncovered by the CBC investigation has sparked a debate in the industry about how condo corporations are governed and who should be allowed to run for their boards, says Conant, partner and head of the condominium law group with Shibley Righton LLP.

“Because of these recent situations, there is a push by the industry to have the government legislate or regulate that you must be an owner to be on the board,” Conant tells AdvocateDaily.com.

Some caution that placing such a restriction on board membership could reduce the candidate pool, says Conant.

Several provinces restrict condo directorships to owners, but Ontario does not, leaving it up to individual condo corporations to decide.

According to the CBC, several of the condo board members embroiled in controversy were elected through proxy votes, some of which were alleged to have been irregularly obtained.

“Unit owners have to be very careful because proxies are extremely powerful,” says Conant.  “Be very careful about who asked you to sign it and why. Make an informed decision, because you are giving away a very important democratic right — the right to vote.”

Some people seeking proxy votes for board elections misrepresent themselves and their plans as they knock at unit owners’ doors, he says.

Under Ontario’s Condominium Act, 1998, anyone can run for a condo board if they are over 18, mentally competent and not bankrupt. The law also stipulates that if more than 15 per cent of the condominium’s owners live in their units, one board position can only be elected by these owners, Conant notes.

A condominium corporation can pass bylaws putting additional qualifications on who can run for the board, but these bylaws must be approved by a vote of more than 50 per cent of the unit owners, Conant says.  “They’re hard to pass,” he adds.

The question for the government is how far it should intrude on the affairs of a condo corporation, which is sometimes considered a fourth level of government, by imposing additional qualifications for board membership, he says.

There are pros and cons on each side.

On the plus side, making unit ownership a prerequisite would stop people from sitting on boards in multiple buildings where they are not owners. That might reduce the kinds of problems alleged in the CBC series, he says.

If the government were to make ownership a condition of board membership, it would have to determine what percentage of a unit a candidate would need to own, he adds.

“Does it mean 100 per cent, one per cent or some other percentage? I think it’s a necessary discussion.”

Some people would also like the government to restrict board membership, not only to unit owners, but to those with whom they are related, like a spouse, partner or child, he says.

On the other side of the debate, people argue that barring non-owners from running for the board would make it harder to find candidates, let alone skilled and knowledgeable candidates for what are unpaid and often thankless positions, he says.

As a condo director, he says, “you sometimes get yelled at and harassed. When you add further requirements, it may scare off candidates.”

Conant says some people think finding suitable owner-candidates would be especially problematic in condominiums with a high proportion of rental units, as is common in Toronto.

As the debate continues, Conant says the government seems to be listening.

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