Real Estate

Further disclosure ensures condo board members are capable, ethical

By Kathy Rumleski, AdvocateDaily.com Contributor

A disclosure obligation for candidates of condominium boards in Ontario will help ensure boards consist of members working for the good of all, Toronto condominium lawyer Audrey Loeb tells AdvocateDaily.com.

“Anybody who wants to run for the board already has to disclose if they have any convictions or legal proceedings and other information set out in a bylaw,” says Loeb, a partner with Shibley Righton LLP. “We convinced the government to add a new requirement that board directors also disclose whether they own or occupy a unit in the building.”

She says this mandatory disclosure obligation came because of efforts to expose some individuals trying to gain control of multiple condo boards and through investigative reporting by CBC News journalists.

Loeb says she became aware of people seeking to become board directors at multiple condos in Toronto and Mississauga through a client.

“They heard rumours some individuals were making efforts to get onto their condo corporation board,” she says. “In one of our buildings, we prevented these people from succeeding in doing this.”

Removing a member from a board can be quite difficult, Loeb says, so it’s best to ensure capable and ethical directors are elected in the first place. She advises her clients to add additional candidate disclosure obligations, including information as to whether they sit on any other boards."

“We have enhanced disclosure obligations in our bylaws for clients to add more than what the province requires,” she says.

Loeb says she also drafts a code of ethics and conduct included in bylaws for her clients. While the Canadian Condominium Institute has a code of ethics, it lacks some details and does not include a code of conduct.

“Ours is more expansive than what many corporations use, and our bylaw also covers how to deal with a board member who becomes involved in litigation against the corporation,” she says.

“We look at issues that our boards have dealt with over the years and try to enhance bylaws,” Loeb says. “Any board member's breach of the code of conduct results in a warning. If the behaviour continues, you can be removed from the board,” Loeb says.

“The courts have upheld that provision, providing the corporation follows the proper protocols,” she says.

Boards should also communicate regularly with their owners to ensure everyone understands the issues and to give people a sense of what is happening in the building.

“We have always preached communication to our boards so that there is a trust that builds up.”

Loeb says, adding that she often advises boards to go above the letter of the law to protect themselves.

“Sometimes we tell them, ‘The law says this, and you don’t have to do anything beyond that, but sometimes it can be helpful to go above and beyond.’ We know from our experience what needs to be done,” she says.

For example, Loeb recalls a board that wanted to end valet parking at a building.

“I told them, ‘Under the Condominium Act you can get rid of valet parking, but I am advising you not to do this without holding a meeting of the owners,’” she says. “The board ignored my advice and terminated valet parking, and all hell broke loose.”

Unit owners can also ensure good governance by reading minutes and pressing boards to post them, she says.

Ultimately, Loeb says owners must know who they are voting onto a board.

“It’s like electing a politician,” she says.

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