What’s a New Condo Director to Do? Five First Steps

Congratulations! You’ve been elected to your condo’s board. As a new condo board director you will now need to take the time to understand what your and the board’s responsibilities are, and how they are met. This information is vital, because condominium directors have legal obligations to the condominium corporation (including present and future owners). Getting familiar with all of this is a director’s first duty, and is significantly helped by taking an introductory course for condominium directors (which is always recommended). But, here are some other steps that may be worth taking in each case:

1. Review All Constituent Documents

Becoming familiar with the Condominium Act and the corporation’s Declaration, By-laws, Rules and Survey Plans is a top priority. A condominium director would not be expected to know and understand all of the intricacies of the Condominium Act, but in most cases a director would be expected to have general familiarity with the Act and would also be expected to know the condominium’s specific governing documents (ie. the Declaration, By-laws, Rules and Survey Plans).

2. Review the Condo’s Directors and Officers Insurance Coverage

This is vitally important, because directors do get sued from time to time. Understanding the corporation’s D & O insurance protection may put your mind at ease, and make you less likely to balk when it comes time to making hard decisions that could raise the ire of other unit owners, or perhaps service providers. Some questions that you will want to ask yourself when reading this insurance policy include: Is the coverage amount enough? (Two million dollars coverage is now considered the very minimum amount that should be in place. But five or even ten million dollars coverage is now very common. This is something to be reviewed with the corporation’s insurance broker.) Are the terms of coverage sufficient, or could they be broadened, or gaps in coverage filled, with another policy? Is there a deductible? And, most importantly, read and become keenly aware of the policy’s requirements to provide notice in the event of a potential claim, because failing to meet those requirements could see your insurer decline coverage. [Again, all of these issues can be reviewed with the corporation’s insurance broker.]

Somewhat related to this topic is that you should also make sure that the corporation is required to indemnify you for any acts or omissions that result in legal action – check the by-laws for this protection.

3. Review Past Minutes of Board and Owners’ Meetings

Review the minutes for the past two years (or further back, as appropriate in the given circumstances), in order to understand any current issues requiring the Board’s attention.

4. Review the Condo Manager’s Contract

Most condos contract with managers to handle the “day to day” financial and maintenance issues of the condo, as well as to ensure that the board is following the correct procedures when it acts. Board agendas, meeting minutes and annual budgets are usually generated by the manager for the board to rely on, and will follow-up with the board on the status of action items. A review of the manager’s contract will detail the manager’s duties, and allow you to see if the manager is fulfilling its duties, and conversely, if the board is fulfilling those duties left to it. You will also want to see if the manager’s contract has an indemnification provision in the manager’s and/or the condo’s favour in order to more fully understand the board’s potential liability should a claim be made against the manager for acts or omissions that are linked to the manager’s contractual performance.

5. Review Current Financial Documents

Many of these documents you will have seen, as they were already available to you as a unit owner and formed part of the information discussed at Annual General Meetings. These are: the annual budget, the current Reserve Fund Study (and related plan to finance it) and current Status Certificates. But, as a director, you will now want to understand what they are and what they mean in more detail. Again, what is required in each is set out in the Act and its regulations, so you should start there. When you get to the documents themselves, more context may be needed to appreciate specific line items or statements. This is where dialoging with your condo manager and the more experienced board members will come in handy.