What are the Board's Responsibilities ?
Q:What are the Board’s responsibilities?
A: Broadly speaking, condominium board directors are responsible for managing all the affairs of their condominium corporation. CCI National Bylaw 1 goes into detail on this in The Director’s Responsibilities and Governance of The Basics on the National Website
The Director’s Responsibilities and Governance
Provincial Legislation is created largely as consumer protection legislation designed to protect the rights of owners. As such, it has many sections setting out insurance, maintenance and repair, creation of its Declaration, by-laws and rules.
The government recognizes the need to protect owners’ interests and to provide rights and guarantees to prospective owners. This legislation is what makes Condominium ownership a viable housing option. Directors should become familiar with the structure and process of their Provincial Legislation. This section reviews the Directors’ responsibilities and the governing documents that secure the rights and expectations of the owners and residents.
A Director’s role and responsibilities are not subjective; they are clearly identified in the Provincial Legislation, and it is the Provincial Legislation that should be referred to for guidance.
A Condominium Corporation is governed by an elected Board of Directors, typically drawn from the unit owners. The business decisions of the Board are not generally subject to owner approval unless the Provincial Legislation specifically requires the owners’ involvement, such as when the Condominium wishes to borrow money or make a substantial addition, alteration or improvement to the common elements.
Minimum standards apply to the number of Board members. There must be at least three individuals.The minimum qualifications provide that a person shall not be a Director if under the age of majority, an undischarged bankrupt or mentally incompetent.
Every Director and officer of a Corporation shall exercise the powers and duties of his office honestly and in good faith. Acting “honestly and in good faith” encompasses many things, such as an honest belief in the action one takes, the absence of malice and the absence of intent to defraud or to seek an unconscionable advantage over another.
Acting in the best interest of the Condominium Corporation involves a fiduciary duty which is often misunderstood. A fiduciary is a person who has agreed, or has undertaken, to act for, or on behalf of, or in the interest of, another person in a manner that will affect the interest of that other person in a legal or practical sense. In common law, Directors of business corporations have long been held to owe a fiduciary duty to the Corporation itself. Similar considerations apply to Condominium Corporations. A Director does not owe a fiduciary duty to individual unit owners but does owe this duty to the Corporation.
A Director upholds and abides by the decisions of the Board even if they individually did not vote in favour of the decision. This is a very challenging duty as personal feelings are hard to ignore. A successful Board speaks as a complete unit regardless of a split decision. The owners never need to know the split and who was for or against, as it is irrelevant.
The Provincial Legislation requires that not only must Directors of Condominium Corporations act, “honestly and in good faith”, but they must also, “Exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances”. This is identical to the standard of care imposed upon the Directors of Corporations under most Provincial Commercial Legislation. This is an objective standard meaning, as it relates to Condominium administration, the degree of care of a Director in one Condominium Corporation may be compared to the degree of care exercised by Directors in other Condominium Corporations who are faced with similar circumstances.
Most Provincial Legislation states that if, in making a decision, the Directors rely on the opinion of a lawyer, engineer, auditor or other individual whose profession and experience lends credence to their opinion, that Directors cannot be held liable if the decision that was based upon that opinion does not turn out well. Conversely, if a Board makes a decision that is contrary to a professional opinion received, and the outcome does not turn out well, there is a risk that the Board members acted in a manner that is contrary to that of a reasonably prudent person.
In short, when in doubt, a Board should make use of the best resources available to it through the manager, solicitor, engineer, auditor, etc. Good governance includes making informed decisions, taking proactive measures to rectify existing or potential problems, having organized and timely Board meetings, reviewing financial/banking documents, and taking advice provided by professionals.Bad governance can result from ignoring problems, not obtaining professional advice, ignorance about or disinterest in the affairs of the Condominium Corporation, putting other interests ahead of the interests of the community and not adhering to the standard of care required of a Board member. published by CCI National, which provides a comprehensive guide on director’s responsibilities.
Not all of this information is created, provided or vetted by CCI. Some of the information is only applicable to certain provinces. CCI does not make any warranties about the reliability or accuracy of any information found in the materials on the website. The information is not updated to reflect changes in legislation or case law and therefore may not always be current and up-to-date. We suggest you seek professional advice with respect to your specific issues or regarding any questions that arise out of the material. We will not be liable for any losses or damages in connection with the use of any of the material found on the website