Condo Governance Best Practices for Directors in Ontario

Condo board members are often the backbone of a condominium’s community. They’re olunteers who oversee a condominium’s operations and ensure the maintenance and governance of the property is well taken care of. 

While managing a community is no small feat, by adhering to good condo governance practices and provincial laws can help make it easier.

 

What is Condominium Board Governance?

Condo governance refers to the processes a condo board uses to manage and oversee a condominium property. Governance processes do not define the rules and laws a board must abide by. Instead, they outline how a condominium corporation will meet its legal obligations and responsibilities that are outlined in:

• The provincial condo act. In Ontario, this is outlined by The Condominium Authority of Ontario (CAO) .
• The condominium’s governing documents. These include by-laws, corporate declaration, rules, and health and safety regulations.
• Municipal laws
• Health and Safety laws

 

 

The Importance of Good Condo Governance

How a condo’s board of directors approaches governance practices can have a significant impact on the health of a condominium corporation and its community members. Without well-established and relevant governance processes, a condo corporation is less likely to meet its financial and legal requirements; potentially risking paying hefty fines and other penalties.

However, when a condo is governed properly, its ability to thrive as a well-managed and cohesive community can increase exponentially.

 

Benefits of Good Governance Practices for Condominiums 

There are numerous benefits of having governance practices that follow accepted best practices and are tailored to its communities unique needs. Four of which are discussed below.

 

Increased Community Harmony

A well-governed condo fosters a sense of community. Residents can feel comfortable to communicate effectively, resolve conflicts amicably, and participate in decision-making. 

Establishing conflict resolution practices in governance documents can aid in a harmonious living environment, foster a positive atmosphere and create a stronger sense of belonging among community members.

 

Compliance with Laws and Regulations

By adhering to legal requirements and regulations, a condo board demonstrates accountability and protects the interests of both the corporation and its owners. Compliance ensures that the condo operates within the boundaries of the law, minimizing legal risks and potential penalties.

 

Increased Property Values

A condo with effective governance practices becomes an attractive place to live, boosting property values. A well-maintained building, that’s guided by proactive decision-making, and a sense of community, contribute to a desirable living environment. This is a desirable attribute to potential buyers that can boost unit prices above expected market rates.

 

Sustainable Financials

With proper financial management, a condo board ensures that funds are allocated prudently, meeting both short-term expenses and long-term maintenance costs. 

Adequate reserves for major repairs or replacements, such as a roof or ageing playground equipment, protects owners from unexpected financial burdens and ensures the sustainability and proper maintenance of the condominium.

 

The 4 Foundations of Condo Governance Best Practices

To help Ontario condo corporations develop robust and effective governance systems, the CAO has created a best practices guide. In it, they highlight the 4 foundations of good governance that condo boards can use as a guideline to make their own governance policies.

The four foundations include:

1. Developing Key Competencies 
2. Meeting the Standard of Care
3. Proper Condominium Board Composition
4. Maintaining Good Owner Relations

 

Foundation One: Develop Key Competencies

Key competencies of a governance framework refers to setting up processes that inherently uphold provincial and municipal laws and the condo corporation’s internal by-laws. 

When developing the key competencies of a governance policy, it’s essential to collect and understand the information needed to lay the right foundation needed to ensure a condominium corporation’s needs and obligations will be met. 

These obligations include:

• Understanding the condominium’s legal framework.
• Upholding a minimum standard of care for the condominium corporation.
• Develop and implement good governance practices.
• Establish how board’s will conduct themselves to effectively execute board business.

 

Foundation Two: Meeting the Standard of Care

Governance processes should be designed so the corporation will receive the minimum level of care and attention needed to stay financially healthy and legally compliant. This is to ensure all of its financial, maintenance, and legal obligations are allocated the right amount of resources necessary to uphold them.

This includes:

• Financial Due Diligence
• Reserve Fund Management
• Risk Evaluation and Sustainability Planning
• Conflict of Interest Disclosure policies
• System to oversee the management company.

 

Foundation Three: Proper Condominium Board Composition

A community’s board of directors can wield a significant influence over a condominium’s operation and management practices. In order to ensure fair, inclusive, and transparent board member behaviours, the right board composition is needed. Policies guiding the board on how to act on every owner’s behalf will help keep condo operations running smoothly.

When determining your building’s condo board composition, keep the following in mind:

• Determine what roles you need to have on the board. This includes the board president, vice-president, secretary, treasurer, and other relevant director roles.
• Determine presiding term constraints. This includes how long one person can hold a position, term limitations, role expectations and responsibilities, as well as election frequencies and rules.

The Ontario Condo Act has specific rules to follow when determining a condo board’s composition. If you’re unsure how to proceed, connect with a property manager that has experience establishing new condo board governance practices and amending established bylaws.

 

Foundation Four: Maintaining Good Owner Relationships

While a properly established governance structure and clear by-laws lend themselves to developing and maintaining good community relationships, it’s a good idea to do more. When a board has the support of its community, there’s less likely for them to have unresolved issues to deal with and fewer complaints by residents.

To make community engagement and owner-relationships a part of your governance practices, consider the following:

• Establish rules on how to inform residents of pertinent information.
• Welcome owner feedback and establish policies for them to share concerns. 
• Schedule board meetings where owners are welcome to attend without special requests.
• Consider semi-annual town hall meetings in addition to the annual general meeting (AGM) for owners to connect and share information.

Learn More About Condo Boards and Their Responsibilities How Much Power Does a Condo Board Have? How to Run a Condo Board Meeting Condo Manager’s Role in Electronic Voting Process

 

It’s Easier to Uphold Good Condo Governance With Help From a Property Management Company

ICC Property Management has over 30 years of experience with Ontario’s condo laws. That means we’re well-equipped to help you make sure your board members uphold them while also advising you on other best practices.

Over the decades, we’ve encountered many different situations so there’s a good chance we’ve helped another condo corporation with a challenge much like the ones you may face.

Request a free quote to start enhancing your condo governance standards.