How to avoid condo board breakdowns

When a condominium community goes to war, everyone loses. The owners lose trust in the board of directors’ ability to manage the condominium. Necessary repairs go undone. Not enough money is collected to pay for future repairs. Nothing gets accomplished, and the value of the units declines. 

Often, disgruntled owners try to replace the directors. In some cases, the courts have to appoint a third party to come in and fix things.

The courts will get involved if it can be demonstrated that the corporation is being mismanaged, there is misconduct by the board of directors or the management company, or there are competing groups of owners who are not able to agree. It is very expensive to hire lawyers to do this, so it normally takes a large group of owners to get this done.

The courts get involved when reserve funds have been drained and major repairs are needed following years of neglect by successive boards trying to keep costs down. In some cases, it is the board of directors who ask the court for assistance, when they want additional funds for repairs, only to be voted down by a majority of the owners.

The court administrator will typically conduct an assessment of the condo’s finances and will work with the owners to develop a proper plan of action to restore the building. If necessary, they will come back to the court to approve the steps they are recommending.

Suffice it to say that when buyers hear that a condo building is under a court-appointed administrator, they are nervous about buying.

Here’s how to protect yourself from being part of a dysfunctional condominium group:

•Read all the condo documents before you buy, including the rules, restrictions and financial statements. Make sure they are not running a deficit and there is enough money in the reserve fund to pay for repairs.

•Volunteer to join committees to assist in making the building more of a community; to learn about problems and pass them on to the property manager for resolution.

•Attend all meetings to make sure that you understand and agree with the decisions being made.

If you are part of a condo board, here are some ways to instill confidence:

•Hire a professional property manager.

•Address owner concerns promptly.

•Have timely communication with notices posted around the building, especially when rules are not being followed (for example, unit owners parking in visitor parking spaces).

•Make sure any major repairs are discussed in advance with all owners through information meetings.

•Ensure that a proper tender process for major repairs, so that the corporation gets the best value for the money spent.

•Avoid conflicts of interest; do not vote on any matter or permit a personal friend or relative to gain any advantage in dealing with your corporation.

•Have a transparent process to release financial details to unit owners.

•Consider making part of a director meeting open to all the members, to help them learn more about issues facing the corporation.

When unit owners and their boards work together, with open communication, creating a sense of community and always acting in everyone’s best interests, then your condominium will only increase in value.

By: Mark Weisleder