Proxies need to be Curtailed in Condominiums

Gerry Hyman has another article for the Toronto Star.  Let’s discuss some of the questions:

QUESTION:We attempted using proxies to get enough votes to remove our condominium’s directors. But they fell a bit short, Now the board has introduced a new proxy form naming a vice-president as proxy and “failing him, the president — and “failing him” a person to be named by the owner who signs the proxy instrument. Do I understand this correctly that if either the vice-president or president is at the meeting, they will be the proxy and a person named by the unit owner will not?

ANSWER:  Yes! The words “failing him” mean that unless both the vice-president and the president are not available one of them will be the proxy and the unit owner cannot choose the proxy.

Using that form of proxy will render it impossible for owners to obtain enough proxy votes to remove the directors. Presently, however, you need not use the corporation’s proxy form but can prepare your own in which the second “failing him” is replaced by “instead of the foregoing I name . . . ”

This is a major problem with the current Condominium Act in three ways, only one of which Mr. Hyman addresses:

  1. The current Condominium Act requires a majority vote of all the owners to remove a director.  This means that proxies are almost certainly required, but also sets the bar far too high in this case.  If the requirement was dropped to a two-thirds vote of votes cast, then it would make the situation more democratic and helps to keep the directors accountable to the owners who they elected by and are supposed to be representing.
  2. Proxies need to be limited to two proxies per person/unit.  This means that no one can hold more than two proxies – but also means that a couple (or family) cannot hold multiple proxies.  The proxy granter (i.e. the owner not attending the meeting) can still give their proxy to anyone, regardless of whether or not they live in the condominium but it stops a small group of people from trying to rig a vote – and I am sorry but if people show up with 10-20 proxies, then you have to ask what the real intention is!
  3. Proxies need to be standardized.  Currently, the Chairman of the meeting gets to decide whether or not a proxy is legitimate, and in the case of the question above is Mr. Hyman so naive that he honestly believes that the Chairman will really allow any proxies that were not prepared by the condominium?  I do not think so!  With a standard proxy form, it becomes obvious whether or not a proxy is legal or not.  If it follows the prescribed form the the proxy is good, otherwise it is not.

Of course, the current proxies are supposed to indicate how an owner would vote at the meeting – so the members could still go out and get proxies.  But it still makes the situation harder, especially if a Chairman, selected by the Board and not the owners, gets smart and decides that any proxy received is not legitimate if it is not the proxy form sent out by the condominium.  But, the province has not seen to deal with this – the province assumes that everyone will behave in a totally honest way.

Another question raised was:

QUESTION:  Our board has recently spent more than $500,000 in cosmetic work — such as refurbishing hallways and the lobby. Two directors are real estate agents and the refurbishing helps them sell units. Is the expenditure valid?

ANSWER:  The corporation is required to carry out necessary repairs and replacement of the common elements. If the refurbishing is reasonably necessary due to the worn-out or damaged condition of the hallways and lobby, the board is required to act without notice to or a vote of the owners.

If, on the other hand, such refurbishing is not necessary but constitutes a desire by the board to upgrade the hallways or lobby, it constitutes an addition, alteration or improvement to the common elements. In that event the board must comply with section 97 of the Condominium Act, including advising the owners that owners of 15 per cent or more of the units have the right to requisition a meeting of the owners to vote on the proposed addition, alteration or improvement.

If an estimate of the cost of the proposed work exceeds 10 per cent of budgeted common expenses for the current fiscal year, the work is deemed to be a substantial change and the corporation cannot carry it out unless the owners who own at least -/3 (sic) per cent of the units vote in favour.

If the Board is following the most recent Reserve Fund Study, which is most likely, then no vote by the owners would be required or allowed under the Condominium Act.  However, the Act could, and should, be amended to require the Board to get input from the owners on cosmetic work, so the owners get to decide what colour the carpeting will be or what paint/wallpaper will be used.  This would make condominiums more democratic.  And is that really a bad thing?  I do not think so!  Come on, I understand why the owners should not have to approve mechanical work, and I am not saying that the owners can veto cosmetic work found in the Reserve Fund Study, but I do think they should be given some input as to how their condominium – and thus their home – should look like.

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