Reserve Fund Balance must be Disclosed

Gerry Hyman has another article for the Toronto Star.  I want to discuss two of the questions raised.

The first question is:

QUESTION:  A number of us as unit owners have written to the board requesting the current amount of the corporation’s reserve fund. The board has not replied or even acknowledged our request for over six months. Is that proper?

ANSWER:  The directors, in my opinion, have failed to act honestly and in good faith as required by the Condominium Act. You could go to court requesting a compliance order pursuant to section 134 of the act. You could also pay $100 for a status certificate that will reveal the amount of the reserve fund. You might examine a status certificate recently received by an owner who is selling the owner’s unit.

This is where a major issue with the Condominium Act.  It has no real teeth.  Owners should not have to go to court, and at their expense, to enforce their rights.  The forthcoming Condo Office may be beneficial, but the owners should not have to pay to use the Condo Office to enforce their rights.

Also, the Condo Office should come equipped with the power to discipline directors who are not acting honestly and in good faith – it’s not good enough to provide an opinion as such.  While the Condominium Act should be amended to allow for the removal of directors at a vote of 2/3 of votes cast – and proxies need to be curtailed to stop the directors from used them to ensure they get re-elected.  But at the same time the Condo Office should be permitted to fine directors who misbehave, and even remove them from office if required.  If directors can get away with actions like they have in the question above, they will.  If it is possible for them to be disciplined, and at no cost to the owners, this will help ensure that the directors will work in good faith.

The other question is:

QUESTION:  A former director wants a bylaw providing that, after a director has been on the board for two terms, he or she must wait one year before running again for election. The board was not in favour of the bylaw but sent the proposed wording to the owners and requested their opinion. Out of a possible 44, 34 responded and 23 were not in favour and they want the board to call an owners’ meeting to discuss the bylaw. Can we refuse, given the negative response we received from the owners to the suggested bylaw?

ANSWER:  Owners of 15 per cent of the units are entitled to requisition an owners’ meeting to discuss the bylaw. The board must hold the requisitioned discussion meeting. The Condominium Act states, however, that the passage of a bylaw is up to the board and, in my opinion, the owners cannot vote to force the board to pass the bylaw.

The former director has a valid idea.  Normally I argue for a three term limit, it can be a good idea to force directors to step down after three consecutive terms.  Anyway, if the Board is running the condominium properly, it should have Committees set up to advise them (the Board, and the owners) on issues.  Thus, when a director is required to step down, he/she can be appointed to a Committee and thus stay involved in what is going on in the condominium.  Plus, a good director will likely be elected to the Board again in the future.

Also, the owners should not be forced to requisition a meeting.  A number of owners have already requested that the Board hold a meeting, and as such this should be good enough.  Why should the Board not listen to the requests of the owners?  The owners should not be required to force the Board to hold a meeting.  I find it disrespectful on the Board’s part for refusing to listen to the owners.

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