Transparency
Effective governance requires that board decisions, financial records, and operations be open to scrutiny by stakeholders. Transparency builds trust among unit owners and ensures accountability.
Best Practices:
Disclose all material facts about finances, maintenance, and board decisions.
Maintain accessible meeting minutes and records.
Respond promptly to owner inquiries regarding financial documents.
Accountability
Boards must act in the best interests of the condominium corporation, ensuring that their decisions align with legal obligations and community needs.
Best Practices:
Board members must act in good faith and within their authority.
Regular reporting on financial health and decision-making processes.
Clear policies for handling conflicts of interest.
Ethical Decision-Making
Boards should operate based on ethical principles, ensuring that personal interests do not influence decisions.
Best Practices:
Establish a code of conduct for board members.
Require disclosure of conflicts of interest in vendor selection.
Ensure that all decisions are fair, consistent, and legally compliant.
The Role of Bylaws and the CPA in Governance
Importance of Bylaws
Condominium bylaws establish operational rules specific to the corporation, covering:
Board election procedures.
Meeting requirements and voting rights.
Maintenance responsibilities.
Bylaws must comply with the Condominium Property Act and cannot contradict legislative provisions.
Compliance with the Condominium Property Act (CPA)
The CPA outlines mandatory governance standards, including:
Record keeping and financial disclosure: Corporations must maintain and provide access to financial statements, meeting minutes, and other essential records.
Reserve fund studies and financial planning: Corporations must conduct reserve fund studies and ensure sufficient funding for long-term maintenance.
Board responsibilities: Boards must act in the best interest of the corporation and in compliance with legal obligations.
Legislative Reference:
According to the CPA, the corporation shall keep financial records as required by the regulations and make them available to owners upon request. This reinforces the legal obligation for financial transparency.
Financial Responsibility and Reserve Fund Management
Financial Planning and Budgeting
Condominium boards must create an annual budget covering operational costs, reserve fund contributions, and unexpected expenses.
Best Practices:
Clearly outline budget allocations and expected expenditures.
Disclose all financial statements to owners.
Implement regular financial audits.
Reserve Fund Requirements
The CPA requires condominiums to maintain a reserve fund for major repairs and replacements.
Best Practices:
Conduct reserve fund studies at least every five years.
Ensure the fund remains adequately financed.
Plan for long-term capital expenditures.
Maintaining Accurate Records and Compliance with Legislative Reporting
Essential Records Condominium Corporations Must Maintain
Meeting minutes (board and general).
Financial statements and budgets.
Reserve fund study reports.
Contracts with service providers.
Correspondence related to governance decisions.
Ensuring Compliance with Reporting Requirements
To maintain compliance:
Keep detailed records for the required retention period.
Allow owners access to non-confidential documents upon request.
Ensure timely filing of financial reports as mandated by legislation.
Governance Audit Simulation
Scenario:
A condominium corporation has received complaints from owners about a lack of transparency in financial reporting. The board has not shared financial statements or reserve fund updates.
Task:
Identify governance failures in this situation.
Determine corrective measures to improve transparency.
Outline the steps the board should take to comply with the CPA.
