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Identifying and Addressing Improper Conduct Under the CPA

A Key Condo Guide

Definition of Improper Conduct Under the CPA


Improper conduct is any action by a developer, board member, unit owner, or condominium corporation that violates the CPA, Condominium Property Regulation, bylaws, or financial governance requirements. Some examples of improper conduct include:


Developers


  • Failing to meet obligations outlined in the Condominium Property Act.

  • Misrepresenting information about the condominium to purchasers.

  • Retaining control over the board longer than legally permitted.


Condominium Boards


  • Not acting in the best interests of the corporation.

  • Failing to enforce bylaws consistently.

  • Engaging in conflicts of interest (e.g., awarding contracts without transparency).


Unit Owners


  • Deliberately violating bylaws (e.g., unauthorized renovations, noise violations).

  • Failing to pay condo fees or special assessments.

  • Harassing board members or condominium managers.


Condominium Corporations


  • Failing to properly disclose financial records.

  • Misusing corporation funds or reserve funds.

  • Not maintaining common property as required by law.


Court Remedies and Penalties for Non-Compliance


If improper conduct occurs, the CPA provides several legal remedies:


  • Court Applications: The condominium corporation or an affected party may apply to the Court of King’s Bench for an order to compel compliance or rectify improper actions.


  • Fines and Penalties: The CPA allows for financial penalties against those who breach legislation.


  • Board Member Removal: If a board is engaging in improper conduct, owners may call for a special general meeting to remove and replace the board members.


  • Developer Accountability: If a developer fails to meet legal obligations, owners or boards may take legal action to enforce developer warranties or recover financial losses.


On application by the Corporation, an owner, a purchaser, or a mortgagee of a unit, the Court may make any order it considers appropriate in the circumstances, including an order directing a party to comply with this Act, the regulations, or the bylaws.


Case Studies of Improper Conduct


Case Study 1: Board Misuse of Funds


A condominium board used reserve fund money for an unauthorized project, violating financial management rules. Owners filed a court application under the CPA, which resulted in an order requiring the board to replenish the funds and undergo an external audit.


Case Study 2: Developer Non-Disclosure


A developer failed to disclose construction defects in the original purchase agreements. Owners sought legal action, and the court ordered the developer to compensate for repairs and provide full disclosure for future sales.


Case Study 3: Unit Owner Bylaw Violations


An owner continually rented units for short-term stays despite a bylaw prohibiting short-term rentals. The board issued fines and eventually sought a court injunction to stop the activity.


Best Practices for Addressing Improper Conduct


  1. Documentation: Maintain thorough records of all board decisions, financial transactions, and correspondence related to suspected misconduct.


  2. Transparency: Ensure clear, open communication with unit owners and board members about legal obligations.


  3. Legal Compliance: When in doubt, consult legal professionals or the Real Estate Council of Alberta (RECA) for guidance.


  4. Board Oversight: Implement strong financial controls and conflict-of-interest policies to prevent misuse of funds or power.


  5. Owner Education: Provide owners with clear explanations of their rights and responsibilities under the CPA.

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