Identifying Non-Compliance and Reporting to the Board

Recognizing Non-Compliance in Condominium Governance

Non-compliance can take many forms, including:

• Failure to follow CPA-mandated procedures (e.g., improper record-keeping, failure to provide financial statements to owners).

• Bylaw violations (e.g., improper voting procedures, exceeding board authority).

• Financial mismanagement (e.g., failing to maintain reserve funds, misuse of operating funds).

• Failure to enforce bylaws fairly and consistently.

• Ignoring maintenance obligations leading to health and safety concerns.

Condominium managers must regularly monitor governance practices, financial records, and maintenance procedures to detect early signs of non-compliance.

The Manager’s Role in Advising the Board on Legal Responsibilities

Condominium boards are responsible for ensuring their corporation operates within legal and regulatory requirements. However, board members may not always be fully aware of their responsibilities.

Key Responsibilities of the Condominium Manager:

• Educating the Board: Provide guidance on CPA requirements and other applicable laws.

• Monitoring for Compliance: Ensure that condominium operations align with legislative obligations.

• Providing Documentation: Maintain accurate records that demonstrate compliance.

• Advising on Risk Management: Identify areas of concern and suggest corrective actions.

Steps for Documenting and Reporting Non-Compliance Issues

When a condominium manager identifies a compliance issue, it is essential to follow a structured approach to reporting and resolution.

1. Identify the Non-Compliance Issue

• Determine which legal or regulatory requirement is not being met.

• Gather supporting documents, such as meeting minutes, financial statements, or maintenance logs.

  
  

2. Assess the Impact of Non-Compliance

• Consider the potential legal, financial, and operational consequences.

• Determine whether the issue requires immediate corrective action.

  
  

3. Notify the Board in Writing

• Provide a clear and factual report outlining:

  • The nature of the non-compliance.

  • The relevant CPA regulation or bylaw.

  • The potential risks associated with inaction.

  • Recommended steps for resolution.

    
    

4. Maintain Records of the Notification

• Keep a copy of the report in condominium records.

• Document any follow-up actions taken by the board.

  
  

5. Follow Up on Corrective Actions

• Ensure that the board takes steps to address and rectify the issue.

• If the board fails to act, consider seeking legal advice or reporting the matter to regulatory authorities if required.

Developing a Reporting Procedure for Non-Compliance

To ensure compliance issues are managed effectively, condominium corporations should adopt a formalized reporting procedure. Below is a sample Non-Compliance Reporting Policy that condominium managers can implement:

Sample Policy: Non-Compliance Reporting Procedure

Purpose:

To establish a consistent and structured approach for identifying, reporting, and addressing non-compliance issues within the condominium corporation.

Scope:

Applies to all aspects of condominium governance, financial management, and operational compliance with the Condominium Property Act (CPA) and associated regulations.

Procedure:

1. Monitoring and Identification:

   • The condominium manager will conduct regular reviews of governance, financial, and maintenance records to ensure compliance.

   • Any suspected non-compliance must be documented with supporting evidence.

     
     

2. Assessment and Reporting:

   • The manager will assess whether the issue poses an immediate legal or financial risk.

   • A written report will be prepared, outlining:

     • The specific CPA requirement or bylaw that is not being met.

     • The potential consequences of continued non-compliance.

     • Recommended corrective actions.

       
       

3. Board Notification:

   • The written report will be submitted to the board within a reasonable timeframe.

   • The board must acknowledge receipt of the report and indicate whether corrective action will be taken.

     
     

4. Follow-Up and Record-Keeping:

   • The condominium manager will track all reported non-compliance issues and document corrective actions taken.

     • If the board fails to act, the manager may seek further legal or regulatory guidance as necessary.