Does a condo board have to hold AGMs?
Not if they can't and not if they don't want to.
In a column for a law blog Brandan A. Hallaq, he writes about a Michigan Court of Appeals decision (Channel View East Condominium Association, Inc v Gregory V Ferguson) that a condominium association’s board of directors had authority to take action on behalf of the corporation when it failed to hold annual membership meetings to elect directors as required under the bylaws.
This is an important decision and it affirms the power that a sitting board has that is little understood by condo owners.
The blog states:
“If board members did not holdover and retain authority to act on behalf of corporations, many community associations would be unable to enforce their restrictions, collect assessments, file taxes, enter into contracts with vendors, or even file annual reports with the State of Michigan to retain their corporate existence. The Channel View Court’s holding that “regardless of the appropriateness of plaintiff’s failing to call for and hold any member/co-owner meetings…plaintiff’s directors continued to hold over in the absence of any elections” is critical in reaffirming the principle that nonprofit corporations retain authority to act.”
So there can be good reasons for a condo board of directors to have the power to make binding decisions for the condo corporation even when there hasn’t been an AGM and no elections have been held to elect directors for the terms that had expired.
The best example is when a Board tried on several occasions to hold an AGM but continually failed to get a quorum.
Unethical directors
Yet, the ability for a board not to hold elections can be abused by unethical directors.
I know of two condos corporations in Toronto that did not hold annual AGMs. One did not do so because they did not want the owners to know how bad the finances were. They were also worried that they would not be re-elected.
So units in that condo were sold even though the audited financial statements that were attached to the Status Certificates were three-years old. The buyers, and their real estate lawyers didn’t seem to care.
At the AGM, the auditors had to present four-years of financial statements. At the end of their presentation, they resigned. There was $13,000 in the Reserve Fund for a building that needed $5 million worth of major repairs.
In the other condo I know of, there was a turn-over meeting where the developer’s three-person board retained their positions. They then did not hold an AGM for the next few years. In that condo, the Board realized that they were very unpopular.
Only when a couple of owners took them to Superior Court and the judge granted the Appellants court orders (including court costs) did the owners get an AGM and the ability to elect new directors.
How to force an AGM
In Ontario if an owner, or a group of owners, want to force their Board to call a long overdue AGM, I believe that they will need to make an Application to the Superior Court of Ontario. (Check with a lawyer who is experienced in condominium law.)
To insure that the AGM goes smoothly, make sure you ask your lawyer to request court orders to have an independent lawyer chair the AGM and to have two off-duty police officers present to insure a safe and orderly meeting.
It is better to be extra careful than to leave any opportunity for the Board to play games.
Ottawa Carleton Standard Condominium Corporation v. Friend
A recent Superior Court judgement that confirms that:
• it doesn’t pay to be confrontational with the directors & the property manager when
you are a jerk;
• it doesn’t pay to self-represent yourself in Superior Court.
• it gets very expensive when you combine the above.
http://bit.ly/2XTVsNO
Condominium Authority Tribunal decisions
Tonu Orav v YCC No. 344
The Applicant’s got to see the condo records he was looking for (both Core and Non-Core Records) for free plus $2,200 ($2,000 penalty and his $200 filing fees) and he will not have to pay his unit’s share of the Corporation’s costs.
http://bit.ly/2LOI5f8
Kai Sin Yeung v MTCC No. 1136
The Applicant, wanted to examine the email correspondence in relation to the renewal of a gas contract that were referenced in MTCC 1136’s Board Meeting minutes of January 19, 2017
The Minutes state that the renewal of the gas contract “has already been approved by the Board via e-mail”. This differed from other business referenced in the Minutes, whereby motions were brought, seconded, and carried at board meetings.
“The Respondent suggests that the Emails, if they existed, were informal and constituted an “agreement to agree” rather than formal approval, claiming that formal approval of the gas contract renewal was given at the Board meeting. Unfortunately, the Minutes are not clear, and the Respondent has offered a contradictory explanation of how the gas contract renewal was approved.”
The Applicant was unsuccessful in his claim that the emails constitute a record of the Respondent. However, since the condo corporation delayed in replying to the owner’s Request for Records, he occurred fees totalling $200.
The Applicant received his costs ($200) plus a credit towards his common element fees in the amount of his share of the corporation’s expenses for the cost award.
http://bit.ly/2SdUquJ