Condo board conduct

Each board member has a duty to act honestly and in good faith. To act honestly means to act without lying, cheating, misleading, or misrepresenting facts. Acting in good faith means to carry out obligations in the best possible way without putting one’s self-interest ahead of others.

Board members must exercise care, diligence and skill that a reasonable person would do in similar circumstances. Under common law, being reasonable means avoid harming others, acting prudently and taking proper precautions. Custom, industry practice and statutory or regulatory standards can all be factors in determining what is reasonable.

Under the Condominium Property Act (CPA), board members must:

• Avoid conflicts of interest by disclosing any conflicts of interest to the board
• Not vote on matters relating to any conflicts of interest

A conflict of interest occurs when a board member has a substantial interest in an agreement, arrangement, or transaction in which the condominium corporation is or will become a party to.

For example, a conflict of interest would occur if a board member owns a property management company and the condominium corporation is thinking of hiring the company. In this type of situation, the board member must disclose their interest in the company to the other board members. The board member also cannot vote on that matter.

It is important that board members understand their responsibilities and act according to the CPA, regulations, and bylaws. There are serious consequences for not complying with the law. For example, the corporation and individual board members can be sued in Court for engaging in improper conduct.

A board member should always act fairly when dealing with owners, the condo corporation, and other board members. Otherwise, board members and the corporation can be sued for carrying on improper conduct. Situations that may be considered improper conduct, as it applies to condominium board members and corporations, include:

• Failing to comply with the CPA, regulations and bylaws
• Conducting the condominium corporation’s business affairs in an oppressive or unfairly prejudicial way, or in a manner that unfairly disregards the interests of an interested party (which may include the owners, corporation, board member or a registered mortgagee)
• Exercising the condo board’s powers in an oppressive or unfairly prejudicial way, or in a manner that disregards the interests of an interested party (which may include the owners, corporation, board member or a registered mortgagee)

There are a number of ways for condominium board members to put the standards of conduct into practice. For example, experts recommend that condominium board members should:

• Be engaged, participate, and keep learning
• Prepare for and attend board meetings
• Ensure they have liability insurance and know what it covers
• Deal with problems and issues right away, including taking reasonable steps to enforce the corporation’s bylaws
• Seek out professional help and services with care
• Hire competent professionals where necessary
• Treat people fairly, equally, and reasonably