Notes for a new Board!
A few weeks ago I was asked to act as a court-appointed chairperson for an AGM to elect a new Board at a Condominium. The last few attempts had failed due to community strife and tempers. Previous AGMs have ended in chaos with chairs being thrown in frustration, accusations of theft, fraud and corruption being leveled at the Board and threats of lawsuits for slander being hurled back at the owners as a result. So the court appointed a neutral third party chairperson to oversee the elections.
I was both excited and nervous. Would the owners resent the involvement of a neutral party appointed by the legal system? Would the position be challenged by the current Board or the legal counsel? Was a neutral democratic process possible without mistrust or challenge?
I am happy to report that my concerns were unfounded!
The two solicitors on opposite sides demonstrated an incredibly admirable commitment to the election process and agreed on decisions to enable an inclusive and democratic election, even if there was a possibility that their side of the “fight” might not benefit. It was a refreshing, and I dare say an energizing evening. Sure there was some anger and some raised voices but in the end there was a new Board, a happy ownership (with applause and everything) and a feeling of a fresh start.
There is a lot of history to overcome but the new Board has a mandate to make things happen. From a neutral observer’s position, here are 5 pitfalls that I hope they avoid:
1. I hope that they work as hard at communicating now that they have the control they were seeking, as they did during the process of seeking election to the Board. The door to door campaign to tell people what was happening or not happening in their community helped get them elected. The time that they spent talking to their neighbors should not end with their first Board meeting. They have set a standard.
2. I hope that they don’t try to govern by referendum – they are responsible to make some hard decisions. Make those decisions and explain why they had to be made.
3. I hope they develop a plan with input from the owners. Discuss the challenges they face and set out goals. This will encourage buy-in from the community and they will have a road map to follow when the Board announces decisions they have made.
4. I hope they face the future without spending all of their considerable energies trying to blame someone for the past. I am not saying they need to ignore the past. If there are accusations, they need to be investigated as part of the Board’s obligation to protect the owners’ interests…but don’t lose sight of the fact that finding someone to blame may not always lead to a cure for your future challenges. Winning a court battle that may cost you more than you win is a dubious victory.
5. As a property manager, I hope they don’t make wholesale changes to every tradesperson – including the management – without honestly assessing the performance. Talk to the manager and the tradespeople to find out if their knowledge of the property will benefit the new Board. Remember that the manager had to follow the Board’s directions; those directions may not have been based on the best advice the Board received. The contractors may not be the ones responsible for the challenges the new Board faces…
GOOD LUCK!
Hello Dean,
your points 2 & 3 of the article seem to argue against each other:
2. I hope that they don’t try to govern by referendum – they are responsible to make some hard decisions. Make those decisions and explain why they had to be made.
3. I hope they develop a plan with input from the owners. Discuss the challenges they face and set out goals. This will encourage buy-in from the community and they will have a road map to follow when the Board announces decisions they have made.
In a perfect world, I would trust my fellow owners to know what is a “NEED” and what are “WANTS” that management companies are encouraging us to spend on.
Owners can go broke – In reality it is very difficult for a corporation to go broke, there is always the pockets of owners that can be raided without input from them. Statistics can be bent and twisted, projects can be divided into small sections for costing, to make sure that the owners will not have veto-rights over the expenditure of huge sums.
I am sure that you have seen examples of this even in the best Management firms that you worked for.
I hope you developed your own more ethical way of running other peoples’ homes. Yes, HOMES ! We are NOT a business – contrary to what the condominium service industry likes to think of us.
Best wishes and a great future.
Thanks for your comment.
I am not sure that I agree that points 2 and 3 are at odds with each other. I do believe that there is a way to discuss various options with the owners, including them in the process of investigating all options but then making a decision as a Board in the best interest of the owners.
I would look at an example of a property that needs money in the reserve fund because it has been historically underfunded. In some cases borrowing money as a condo may be the right approach and offsetting interest with savings from an energy project, but if the work that is needed is structural and really will not generate any savings by reducing costs then borrowing will only serve to drive up the cost of the repair by adding interest. In that case it may be best to special assess and give the owners the right to choose how they fund their portion.
In this example a board can listen to options and then has to make a decision on behalf of all owners. Governing by referendum in that instance can cause a lot of division within the community.
I have often said that condos are communities, but they are also corporations, protecting the value of many peoples investments. The best managers understand that and help the Boards walk the line between recognizing the role of the board in managing community and corporation by communicating well and educating owners.
Thanks for your comment.