The Blog

RESOLVING ETHICAL DILEMMAS

Putting in place a Code of Ethics helps condo boards resolve disputes

Question : Dear Maria; How important is it for an elected Officer or Director to maintain confidentiality of Board decisions?
Answer : Very important is the correct answer. We need only look at the current political scandals in Canada and the U.S. to see how important it is to conform to a code of ethics.

Boards have an obligation to act honestly and in good faith and in the best interest of the condominium corporation. If the board chooses not to follow the standard of care, this can put the condominium corporation in a position of liability.

In addition, the board of directors must exercise care, diligence and skill that a prudent person would exercise in comparable circumstances. In other words, not putting the condominium corporation in harms way and always acting with prudence when making decisions.

Once elected, the condominium board of directors have specific and critical duties that they must adhere to. These duties are listed in the condominium corporation bylaws. It’s important for board members to understand and be familiar with the bylaws, since they will be held accountable to them and the owners.

It’s also recommended that boards implement a Code of Ethics that can be signed by all members of the board. A Code of Ethics will set clear and precise guidelines that members of the board can follow, and it will help set the framework of how to handle conflicts within their condominium community.

For example: if a director has a relative they want to hire to complete a certain project at the condominium or in the insistence where a director is in breach of a bylaw. The Code of Ethics can help determine the best course of action to address that particular situation.

It can be overwhelming and time consuming for a board to create a code of ethics. So let me help set you in the right direction. New Concept Management Inc. recommends some, if not all of the
following to be included in your code of ethics.

• Honesty and Good Faith
• Care, Diligence and Skill
• Conflict of Interest
• Confidentiality
• Good Conduct
• Education
• Abuse of Proxies
• Support
• Defamation
• Minimize Conflict
• Performance of Duties
• Scope of Authority
• Agreement
• Unsanctioned Board Meetings

When you as a board create your code of ethics, be sure to define in detail and set the parameters for each of the codes. This way, there is clear understanding behind the meaning of the rules. Also, don’t forget to sign and date your code of ethics.

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THE IMPORTANCE OF CONDO FEES

The maintenance of your condo is in your hands

Hi Maria; Can you tell me why condo fees are so important?

Answer : You’ve heard me say it before and it goes without saying. A condo is a living organism and the condo fee is its lifeline. If you’re living in a condo, this is as constant as giving birth and paying taxes, but it is completely necessary for the good of your condo.

Every condominium operates under the same basic financial principles. Owners pay condominium contributions (also referred to as “fees”) to the condominium corporation. These contributions are
calculated based on unit factor assigned to their unit.

Condominium contributions vary with large amenity-rich buildings usually having higher fees than smaller buildings with minimal to no amenities.

The condo fees are made up of all the costs associated with running the condo corporation. From water and sewer expenses, common electricity, insurance, payment to a management company, legal, landscaping and snow removal are just a few items that may be included in putting together a budget.

And let’s not forget, a portion of this fee is allocated towards the capital reserves to pay for major expenditures over the lifetime of the building. The great thing about being on a condominium board is they decide how owners’ contributions will be allocated each year. The board is required to provide owners with a yearly financial reporting, typically done at an annual general meeting, showing how their money was allocated in the previous year and how it proposes to use the upcoming year’s contributions. Condominium fees are not optional or negotiable and must be paid to the corporation on a monthly basis, normally on the first of the month. Owners who default in paying their condo fees can put their condo corporation in jeopardy, and
tend to place a burden on those owners who do pay.

Before making the decision to move into a condo, ask yourself, “can I afford to pay the monthly condo fees and any extra expenses that might occur.” Condominiums are not the same as
purchasing a single-family home. A side from paying condo fees, you also have a responsibility to follow bylaws that govern the condominium corporation. These are specific rules that must be followed. The moral of this story is simple: If you choose to live in a condo, be prepared. Know the facts and always plan for the unexpected. Don’t place the burden on other owners to pay your fees

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CHANGES TO THE CONDOMINIUM PROPERTY ACT REGULATIONS ANNOUNCED

Question Dear Maria; How will the new condo regulations affect me as a condo owner?

On December 14, 2018, Service Alberta Minister Brian Malkinson announced changes to the Condominium Property Regulation that will be coming into force to improve the governance of condominium corporations. These changes follow extensive consultation with condo owners, board members, managers, and other members of the condominium sector in 2017 and 2018.

“About one out of every five Albertans lives in a condo and our government has their back. Last year, we unveiled stronger protections for condo buyers and now we’re introducing new rules to improve condo living. These new regulations will make life better for everyone in the industry, including condo owners, condo managers andcondo boards.” Brian Malkinson, Minister of
Service Alberta

How does this impact the Condominium Community?
• Improve rules around meetings, such as requiring more notice to attend general meetings and get topics on the agenda.
• Revamp voting rules so owners can participate more effectively in meetings.
• Provide easier access to condo documents by clarifying which documents must be provided to owners, when they need to be provided and what needs to be included in them.
• Require a fairer process when condo corporations issue bylaw fines.
• Establish more protections for condo owners’ investments.
• Strengthen how reserve funds are managed.
• Establish new requirements for insurance and rental deposits.

The majority of the new regulations will come into effect July 1, 2019, with the remainder of the changes to follow on January 1, 2020. This will allow condo corporations and managers the time
they need to update any requirements under the new regulations. Alberta Condo Boards will need to be more transparent as a result of changes made to the Province’s Condominium Property Act Regulations.

It will hold condo boards more accountable for their actions. More specifically, they cover the governance of condominiums and the working relationship between condo owners and
condo corporations. The Condominium Property Amendment Act was passed in December 2014. The next step was to create more than 50 supporting regulations, which are being developed and
rolled out in stages. I’d like to thank Brian Malkinson, Minister of Service Alberta, for his contribution to this article. As a board member for CCI and as best said by Ryan Coles, president,
Canadian Condominium Institute (CCI), South Alberta Chapter; we would like to thank Service Alberta for the transparency in these changes and for including the voice of southern Alberta condo owners in their decisions. The Southern Alberta Chapter of CCI supports and congratulates the government in taking these positive steps. We look forward to collaborating in the next
phase of changes. To learn more, the announcement of the change is available at www.alberta.ca/ release.

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