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CONDOCENTRIC: Record Keeping

Imagine the following scenario: a condominium corporation spends tens of thousands of dollars to carry out balcony repairs over several years. The cost for each instance of repair is relatively small, as the repairs are carried out on an as-needed basis; however, the overall amount spent is significant. The repairs deteriorate prematurely.

If record keeping has not been carried out effectively, including the keeping of paper contracts and minutes of meetings, a condominium corporation may be further frustrated if the terms of the warranty cannot be determined, if the method of repair cannot be determined, and particularly, if it cannot be determined what the condominium corporation had originally authorized.

If the financial records are incomplete or unavailable, there is no way of knowing if the contractor who performed the deficient work had been paid (when he/she arrives at the doorstep of the president claiming that the last five invoices are outstanding). The same problems can arise regarding common expense arrears, when it is evident that arrears exist, but it is not possible to determine the source of the arrears.

Regretfully, it is not unusual to find that a condominium corporation’s records are incomplete. Rather than being due to some malice, incomplete records are often the result of either the loss of records or as a result of records never having been made in the first place.

At the risk of generalizing, and understanding that most condominium corporations keep very good records, it appears that the absence of a central onsite management office (as is often the case in townhouse condominiums) seems to increase the probability of inadequate record keeping. The probability of inadequate records also seems to be high where condominium corporations are self-managed or where there is frequent turnover of the board of directors and/or property management.

The taking, keeping and preserving of records is of the utmost importance to any condominium corporation; not only for the purpose of complying with the requirements of the Condominium Act, 1998 (the “new Act”), but also for preserving the rights, remedies and interests of the condominium corporation and unit owners at any time in the future.

The new Act recognizes the importance of record keeping by now making it a quasi-criminal offence for a condominium corporation to fail to keep records pursuant to the new Act. While the old Act contained provisions for quasi-criminal offences, they were rarely used. It will remain to be seen how this section will be enforced under the new Act.

Condominium corporations are responsible to keep and to disclose records when requested. Board members are personally charged with the responsibility of managing the affairs of the condominium corporations, which includes the keeping of adequate records. Board members must ensure that proper record taking and keeping is in place, failing which, individual board members may be found to be in contravention of their duties and obligations as required under the new Act.

Response by Richard Elia, a Toronto-based lawyer who practices primarily in the area of condominium law. He also represents MTCC 1385 (Phase 2 to MTCC 1280) in its ongoing disputes with Skyline Executive Properties, and is assisting in the drafting of the private members bill referred to in the above response.

From “Common Elements” Winter 2002
By Richard A. Elia
B. Comm. LL.B., LL.M. (ADR), A.C.C.I.

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E:  richard@elia.org
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