The new calendar year brings lots of excitement, opportunities, and a sense of renewal for condominiums. At this juncture, we provide a few safeguards and due diligence practices for Boards and condo managers to consider. While this list is nowhere near exhaustive, we have highlighted a few issues to consider:
- Short Form Dates : It is not uncommon to utilize short form dates on various documents. For example, a December 24, 2019 document could be dated Dec.24.19 or 12.24.19 (amongst other iterations). However, 2020 is unique and poses a potential issue. If there is a contract entered into on January 7, 2020 and the date is entered as 01.07.20, an unscrupulous party can change the date by adding two digits to “20”. For example, by adding “19” after the “20”, the date is 01.07.2019 and the contract is dated January 7, 2019 instead of January 7, 2020. If there is frequent turnover on the Board of Directors and management personnel, this may go unnoticed. Depending on the contract, the change of the date may materially prejudice the condominium corporation. Recommendation: We recommend being cautious with dates and writing the entire year to avoid any issues or confusion down the road.
- Key Dates: There are many key dates for condominiums, especially newly built corporations. Amongst these dates, are the 1 year period, post turnover, to terminate certain agreements that the declarant controlled board enter into on behalf of the condominium prior to turnover and the various Tarion deadlines to file performance audits and request conciliations. Often, these dates are not negotiable and once the date is missed any potential opportunity or warranty is lost. Recommendation: We recommend that Boards and management consider the relevant dates and if there is any uncertainty, reach out to the corporation’s performance audit engineer and/or legal counsel for guidance.
- Review Contracts and Invoices: Given the wide scope of contracts a condominium corporation can enter into, the size of many condominiums budgets, and/or the proliferation of overseas, off-site, or disengaged unit owners, condominium corporations have been targeted by various fraudsters in years past. Schemes have included entering into fix term utility contracts without Board approval and passing unauthorized or forged by-laws to borrow funds on behalf of the condominium. Recommendation 1: We recommend a careful review of the condominium contracts and invoices to ensure that the agreed upon amounts are being charged by the proper parties and that the condominium is not a party to any alleged contracts unbeknownst to the Board or management. Recommendation 2: We further recommend that any condominium that has not recently passed a new By-Law to consider reviewing their records and By-Laws to ensure that it is consistent with those registered on title.
- Review of Condominium Documents: Condominium living and the laws that govern this lifestyle have considerably evolved over the years. It is important for condominiums to ensure that their rules, by-laws and policies are current and reflect good governance procedures. Things to consider are reviewing directors duties and qualifications and allowing for electronic voting at owners meetings to achieve greater participation from owners. If your condominium has not reviewed or updated these documents recently, this should be a priority in the new year. Recommendation: Have legal counsel do a review of your bylaws and rules.