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CONDOCENTRIC: Property Managers and Professional Advice
Imagine the following scenario: A Director is concerned about the actions being taken by the Board and by property management, particularly regarding the adamant refusal to retain the services of a lawyer from time to time. The cautious Director retains, at his own expense, a condominium lawyer to attend at the Annual General Meeting ("AGM"). The pre-circulated agenda for the AGM contains nothing out of the ordinary. However, upon arrival at the AGM, the property manager is in the process of handing out pre-printed ballots for a vote to remove this single Director, notwithstanding that the Condominium Act requires that notice of this vote be given prior to the meeting.
The Director, who was subject to the removal vote, originally became concerned as it was evident that the Corporation did not use a lawyer for any of its business notwithstanding that the Corporation was in fairly poor shape, physically and financially (account receivables were in excess of $140,000.00).
In the situation described above, the property manager had given legal advice to the other board members (which advice was clearly contrary to the Condominium Act) and the other board members had blindly accepted it, without making prior inquiry with the Corporation’s solicitor. This was the case notwithstanding that it obviously would have created the potential for legal conflict and the potential of personal liability for the board members.
The Law Society Act makes it an offence for any person, other than a member of the Law Society to act as a Barrister or Solicitor (i.e. only a lawyer can provide a legal opinion).
Board members and property managers alike should run, not walk, to avoid situations such as this. Under the Condominium Act, a director cannot be found in breach of his/her duties if the director has acted in good faith upon the opinion of a lawyer, public accountant, engineer, appraiser or other person whose profession lends credibility to the report or the opinion.
The key is to know how to prudently and effectively use and balance a condominium corporation’s financial resources against its need for professional advice. The writer had occasion recently to debate the duties and responsibilities of property manager with the president of a fairly well respected property management company, who, notwithstanding his familiarity with the Condominium Act, summed up his responsibility as being a "gatherer of information", rather than a provider of opinions. Opinions are to be provided by lawyers, engineers, accountants, and other qualified professionals based on the facts.
While condominium directors must be fiscally conscious, this does not eliminate the need for obtaining timely and appropriate professional advice to avoid costly mistakes.
From “Common Elements” Summer 2002
All of the information contained in this article is of a general nature for informational purposes only, and is not intended to represent the definitive opinion of the firm of Elia Associates on any particular matter. Although every effort is made to ensure that the information contained in this newsletter is accurate and up-to-date, the reader should not act upon it without obtaining appropriate professional advice and assistance.
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