Board Can Fire Officers

Gerry Hyman has another article for the Toronto Star.  Let’s discuss some of the questions:

QUESTION:  If a president of a condo board is terminated unanimously by the board members and fails to resign, what is the board’s next step?

ANSWER:  An officer, such as the president, may be removed from office by a vote of the quorum of the board. While the board may remove an officer it can only remove a director in limited circumstances.

The corporation may have a bylaw requiring directors to abide by certain ethical requirements. The bylaw may provide that in the event of a serious or repeated breach of those requirements, the directors may vote to remove the offending director — provided that the director is given the opportunity to present arguments as to why he or she should not be removed.

The President is no longer the President of the Corporation once the Board removed the person as an officer.  However, under normal circumstances the Board cannot remove a director.  As the Condominium Act requires that the President must be a director (and most officers will also be a director), the Board cannot remove the person as a director.  So, the condominium has a new President, but the Board will likely have to requisition a meeting of owners to remove the director.

On a side note to Mr. Hyman’s response, firstly the By-law will have to be passed by the owners.  The Board cannot simply pass a By-law and thus make it enforceable under any circumstance.  Secondly, a By-law allowing the removal of a director for ‘unethical’ reasons should be created carefully and unless there is an impartial process, I would never support the By-law.  It is too easy for the Board to remove a director that the majority do not like using this By-law.  As such, either a Special Committee, of which a majority of members do not consist of Board members, should empowered to report to the Board on the issue, and at the same time the Condominium Act should be amended to allow for a two-thirds vote at an owners’ meeting to remove the director.  It would be more practical, in my opinion, that the Special Committee option be used and that it report to the owners with a two-thirds vote option.  The Condominium Act may have just been amended, but it certainly does not go far enough.

Another question raised was:

QUESTION:  We have discovered that two of our five directors are not unit owners, despite our corporation’s bylaw requiring them to be owners or spouses of owners. The property manager advises that the corporation’s lawyer believes the bylaw to be unenforceable, since it contravenes the Condominium Act. Is that correct?

ANSWER:  No. The Condominium Act permits a board to pass a bylaw setting out the required qualifications for directors. A validly passed and registered bylaw requiring a director to be a unit owner, or spouse of a unit owner, is enforceable.

As with the question above, the Board can pass a By-law, but the Condominium Act requires the owners, by a vote of the majority of owners, must approve the By-law to take effect.  Some condominiums may require a director to be an owner or resident or a relative of an owner.  This requirement, which is a bit less restrictive than the one in the question, allows for those who have a vested interest to serve on the Board, not just owners.

Lastly, let’s discuss this question:

QUESTION:  What can we do when our property manager tries adding new amounts to the corporation’s common expenses that are paid by the unit owners?

ANSWER:  Budget decisions must be made by a resolution of the board of directors — and that includes the passage of, or amendment to, the condo corporation’s annual budget. It’s the directors’ jobs to ascertain the amount required to pay for the corporation’s estimated annual expenses.

The property manager may assist in the budget or amendment preparation, but the decisions must be made by the board.

Yes, the Board makes the decisions, not the manager or management company.  Of course, the way I read the question, the management company/manager is required to submit all bills the condominium receives to the Board for payment.  So, if bills are being received, and will be based coming in based on decisions made by the Board, then the manager has no option but to submit those bills for payment.

Of course, if the Board did not make decisions that result in bills being submitted for payment, then the Board should be demanding an explanation for those bills.  Some costs may be incurred due to requirements found in the Condominium’s Declaration and By-laws (for example, if water and electricity are to be supplied to units by the condominium), then those bills also need to be paid.

Other then this, if required the Board could demand that the property management company stop this (while also calling in the Condominium’s Auditor to conduct a review) and then dismiss the property management company if required.

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