Five tips for struggling condo corporations

New board directors can put their buildings back on track by taking simple, proactive steps
Monday, November 18, 2013
By Eric Plant

Much like traditional corporations, it’s not uncommon for a condo to go through periods of trouble. A number of issues may be responsible, including an ineffective management company, poor communication, misguided directors or any combination of the above.

For newly-elected directors looking to put things back on the right track, the task can be overwhelming. More often than not, the building is left in a state of physical disrepair with little or no money left in the reserve fund to solve the problems, and there is a deep sense of mistrust between the owners and the board or management.

The good news is there are simple, proactive steps that can be taken to remedy the problem. Every building faces different challenges, but there are five tips worth considering:

1. Use engineers to manage major projects

Large-scale projects can be a daunting task. A significant portion of the reserve fund will be spent in one shot, so meeting budget targets is absolutely crucial. While contractors are knowledgeable enough to run the project, it’s almost always a better idea to use a third-party engineer. These independent engineers will oversee the project while never having an option to bid on the work themselves. They will define the scope of work, write the specifications, oversee the tender process and monitor the work of the contractors. Most importantly, they will ensure that no unnecessary work is performed. Having experts on a corporation’s side is a small price to pay for the value they will add and the money they can save.

2. Commission a realistic reserve fund study

A reserve fund study is one of the most important documents a director will sign in this role. This 30-year plan of all a building’s major expenditures spells out exactly what needs to be done and when. When the time comes to commission the study, it’s always important to shop around for the right engineering firm. Many engineering firms may fail to build a plan that takes the corporation’s specific financial needs to heart. It’s important to remember that a corporation always has options. A good plan can sometimes avoid what seem like necessary fee increases and still keep the building in good repair. It’s worth the extra time to have a plan that makes sense and that a corporation is more likely to follow.

3. Sign off on a sound business policy

Trust is an important part of any corporation. Owners must trust that the board is acting in their best interest, and board members must also trust each other. A great way to do this is to tighten the rules around how the corporation does business. Good management companies will often have set procedures that go beyond the regular contract, and detail exactly how business will be done — for example, how to handle the approval process, when to use an outside engineer, how aesthetic changes to the common elements should be handled and so on. It’s always a good idea for a board to review its management company’s procedures and sign off on them. This will define the roles of both the board and management, and will ensure that everybody is acting in the best interest of the owners.

4. Communicate transparently with owners

Honest communications with owners is absolutely necessary, even when the news may not be taken well. Most homeowners would prefer to know there is a problem and that it’s being handled than to find out that something is wrong through rumours and gossip. Ask the condominium’s management company to host an owners’ meeting to go over some of the major points with interested residents. This will go a long way towards building trust.

5. Rely on an active management company

A condominium’s management company should be active every step of the way, ensuring that the corporation stays on the right track. The management company’s staff members should be the ones working with the engineers, coordinating projects, keeping an eye on the budget and communicating with owners. A good company will prepare for and run the annual general meeting, and will encourage owner involvement by keeping an open relationship with residents.

Eric Plant is a director at Brilliant Property Management Inc. He can be reached at

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