Condo Board Fraud

[Anonymous]

I am a member of a condo association with a board that consists of only the president (owner with 65%) unit factor and the rest of us with 35%. He has complete signing authority and signs cheques to himself for work that is not associated with the condo member ship. How do you stop this fraud from continuing? He has removed all owners from the board and installed two friends to make up the rest of the board.

[SB]

Hi Tom,
Are you in a condo where the ‘developer’ still owns enough units to comprise 65% of all unit factors? Is this a smaller infill type of condo where it is conceivable that a single person could own 3 of 4 total units? To possess 65% of unit factors (6500 of 10,000) in any single condo corp. indicates some type of extraordinary circumstances.
I have some thoughts about your question, but more context is necessary.

[Anonymous]

It is a commercial site where there are undeveloped lots. the developer owns four condo units that are built, another owner owns 1 unit, another owns 2 units and I own 7 units. The problem we face is that the developer has bare land adn it appears taht is how he holds so many unit factors. Snce he holds the largest unit factor and the then uses a poll vote to negate any other owners votes, including board positions. In addition he only pays common costs on the developed units. In turn I pay 50% of all common costs without and voting rights.

[SB]

Oh Tom… that’s ugly. Thanks for providing context. I have more experience with traditional residential condos, but do have some experience with commercial condos. There is no difference in legislation. Our provincial condo legislation does not distinguish between commercial and residential condo corps., but there are some individual rules for ‘developers’ and ‘phased’ condo complexes. I recommend you look into C 22 to see if anything in the ‘developer’ or ‘phased development’ sections can help you form an argument but even if you do, there are no condo police. There is no one to oversee boards of directors (or condo managers).
Do your bylaws allow for ‘removing’ and ‘installing’ board members? If what they have done is contrary to bylaws, you’ll have to check with the Act and see what it says, as the Act supersedes bylaws. I don’t know what you’re going to be able to do, as it would take a court action to make changes. Our legislation is so loose that fairness, transparency and good practices have been lowered to a moral imperative instead of a legislative imperative. You end up with a board that either wants to do the right thing or doesn’t and the heartbreaking part is that there is literally no one to turn to to make things right, absent a court case.
https://www.qp.alberta.ca/documents/Acts/c22.pdf
You can write to Service Alberta who oversees the provincial legislation but from my experience, they have no actual authority and I’ve never seen them step up to help a single owner or any entire corporation of owners. See the section of the forum here titled ‘where to send complaints about board and managers’ to get some contact info.
I’d be interested to hear if you are able to make any difference for your investment or other’s investments, but my expectations are rather low. I wish I had a better answer, I truly do.
There would be a lot fewer condo owners (of any type of condominiumized unit) if buyers truly understood how little power they have when placing their homes, their lives and futures in the hands of strangers. BC is all gov’t, all cash grab all the time, but condo owners there are so much better protected by the layers of legislation and the gov’t’s ability and willingness to step in. We, my friend, are in the wild wild west.

[Anonymous]

First I want to thank you for your words. It is extremely frustrating to find out how poorly the government has regulated this vast portion of our society. They wash their hands and say it is a civil matter. Unfortunately for me, I pay 100% of my legal fees and 50% for the association. While the person responsible for this mess pay 25%, making it a very difficult time. If you know of anyone or how I can contact someone that has the understanding of such, I would truly appreciate your help. Thanks and again I appreciate your response.

[SB]

I think your only option is legal and I’m not sure there is a remedy there either. If you decide to acquire a legal opinion, I don’t recommend the 3 or 4 big shiny suits whose names you see in the media. They are overpriced and in the cases I’ve watched, not good litigators. I’ve watched (through my business) these BigGuyLLC (they’re not all men though) take a condo board over several years and thousands of dollars to ‘help’ them do basic things like assist with amending bylaws. The marketing machine behind these lawyers has condo boards flocking to them, at the time and expense of owners who actually pay ALL the bills. My point is that condo legal is something of a niche, but it’s not rocket science. In order to feel like you’ve chased down all the best advice, you’ll need a legal consult. Write to info@condoownerscouncilab.ca and they may be able to recommend someone they have some confidence in, at reasonable rates.

[SB]

And… you’re totally welcome. Please keep us apprised if you find a satisfactory resolution. Your experience may be beneficial to others. There are residential condos who have the same problem… not being able to do anything that benefits the ownership because the developer still holds a majority of unit factors.

[Shelly]

Ugly situation you have there Tom. Unfortunately SB is right, we have a “wild west” when it comes to condo legislation in Alberta. Condos do not fall under Consumer Protection laws so there is another point against us.

If you suspect fraud, first thing I would suggest is that you gather evidence to support your claims before you go to a lawyer. Communicate with the President and related parties only via email for time stamped evidence. You could start by asking questions about finances, voting, etc. You may already know the answers to them but you want them in writing.

Secondly, if you do gather all this evidence, I would suggest you seek legal advice because proving breaches of the Condo Act and other unfairness requires some skill. Not sure if you have experience in self representation in court, other owners have done it and won. But if you prefer to have a lawyer take a look, that may be your next step.
Send us an email to info@condoownerscouncilab.ca, I may be able to point you to a couple lawyers who know this area well.

Sorry to hear about your situation, must be very distressing.

[Lucille Gaumond]

I really ache for you. Regarding legal, hiring a lawyer this is my experience…they gleefully invite you in. Drooling while they give the legalease grabber….there is no protection under the act for condo owners – boards are well aware of that. There is no enforcement process that protects condo owners from condo boards. Thousands aprox. $40,000.00 has been spent here by the owners to try and get justice…there is no such thing. I really feel for you in your position – selling isn’t an option as the condo fees are to high for the size of my unit….So good luck – I don’t what the answer is unless we as owners together form a condo owners bill of rights and press for legislation. All or most politicians are lawyers so therefore they are not going to cut off a viable source of income from gullible condo owners, that’s why we don’t have tribunal..no protection under the act. Sure the act can say this or that …not worth the paper it’s written on. Service Alberta favors corperation and coperate boards. The archaic thinking at all levels relies on good faith…like your presidents good faith…..not sure what the answer is – sure is not lawyers or justice system there is no justice. Judges, lawyers politicians favor boards so we’re really hooped can you get out somehow sell is the only thing I can think of.

[Author]

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