The following question is always asked regularly to us by members of the Boards of Directors of co-ownerships and by co-owners: “There is no one who would want to sit on the Board, can’t we then not just entrust everything to a manager and let him deal with all of it?”
Our answer is no.
A co-ownership can be formed from as few as two residential units, regardless of the size of the condo. The law provides that the day-to-day management of the syndicate may be entrusted to a manager, elected or not, among its co-owners. This manager, who acts as administrator of the property of others, will be charged with basic administrative tasks.¹ In most cases, the deed of co-ownership grants authority to the Board of Directors to procure the services of a manager and establish the amount of his fees.²
The fees that the syndicate will pay to the manager will be included in the annual budget of the syndicate once set by the Board. This budget heading will then be the subject of questions by the co-owners when they will be consulted on the budget at the annual general meeting of the co-owners as is required by section 1072 of the Civil Code of Québec.
On the other hand, the manager cannot take the place of the Board, even if there is no-one who accepts to sit on the Board. The Board of Directors is one of the decision-making bodies, the other one being the assembly of co-owners and the corporate status of the syndicate requires that its affairs are managed by a Board of Directors.³
It is therefore the Board of Directors that must make decisions that are not otherwise within the authority of the assembly of the co-owners⁴, and which must see to the proper administration of the syndicate’s business in compliance with the deed of co-ownership and the Civil Code of Québec. It must therefore be understood that the ultimate decision-making power within the powers and duties of the Board of Directors shall be exercised by the latter, and not by the building’s manager who reports directly to the Board.
The Board of Directors will determine the tasks to be entrusted to the manager: i.e. the complete management of the syndicate’s operations (accounting, physical management of the premises, searching for goods-and-services suppliers, etc.), or just selected tasks. Regardless of the scope of the tasks assigned, the Board remains responsible for the monitoring of the manager’s work and it must continue to exercise its decision-making authority. There must be close cooperation between the Board members and the manager, who, we hope, will bring the benefits of his experience in the matter. The manager must implement the decisions of the Board to the extent that they are not contrary to the deed of co-ownership or the mandatory provisions of the law.
For instance, in the case of a decision of the Board of Directors to establish the contribution of each co-owner otherwise than on the basis of quotas of contribution to the costs established in the deed of co-ownership, the manager may not transmit contribution notices to all co-owners to require them to contribute to the charges on that basis, although there is a directive of the Board. The decision of the Board to act in this direction would be contrary to the provisions of the deed of co-ownership and the mandatory provisions of section 1064 of the Civil Code of Québec.
Another example: The Board would want to entrust work on the common portions to a handyman, but the latter, although possibly very suitable, does not have the skill cards, licenses and insurance required. The manager must therefore advise against this to the administrators, because in case of damage to the building or work poorly done, the directors will be personally liable for damages caused. Directors must act with prudence, diligence and in the interest of the syndicate, and this type of decision is made in total opposition to these principles.
There must be a relationship of trust between the members of the Board of Directors and the manager: your manager should be an experienced person, with skills in suppliers’ management, negotiation, employees’ management if appropriate; therefore the Board must avoid micro-management. It remains important for the Board to be informed of the evolution of various tasks assigned to the manager, but to do more will render the manager unnecessary if the Board prefers to dictate every detail.
When managing a co-ownership raises questions in the minds of the manager and the members of the Board, an experienced manager will recognize that the syndicate, his client, should be advised by an expert in the matter. Depending on the matter, the manager will recommend his client to consult a notary, a lawyer, an engineer, an architect or any other expert in the matter. The manager, as well as the members of the Board, shall refrain from making decisions or making recommendations on matters that are within the competence of experts in a particular field, or the exclusive jurisdiction of a member of a professional corporation.
Feel free to contact us to get advice from a lawyer working in the co-ownership field to better understand the role of your manager and what are sound practices in this field.
¹. Section 1085 of the Civil Code of Québec
². Certain statements dating back to before 1 January 1994 grant this power to the Board, but also give power to the assembly of co-owners regarding the manager’s remuneration.
³. Section 335 of the Civil Code of Québec
⁴. Sections 1096, 1097 and 1098 of the Civil Code of Québec