August 21, 2023 - Blog Post
The Biggest Challenges in Managing a Condominium Corporation
The Condo Chat - Blog #2
So you are either thinking of, or have volunteered to be, a Board Director or perhaps get involved in condo property management. Good for you and good luck. It can be a rewarding experience but it will have its share of frustrations. Managing a condominium corporation comes with its share of challenges, as it involves balancing the needs and expectations of individual unit owners with the collective responsibilities of maintaining the property and its shared facilities. These don’t always gel with one another. I recall from years ago, Tony Hall (Podium Properties) saying “Mike, the biggest challenges managing a condo corporation are the three Ps: Pets, Parking and People”. He was right. Even with the pets and parking and it is a challenge, I have learned it really comes down to one P and that is people.
Fortunately, you’ll find that the majority of your residents will not be a cause for concern. Have you heard of the 20/80 rule? It is a generalization but it has shown value in demonstrating that 20% of your owners will cause 80% of your complaints or problems. You know who the 20% are. Unfortunately that 20% can sometimes be a real pain in the neck. Don’t let them wear you down. Know your rules. Learn the Condo Act and the use of the Dispute Resolution Process and don’t be afraid to engage a lawyer familiar with condo operations if it gets too much or the person just won’t comply despite all your attempts. We’ll get to a more detailed discussion on handling conflict in future blogs. The focus in this blog is on the major challenges that you’ll face managing a condominium corporation:
- Diverse and Conflicting Interests: Unit owners within a condominium complex often have diverse backgrounds, lifestyles, and expectations. Balancing the interests and preferences of different residents can be challenging, especially when it comes to making decisions that affect the entire community. Remember you are there representing the interests of all the owners where majority rules. Regular dialogue with owners, understanding their expectations, and fair and very clear rules and regulations can go a long way to meet those challenges.
- Communication: Effective communication between the corporation and unit owners is vital, but it can be challenging to keep everyone informed. Miscommunication or lack of transparency can lead to misunderstandings, frustration, and even legal disputes. How does your corporation communicate with its owners? Does the corporation have its own website or bulletin boards in the common areas for members to get information? What do you use to get the message out: email, Facebook, paper memos, notices, newsletters? Do you only have an AGM or do you take advantage of other general meetings or townhalls to allow people to ask questions or express concerns or give ideas. With our current technology there is no reason not to keep people informed or give the community a voice. Unfortunately, you may still find people who won’t read or take advantage of websites or bulletin boards, but at least if you do have a website or bulletin boards or townhalls the owners have no excuses to remain unknowing of things and their antagonism will be greatly reduced.
- Rule Enforcement: Enforcing rules and regulations fairly and consistently can be difficult. Some residents may not adhere to the established rules, leading to conflicts within the community. Striking a balance between upholding standards and maintaining a positive living environment is crucial. Whatever you do be consistent. Ensure you understand the intent behind a rule and whether the current rule meets the intent. If not, consider changing the rule. Our initial rules come from the developers who often copy and paste from other documents. In time these may not fit the community you wish to live in. You can change them. Keep in mind whatever you do cannot contravene the Condo Act. Common Element Rules (CER) are relatively easy to change and without the expense of a lawyer whereas if you are changing a by-law or declaration you should really engage the services of a lawyer. When someone does not abide by the rules you have several avenues to address the issue (see the Condo Act & Regulations). However, you should always try to talk with someone first before escalating. Many people have only read the rules once and that was when they were buying the property. People forget or think that they know or don’t think it matters. How about you? How well do you really know your documents? The Condo Act was recently amended. Do you know what changed (see here)?
- Financial Management: Managing the association's finances requires careful budgeting and financial planning. Balancing regular expenses, maintenance costs, and unexpected repairs while ensuring there's enough funding in the reserve fund can be a complex task often requiring specialist skills. Fortunately a good property manager or appropriately skilled owners or an outside party in a self-managed corporation can provide the numbers, challenges and suggestions for the Board to ensure the budget is appropriate and properly used.
- Reserve Fund Planning: Determining how much money to allocate to the reserve fund and when to use it for major repairs or replacements can be challenging. Inadequate reserve funding can lead to financial strain in the event of unexpected expenses. In the recent amendment to the Condo Act, a new Reserve Fund Study (RFS) must be done every five years. With the recent changes in supply and availability of contractors you may even want to consider, if not a full RFS, then more frequent reviews by qualified personnel of building/s operations during the five year period between studies. You do not have to be a slave to the RFS as to when things get done as sometimes things change but you do need to have a rationale for it that can stand up to scrutiny by the owners and/or outside authorities.
- Vendor Management: Finding and managing reliable vendors for maintenance, repairs, and services can be a challenge especially in today’s environment. Ensuring quality work within budget constraints is essential to maintain the property's value and residents' satisfaction. Often a good property manager has developed professional relationships with contractors that they have come to know and trust , which can give more confidence to the Board and make this task more manageable. People sometimes get stuck on insisting that there be three quotes on any major work and then often go for the cheaper bid. That is not necessary so long as you can show that you are getting a fair rate and good quality work. Often going with the cheapest bid can cost you more in the long term from shoddy or incomplete work. As the old adage goes, “you get what you pay for”. Be cautious. Look to reputation, past work, and expert advice.
- Board Dynamics: Condo corporations are typically governed by a board of directors. Managing the dynamics and ensuring effective decision-making within the board can be challenging, especially when members have differing opinions and priorities. Sometimes we find owners will run for the Board because they have specific personal issues they wish addressed that may go against the majority. This can be challenging as it is really the Board’s responsibility to govern for everyone. It is meant to be a democratic process where majority rules. If a Director operates outside of that scope or is causing great grief with the board, they can be removed for cause by a majority vote of the members of the corporation (Condo Act 15 B.)
- Legal Compliance: Keeping up with local laws, regulations, and requirements related to property management, zoning, safety, and more is essential. Failure to comply can lead to legal issues and financial liabilities. These things also have a habit of changing. This is outside my knowledge base so I depend on my property manager, but I will check on things, especially if my corporation is doing any major work.
- Aging Infrastructure: As condominiums age, maintaining and upgrading infrastructure becomes more crucial. Balancing the need for renovations or improvements while minimizing disruptions to residents can be challenging. In addition the costs to do such work have been increasing and may lead to a reluctance to do the work in a timely fashion. One such example of not doing the work necessary despite warnings from engineers resulted in a Florida building collapsing (read here). Make sure you listen to the experts and take the appropriate action even in the face of disgruntled owners.
- Owner Turnover: Frequent turnover of unit owners can lead to shifts in priorities and perspectives within the community. Maintaining continuity in decision-making and community involvement can be challenging amid such turnover. Every time you get a new owner, renter or even a new board member the dynamic of the group changes. Adjustments will need to be made. In particular, in Tuckman’s model of team development each Board will go through four stages/phases:
- Forming: people may be confused or unsure of each other and what they are there for. Make sure each understands their purpose, the values and goals of the organization and what tasks need to be accomplished
- Storming: people tend to focus on their differences and conflict can erupt. People need to go through this phase but help them find common ground, remind them of your purpose and goals and eventually they will get to the next phase
- Norming: people get that they’re in this together and seek common ground. They may, however, slack off, so remind them why they’re there and what needs to be done
- Performing: this is when the real work gets done and the team functions well
Given that developing a team takes time you may want to consider keeping the same board directors for a few years as opposed to changing every year. My own experience is that this is often not a problem as you will get only a few people who will run but it is useful to get some turnover every few years. People can always come back on the Board in future years after a bit of a break.
- Emergencies and Disasters: Being prepared for emergencies such as natural disasters, fires, or other unexpected events requires planning and coordination. Ensuring the safety and well-being of residents during such situations can be challenging. Recent events have certainly shown us that we need to pay more attention to this subject. Do you have an effective evacuation plan? Do all the residents know of it?
- Resolving Disputes: Conflicts between residents, whether related to noise, property damage, or other issues, can escalate if not addressed properly. Mediating and resolving disputes in a fair and timely manner is important for maintaining a harmonious community. If things escalate too far or you don’t feel sufficiently trained in handling disputes don’t be afraid to engage someone trained in the field. Many lawyers have experience in this area. Yes, it will cost you money, but it will be worth it. Remember you’re only a volunteer giving freely of your time. Hopefully it won’t go as far as what happened nine years ago in New Westminster where a couple refused to move to a new parking spot, costing the corporation thousands of dollars in court costs. Eventually the couple were ordered by a judge to sell their condo and move out (read here). Stick with your guns. Sometimes it is a battle of attrition.
- Technology Adoption: Incorporating technology for communication, management, and record-keeping can be challenging, especially if some residents are not comfortable with or accustomed to digital tools. You need to become familiar with your owners and what media they are comfortable with and adapt your strategies to ensure everyone is included. In my building we still have a few people who do not use computers or prefer paper copies. We make adjustments for that. We have used Zoom for meetings, which has worked reasonably well but I am aware some people do not attend. Even when we met in person not everyone attended. It’s a continuing problem. You just have to make sure everyone has the opportunity and capability to join. Whether they do or not is their choice.
Addressing these challenges requires a combination of effective communication, sound decision-making, proper planning, transparency, and a commitment to creating a positive living environment for all residents. We at CCI NS will continue to offer training, seminars, and information to help you meet these challenges. Stay tuned for more.
CCI Nova Scotia
Tag(s): Board DynamicsBoard of Directors CCI Nova Scotia Communication Condo Act Condo Community Condo Education Conflict Diverse Interests Financial Management Get involved Legal Compliance Reserve Fund Planning Rule enforcement Vendor Management Volunteers