CONDOCENTRIC: Ask The Pros - Unwise to hire owner to do renovation; Lack of tendering increases concern. What is recourse if job goes wrong?

Question #1:

Our condo board has hired one of the owners in the building to be the designer for major renovations to the lobby, residential halls etc.  The job was not tendered, just handed over to him.  While the declaration and by-laws apparently have nothing to say about this, friends on boards of directors in other buildings say they would not permit it.  I can see that other owners will feel reluctant to criticize openly the design of a fellow owner.  What are the other disadvantages?  Is it the norm to exclude owners from being hired for such projects in their own buildings?

ANSWER:

While there is nothing in the Condominium Act, 1998 (Ontario) (the “Act”) that would expressly prohibit the hiring of a unit owner by a condominium corporation, Directors, whose mandate it is to manage and control the affairs of the Corporation, must always be aware that they act as fiduciaries on behalf of all unit owners.

Directors have an obligation under the Act to act honestly and in good faith and to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. Particularly in the case of hiring an owner, the Directors must be aware of any appearance of bias and may wish to take greater steps to avoid this appearance. A closed tendering process, for example, puts in place steps to ensure that there is no special treatment given to the owner.  Rather, it allows demand and supply to work for the Corporation (How would the Board otherwise know that it got the appropriate skill at a fair price)?

Another disadvantage is what happens if the work does not progress or stand up to the Board’s expectation? Hopefully, you’ve got this covered in a well-negotiated agreement; however, as the agreement was made among “friends”, this may have been overlooked.  Also, how do the Directors feel about suing a neighbor? Or dealing with a neighbor who may have wished to tender on the job?

In many instances, the property management company, who works closely with the Board in managing the day-to day affairs of the Corporation is likely to have past experience with many trades. In this case, it may be in the Corporation’s interest to take the lead from property management in getting bidders to the table, and if it is felt desirable, to include or invite owners to participate. The Board then considers the owners bids as it would with any other trade in the tendering process.

Question #2:

I live in a small self-managed condominium of town houses. Recently, the Board enacted a By-Law that, amongst other things, specifically excluded from the corporation's responsibility the replacement and/or repair of exterior doors, including front and storm doors. Following this, several owners indicated their intention to replace their front doors, and the directors quite rightly informed them that in the interests of uniformity, the doors would have to conform to an acceptable pattern. To ensure this, the directors have selected a particular door that has to be used when replacing, but, as like most models, it will probably go out of stock within a few years, they intend instructing all owners that they, the owners, must replace their front doors within a specified time, probably 2-3 years. I am contending this on the grounds that whilst I acknowledge and accept the Board's right to specify both the model and colour of all doors, they have no authority in view of the By-Law to insist on a door being replaced unless in their opinion it is unsafe or in bad repair and the owner has taken no action. This happens not to be the case with my own door, which is in excellent condition, and for which the responsibility for the timing of a replacement is specifically mine. I would appreciate your opinion as to the validity of my contention (This is one that puzzles me as well...)

ANSWER:

As a preliminary matter, the maintenance and repair responsibilities for the exterior doors, as the same are stated within the condominium corporation’s Declaration and in the Condominium Act, 1998, should be reviewed. While a by-law can be passed to “govern the maintenance of the units and common elements”, it cannot be passed so as to attempt to alter the maintenance and repair responsibilities expressed in the Declaration and the Act.  For the purposes herein, I will assume that unit owners are responsible for maintaining and repairing the exterior door.

The Act defines “repair after damage” to include the obligation to repair and replace after damage or failure. Maintenance is defined to include the obligation to repair after normal wear and tear but does not include the obligation to repair after damage.

As already stated, a by-law can only be passed to govern the maintenance of the doors, (a by-law cannot be passed to govern how repairs, which includes replacement, are to be carried out). While the condominium corporation does have the right to carry out repair and maintenance on behalf of a unit owner, there are certain pre-conditions that must apply. In regards to repair, there must be a state of disrepair, “damage or failure”, that is not being addressed. With regard to maintenance, the Act will only permit the condominium corporation to carry out the maintenance where the failure to perform the maintenance presents a potential risk of damage to the property or the assets of the condominium corporation or the potential for personal injury to persons on the property.

For these reasons, if the door constitutes a maintenance and repair responsibility of an owner, it is unlikely that a condominium corporation can force an owner to replace a door prematurely (i.e. before damage or failure or the existence of a potential risk of damage to the property or assets of the Corporation). I again suggest that a professional review the condominium corporation’s Declaration with regard to responsibilities and abilities of each of the condominium corporation and unit owner in this matter. As the writer duly points out, appearance and perhaps property value may be enhanced by uniform doors so there may be other considerations and balanced solutions which can address everyone’s ultimate interests.

From “The Toronto Star" on May 15, 2004 - Condo Living Section, P06

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