Update: an interim administrator to cover the board governance gap

The board governance gap is the period from now until an elected board is in place and working. During it, no one has legal authority to act for the corporation: there is no board and no licensed manager.

The boards of all 43 condominium corporations managed by SIREG resigned on or about September 17, and SIREG Management’s condominium management licence was suspended on September 29.

LDDC's estimate is four to six weeks in the best case before an elected board is in place and working. That is how long the gap lasts, in the best case.

Until owners elect a board, nobody can act for the corporation. Electing one takes longer than it looks:

1. No owner list. A valid meeting needs notice to every owner. The records are not in owners' hands, and there is no board or manager to ask for them.
2. Notice period. Even with a list, notices have to be prepared, delivered and given 15 days. A notice sent Tuesday means a meeting on October 28 at the earliest.
3. Candidates and filings. Qualified and willing owners have to stand, and the change has to be filed properly with the Condominium Authority of Ontario.
4. Then the board starts cold. Only an elected board can hire a manager. It also has to open bank accounts and find out what state the building and its finances are in.

• Insurance. Policies need to be renewed before they expire. Some coverage also requires the corporation itself to give notice to the insurer while the policy is in force. Right now nobody has authority to give it, and an insurer could later say the notice was not valid.
• Utilities. Bills need to be paid before service is cut off.
• Repairs. If something urgent comes up, nobody can hire a contractor.
• New directors. Owners who step forward may have no directors' insurance protecting them.

As LDDC put it, we do not know what is there. We only know nobody is at the wheel.

You can. The Condominium Act lets any owner call a meeting to elect directors when there are none (section 34(5)). A requisition is not the right tool, because there are no directors to receive it.

LDDC was clear that some buildings may not need an administrator. Going on your own is a real option if your building has:

• a complete owner list,
• a meeting date and place,
• owners ready to stand for the board,
• a licensed manager ready to start the day after the election, and
• no insurance expiring, no utility at risk and no urgent repair in the meantime.

If any of those is missing, the risk is the weeks before the meeting and the weeks after it while the new board gets set up.

The two routes are not opposites. Under the administrator route owners still elect their own board. The administrator covers the board governance gap and prepares the ground first.

1. Act as the board: One person with court authority to make decisions until owners elect directors.
2. Insurance first: Confirm what coverage each corporation has, and deal with renewals and notices. The corporation, not SIREG, is the insured under the building's own policy.
3. Keep the building running: Pay utilities, arrange urgent repairs, and handle the corporation's side of any insurance claim, such as a fire in a unit.
4. Find the money: Review the records to identify each corporation's common expense and reserve funds. The proposed administrator is a forensic accountant.
5. Hold the election: Work with a group of owners in each building (a "shadow board") and with the community to elect directors.
6. Hand over a working building: Retain a manager, engineer, auditor and lawyer, and assess the building's condition and finances. The elected board can keep those professionals or replace them.

Buildings that stabilize quickly are not held back by the others.

• Each building is assessed on its own. The administrator recommends to the court when each corporation is ready to be handed back.
• Ready buildings go first. For a building with no urgent issues and owners ready to serve, LDDC expects a quick turnaround. LDDC gave about a month as an example, not a commitment.
• The court makes the order. Only the court can release the administrator. In LDDC's experience the court almost always accepts the administrator's recommendation. Until then, an elected board has no formal power.
• You do not pay for other buildings' problems. Time spent on one building is charged to that building. Only tasks done once for many buildings are shared among them.
• One standard mandate. The request is the same for every building. Tailoring it building by building at the start would bring back the cost of separate applications. The flexibility comes from how soon each building leaves.

• Legal retainer: $10,000 per corporation, plus HST (Harmonized Sales Tax) and disbursements, shared by the owners in each building who take part.
• Why it is lower: the earlier estimate of about $35,000 assumed a separate court application for every building. LDDC now plans to ask the court to deal with the first step, the appointment itself, for all participating buildings together.
• Why it is still per corporation: only that first step is shared. Each corporation is a separate legal entity with its own owners, records and finances. LDDC still prepares material for each building, acts for the owners who sign up in each one, and deals with the reporting and the order ending the administration building by building.
• If you already committed: nobody pays the earlier amount. Your share goes down, and LDDC's email will set out the new amount.
• No free riders: the court is expected to order each corporation to repay the owners who paid up front. That cost is then shared by every unit in the building through common expenses, including SIREG-owned units and owners who did not take part.
• Administrator's fees: paid by the corporation and approved by the court, with detailed time records that any owner can challenge. LDDC could not yet estimate the total.
• Early cash: a small special assessment is possible to cover bills until November common expenses come in.
• Recovering money: claims for money owed to a corporation are pursued through the corporation, not out of individual owners' pockets.

No owner is under any obligation to take part. Decide what is right for you and your building.

• It is not a vote. One owner is enough to ask for an administrator, and it does not need a majority. If other owners oppose it with a workable plan of their own, the court will weigh that.
• Other lawyers: LDDC is the firm our group has been working with. You are free to get your own advice or retain someone else.
• Other managers and professionals: these are available to buildings that organize on their own. An elected board chooses its own.
• If you stay out: you keep all of your rights as an owner. An administrator, if appointed, acts for the whole corporation, and its fees are shared across all units.
• Buildings where SIREG companies own many units: owners there can still take part. Those units are expected to be sold. Whoever owns them can vote them only if their common expenses are paid up.

If you are unsure, speak with a lawyer about your own situation before Monday.

An order returning tenancies to unit owners is expected to be sought next week. If it is granted, owners should be collecting rent directly by November 1. Please wait for the order before approaching your tenant. Acting early could create complications.