Understanding Board Member Duties: When Condo Boards Fail

• Published date: 02 March 2021
• Subject Matter: Corporate/Commercial Law, Real Estate and Construction, Corporate and Company Law, Directors and Officers, Real Estate
• Law Firm: Field LLP
• Author: Ms Erin Berney

Boards of directors for condominium corporations are typically comprised of volunteers. Depending on the eligibility requirements in the corporation's bylaws, these are more often than not members of the corporation, that is, unit owners. For residential condominiums, this means that the directors are also often lay people, with no particular specialized skills or professional knowledge. Most board members I've met are certainly not well-versed in the nuances and intricacies of condominium law, and many have little to no appreciable background in building maintenance, or even accounting. As a result, many condo boards tend to rely on experts, such as property managers and engineers, to provide them with advice and guidance when problems arise.

As the board of directors is the directing mind of the condo corporation, endowed with all the corporation's legal powers and duties and tasked with making all its decisions, the board is also legally responsible for all the actions it takes, including those of its employees and volunteers. Because of this ability to control the affairs of the corporation and affect its interests, board members are also fiduciaries to the corporations they serve.

The duties of a fiduciary to a beneficiary (the condo corporation, and by extension, the individual members or unit owners thereof) are broad. In Alberta, these duties are codified by the Condominium Property Act. The Act provides that board members shall act honestly and in good faith, with a view to the best interests of the condominium corporation, while exercising the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances (see section 28). Generally, so long as the members of the board act in accordance with this statutory standard, they will generally not attract any personal liability for their conduct even where it may have an adverse effect on an interested party such as an individual unit owner. However, a recent decision by the Alberta Court of Queen's Bench confirms that acting honestly and in good faith is not a complete answer when a claim of improper conduct is brought against the condominium corporation itself.

In Lauder v The Owners: Condominium Plan No. 932 1565, 2021 ABQB 145, a ground-floor unit owner in an apartment-style condominium had been living with severely leaky windows for several years. Initially, the board was responsive to the owner's concerns and attempted to perform some minimal repairs...