No board? Who takes care of business?

RGM writes:

Dear Paul:

Our condo bylaws call for “a Board of directors consisting of not fewer than three and not more than five persons elected by the members of the corporation” and that “a majority of the elected Directors  shall constitute a quorum”. At our recent AGM, only three members stood for election. No  one else was nominated.  We now have a board consisting of three directors. What would happen if no one wanted to be on the board? Who would run our affairs?

Paul replies:

Dear RGM:

I am sorry to hear that you squeaked by with a minimum of three directors. At the same time, I applaud the three individuals who stepped up. First of all, your bylaws most likely allow your board of three directors to appoint two additional members to fill any board vacancies. This can usually be done without an election.

But, what if no one wanted to take up a board position, what could happen?

  1. Your bylaws may require the current board members to continue to serve until replacements can be found. While these generous souls may not want to serve an additional term, it may not only be irresponsible to leave the corporation without any decision-makers, it is quite possible that they may be found to be in breach of your bylaws. It would be best to consult legal counsel to examine your particular situation.
  • The current board, assuming you still have a board, should call a meeting of owners and explain why they can’t or will not continue as a board and ask for volunteers to step up. If your board is made up of only three directors, if one of the three were to resign, you would no longer have a board.
  • Without a board, a condo corporation cannot function. Who will make decisions and provide direction. The impact would be that contracts will lapse or go unpaid, repairs and maintenance will be ignored, and the building will deteriorate, unit values will go down, it will be difficult if not impossible to sell units. Without a board, a unit owner would have to apply for a court-appointed trustee/administrator to oversee the affairs of the corporation. The Trustee will  make all the decisions on behalf of the Corporation and carry the powers of the Corporation. This would not be ideal since the Trustee will not have a vested interest in the community and the unit owners would still have to pay for the trustee’s fees, expenses, and legal costs. This will cost upwards of $1,000.00 a month.

As you can see, a condo corporation without a board would not be in unit owners’ interests. Without any disrespect intended, the only ones to benefit would be lawyers and accountants who are often appointed as trustees. A possible solution is to elect a board who can delegate the majority of the work to a property manager. In this way, unit owners would not lose control over the affairs of the corporation. Good Luck!

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