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IN THIS ISSUE SPRING 2019
Determining Condo Total Replacement Cost Spring Cleaning at
Condo Corporations The Pitfalls of Deferring Maintenance What is
co-insurance? A checklist for setting condo budget priorities Q
& A Keeping It Confidential Ten Condo Safety Tips to Consider
Did you know?
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CONDO VOICE SOUTH SASKATCHEWAN SPRING 2019
Spring 2019
Temps to -30 tonight feeling like the -40s. Chilly Sat and
Sunday, warming next week.
It’s March 1 as I start doing this newsletter and like many of
us here in South Saskatchewan, I wonder if this winter will really
ever end.
As always though, we are the eternal optimists and believe it
will get better. The weather has been causing havoc across the
country this year and is giving all condos challenges with their
maintenance programs. How to use new technologies, not just for
cost saving but also for their other advantages is an important
part of future planning and many of us have taken advantage of the
rebate programs offered by Sask Power and Sask Energy to upgrade
our systems, lower our costs and of course reduce the impact of
emissions on the environment.
Information and education continue to be critical resources for
all directors and managers. The education committee continues to
assist in this endeavour with events like the Insurance workshop
held in November and the March Bylaws and Enforcement Lunch and
Learn. The Condo 100 Directors Course is May 25. Other seminar
topics are being researched. We also wish to mention how many of
our Business Partners so willingly give of their time and expertise
to assist in this continuing education of our CCI members and how
thankful we are for this assistance. Thank you as well to those who
advertise in our Condo Voice, AGM info and on our website. Without
this continued support we could not hold the educational and
informational events that we do.
The final Thank you goes to the wonderful individuals on the CCI
Board who also volunteer so generously of their time to organize,
research and assist with everything necessary to make events happen
and of course to our Administrator for handling our day to day
operations.
As the saying goes: ‘Spring is just around the corner’; so,
enjoy our Spring information.
It’s now March 28th, and Spring is on its way, by the time you
read this you will be able to say, “it has arrived.”
Thankfully.
-Dawna Matthews
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CONDO VOICE SOUTH SASKATCHEWAN SPRING 2019
Determining Condo Total Replacement Cost and Understanding
Fluctuations - By Cameron Carter, B. Com, RI (BC), CRP Normac
There are many practical ways to measure the value of a
condominium property in Canada, some being more useful than others
in specific circumstances. For insurance purposes, the value of a
condominium asset is defined by its full replacement cost, known to
appraisers as the Total Insurable Value. This total insurable value
(TIV) is the all-encompassing cost to fully replace the property in
the event of a total loss and includes items such as the cost of
materials, labour, bylaw and building code revisions, as well as
changes to standard materials deemed no longer appropriate.
Total Insurable Value Explained
Determining TIV is different than the methods used for other
property valuations. Market Value appraisals, a report an owner
would obtain to finance their home purchase includes a
consideration for the value of the land which can impact the
overall valuation drastically. Properties that generate revenue
would normally be appraised using the Income Approach which
estimates the value of a property based on how much net income is
created. The approach an owner would take to establish an accurate
TIV for insurance purposes is different and starts by hiring a
reputable third-party firm to complete an insurance appraisal. Once
hired the company starts the process of identifying, assessing,
analysing, and reporting on the current replacement cost of the
property. As mentioned, there are a multitude of components that
must be evaluated: building structure and systems, all common
assets, applicable bylaw and building codes, landscaping, and even
the cost of demolition. Once all factors have been accurately
accounted for, the insurance appraiser can provide the condominium
with the TIV, which enables the owners or manager to insure the
property sufficiently. If appraised too high, the condominium
corporation will be paying excess amounts of money in premiums for
insurance. If appraised too low, the asset is at high risk in the
unfortunate event of a total loss. This issue is more complex when
considering the many external factors that can cause fluctuations
of the TIV of a property.
TIV - Factors and Considerations
Construction Type, Materials, and Labour Considerations
Looking at insurance appraisals through the lenses of an
appraiser, the three major considerations for costs are the type of
construction, materials, and labour. As economic conditions
fluctuate, so do these variables. Changes to supply and demand,
workforce composition, even international trade can all contribute
to rapid and profound TIV fluctuations
Location and Scale
While the TIV has nothing to do with the market value of the
land, location can have a substantial impact on the replacement
cost. Many contractors charge more for their services in urban
areas than in rural areas. Locations that are considered affluent
will often get higher quotes from contractors. Demolition is
another significant contributor to the total replacement value.
Demolition and removal jobs in urban areas will cost significantly
more due to space limitations, traffic considerations, imposed
standards for separating materials, and development permits that
may be required. Smaller properties do not benefit from economies
of scale that exist on larger projects. For example, material
suppliers typically offer discounts on larger orders, and this can
lead to an overall lower cost per square foot of construction.
Furthermore, small suites do not equate to lower costs because all
suites still require all the same utilities
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CONDO VOICE SOUTH SASKATCHEWAN SPRING 2019
and amenities such as appliances. In larger units, those
expenditures are spread across more floor area, thus the price per
square foot can be lower.
Bylaw and Building Code, Building Practices
Bylaws and building codes are an important consideration when
appraising condominium assets. Due to variations between
municipalities and provinces, bylaws and building codes must be
assessed in detail on a case-by-case basis as discrepancies between
current standards and older structures can reflect large portions
of a building’s full replacement value. Experienced appraisers have
seen cases wherein new building codes and bylaws represented up to
30% of an asset’s TIV. Examples include updates to fire protection
standards, elevator codes, and parking requirements that would
entail large amounts of capital to rebuild to current day
standards
Current fluctuations explained
The aggregate of all previous factors results in total insurable
value fluctuations which, when shifting above the insured value of
a condominium property, pose a serious concern for owners and
managers. Currently, certain economic conditions have had a great
impact on TIV, including:
Supply and Demand of Raw Materials
Supply and demand of materials such as steel, concrete, and
softwood lumber has been transitioning through a period of major
imbalance, causing extreme price increases1. With an overall
decline in steel production, global increases in demand for steel
have drastically affected pricing. According to the World Steel
Association, the cost of steel has been increasing since July 2017
and is expected to rise again by 8% through 20182. Canadian
softwood lumber production has been stifled by recent, record-level
forest fires, beetle infestations, and by climate change3. In 2017
alone, building and construction costs saw an increase of 10% - 40%
due to BC’s wildfires. This reduction in supply has led to sawmill
closures in Canada, further contributing to record level
pricing.
International Trade
A deterioration in trade relations between Canada and the USA
has further affected increases in material costs. The USMCA is the
new trade deal to replace NAFTA and it may have a significant
impact on the exchange rate between the two countries. Tariffs on
raw materials are another main consideration regarding fluctuating
prices. It is expected that steel tariffs alone could raise
condominium prices by $10,000 CAD5.
Labour Market Shortages
Lack of skilled labour equates to higher charges by contractors
and construction companies as wage increases are needed to attract
workers. As of December 2017, Canada was reported to have a
national shortage of 38,000 construction jobs, third on the list of
industries experiencing labour shortages6. By March of 2018, the
construction industry had jumped to the number two spot7. This
year, overall labour costs are expected to raise an additional
2-3%, influencing overall construction costs as well as expenses
such as demolition and debris removal, both major components of a
condominium’s TIV. With labour shortages affecting many other
industries besides construction, we believe that this issue will
have a profound affect on construction costs for the foreseeable
future. The TIV is the essential figure to replace a property in
the event of a major loss. With so many variables to consider, your
best protection from the risk of loss is to obtain an appraisal
from specialists in the field.
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CONDO VOICE SOUTH SASKATCHEWAN SPRING 2019
Spring Cleaning at Condo Corporations -Richard Murray Condo
Strength Chair Grand River
It may not seem like it yet, but Spring is just around the
corner. With that in mind, condo Boards should investigate some
annual tasks.
Firstly, you should have already started, if not already
completed, your contract negotiations for your lawn maintenance, if
you have any. These are usually completed by tender and take a good
month or more to finalize. You will likely use the services of your
Property Manager to garner a list of potential candidates, or you
may use your own resources. Either way, it is important to get some
references if you do not already know a candidate. Contracts can be
for a single season, but also, many corporations set a multi-year
contract to firm up pricing for budgeting purposes. Showing the
potential for a multi-year contract may also create better pricing
and better performance since poor work will jeopardize a larger
fiscal reward for a contractor. Also, in projects such as lawn
maintenance and snow removal, the first year of a contract will be
a learning experience and the subsequent years will give you the
work standards that you really want.
You will want to have the prospects all walk the site with your
Property Manager so that questions can be properly answered, and
issues pointed out in advance. While letting a prospect do his/her
own site visitation may result in a reduced-price quote, what you
really want is a proper job done as your priority, with good
pricing the second. It is also an excellent idea to take photos of
the site in advance of awarding the contract and providing copies
of these to the awarded recipient. In this way, there are no
disputes about the existing conditions of the property prior to the
landscaper initiating the contract. Apply the same logic when
contracting out your snow removal provider.
Now is also the time to assess the snow removal situation. Has
your snow removal company damaged any landscaping? Does your
contract stipulate that they must fix damage that they caused while
completing their contract? It should.
If you do not have an on-site Property Manager or are
self-managed, you have more work to do. There is a protocol to
follow to tender a project. If you do not have one in place, you
may wish to contract the writer to get a standardized set of
protocols to consider. Knowledge is strength.
Fire alarm inspections need to be performed at least annually.
All units must be inspected by an independent inspector. It could
be a staff member or an appointed alternate. The point is that you
cannot rely on the honour system from the resident. The negatives
are just too great. Often, a specific date is advertised, and
individual unit residents are provided with a door notice advising
when their unit is to be inspected. Allow for an alternative or
multiple date since people do have their own life schedules and you
need to reasonably accommodate these. Advised times will likely
only be for an AM or PM on a day. Weekends or evenings may be
preferable, and your notice should include advising that if no one
is available when scheduled, a fee may be charged for a come-back
inspection.
With the new rules about carbon monoxide alarms, (Saskatchewan
has no Provincial CO detector law and the National Building Code of
Canada is adopted, requiring smoke alarms in all new dwelling
units, sleeping rooms, and on every floor.) you need to check for
these too. Remember that there needs to be one alarm per level for
fire and one alarm for carbon monoxide/unit. Whoever does the
testing likely should have a few new alarms for sale when
inspecting. Alarms must be replaced at least every 10 years, but
the batteries need replacing much more frequently. Remember also
that if a unit originally had a wired alarm, it must be replaced
with another wired alarm. New versions of wired alarms now come
with a battery backup. Have your Manager check with a professional
fire alarm company to ensure you have everything looked after
properly. You do not want any issues where the condo corporation
could be held responsible.
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CONDO VOICE SOUTH SASKATCHEWAN SPRING 2019
Site inspections of all common properties should be done at
least twice annually. By this, I mean a full site inspection, not
just a quick look around. Look for items requiring maintenance or
repair. Look at everything from a safety perspective. If you have
balconies, check that the support structures are in good condition.
You might even wish to modify your rules to stipulate weight and
numbers restrictions for balconies. Look carefully at all roads and
sidewalks. Are there any defects or uneven surfaces that could
cause accidents? Deal with them. Are all lights in common areas
working properly? Consider replacing defective lighting with LEDs.
Do you have common areas like pools or tennis courts or party
rooms? Check all these thoroughly. If you have a pool, do you have
the plans in place for lifeguards, bromine supplies and similar all
looked after? Do any walls in common areas need repainting?
Do you have emergency evacuation exercises? These should be
completed at least annually, possibly more frequently. Do you have
any keyed areas? Are the records as to access up to date? For
security for your premises, do you change codes occasionally? Now
would be a good time to do this.
If you have your own private streets, you likely have catch
basins that need to be vacuumed out each Spring. Plan for that work
now. Do exterior/common windows need to be washed? Firm up your
work plans now.
If you have any work that needs to be done in better weather,
look to contracting that out sooner, not later. Many times, you can
get better pricing if work is done in fringe periods like Spring
and Fall when the contractors have staff on hand but are not yet
fully busy because their work is weather based. If a contractor can
do work at their discretion when a nice day comes along, they love
this option as it brings in money when they have the time and their
personnel are not yet fully committed elsewhere. Also, minor work
can be accommodated in fringe periods and many contractors will
only work on large projects in the optimum work periods such as
Summer, so your smaller projects get left undone.
In summation, think like a professional and use common sense. By
mid Summer you should be thinking about your Winter projects.
Everything takes time and not just on your part. A busy contractor
cannot just drop what they are doing to give you a quote.
While this is not a complete overview it should give you enough
to get you started in the right direction.
Good luck. Think Spring!
Inside have your trusty green cleaners at the ready — baking
soda, vinegar and Non-toxic. Low-cost hydrogenperoxide. Hydrogen
peroxide is a safe cleaner to use around kids, or anyone with
respiratory problems, because it’s not a lung irritant. When
cleaning it is best to avoid cleaners and chemicals that can pose a
danger. Bleach can be corrosive and a skin irritant. Most cleaners
sold in stores contain hydrochloric acid, ammonia or
formaldehyde.
drops of essential oils to give vinegar a more appealing
fragrance.washer and eliminate odours. Run a full cycle with a cup
of baking soda.
minutes.ing vinegar mixed with a small amount of baking soda.
Scrub all
surfaces. Let it sit in a toilet or sink for half an hour to
help eliminate odours. All other surfaces including mirrors
andglass can be cleaned using a vinegar-water solution.
pe down items with a microfiber cloth using some lemon juice or
essential oils.
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CONDO VOICE SOUTH SASKATCHEWAN SPRING 2019
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CONDO VOICE SOUTH SASKATCHEWAN SPRING 2019
The Pitfalls of Deferring Maintenance and Repairs in
Condominiums
Deferring maintenance can have measurable short-term gains.
Delaying repairs or replacement to building components or systems
can be done to provide cash flow relief, meet budgetary
expectations, or delay the non-financial impact of the project.
However, deferring maintenance also comes with risks and
potential costs
Pitfall 1: Lack of consideration of the risks associated with
emergency failure
Properly forecasted and planned replacement and repair projects
consider construction variables such as urgency and material
delivery time. There are numerous systems throughout complexes that
require continuous operation and greatly affect the community in
the event of unexpected failure. While considering deferring a
repair or replacement project, a corporation must address the risk,
adverse impact, and the additional costs that an emergency failure
of the system could impose during the deferral period. Envision a
main breaker switch replacement that is deferred due to immediate
budgetary issues. Properly planned, any scheduled shutdown of the
power during the project is addressed by notification to the owners
or by arrangements of temporary power. In the event of emergency
failure, the risks associated with the potential lack of
availability and costs of emergency power, coupled with the
additional strain of dealing with a community that just lost power
may be worth re-evaluating budgetary priorities on aging equipment
where the negative impact of unexpected failure is so great.
Pitfall 2: Uncontrolled or concealed continual degradation
Individual building elements are part of an overall system that
rely on the integrity and proper functionality of all components. A
failed caulking joint around a window can lead to water
infiltration that damages drywall and saturates insulation,
resulting in heat loss at the wall assembly. Deferring maintenance
of elements where the failure is damaging other, sometimes
concealed, secondary elements without proper consideration of the
costs and impacts of repairing these secondary elements will often
result in significantly increased future maintenance and repair
costs. Countless localized and minor repairs projects have
spiralled into large, multi-year, costly, and disruptive projects
under the guise of deferred maintenance.
Pitfall 3: Ignorance to volatility of material cost
Condominium budgets expect costs to increase over time in line
with inflation. When evaluating future costs of deferred
maintenance, condominiums often look to the local construction
price indices which indicate year over year general inflation.
However, materials or equipment that are related to a specific
commodity, such as aluminum in high-rise windows or petroleum in
asphalt, may see price increases over a relatively short period of
time that fall outside the range of the general forecasted
inflation rates.
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CONDO VOICE SOUTH SASKATCHEWAN SPRING 2019
Window frame replacement projects that were deferred from 2013
to 2015 would have expected a general construction price increase
of 2.3% (Statistics Canada), however, aluminum prices varied
significantly in this period, increasing by 17% at their peak.
Although aluminium does not make up the entirety of these projects,
over a 2-year period, the changes in material costs affected
overall construction costs, resulting in an estimated increase in
project cost of 6%. These unexpected changes could negate the
original benefits of deferral altogether.
Pitfall 4: Life-extending repairs associated with deferral does
not return an appropriate benefit
Occasionally, useful service lives of aging elements can be
extended with minor to moderate repairs, thus reasonably deferring
their subsequent major overhaul or replacement. The cost and scale
of these life-extending repairs must be evaluated in relation to
the benefit or savings of their deferral. The cost of the
life-extending repairs may not be reasonable when considering the
amount of time that the repairs defer the subsequent project. The
cost of these refurbishments will always be significantly lower
than a complete window frame replacement, however, if the value of
the refurbishment is 35% of the value of the future replacement,
and is only expected to extend the service life of the windows by
25%, consideration should be given to dealing with the window
elements as a whole, without delay.
Managing Risk
Deferring repairs and assessing priorities is a part of building
management and operation. The money isn’t always available every
year, and if it is, it may not be in the best interest of the
community to carry out a specific project at a given time. All
project deferrals contain risk, which are evaluated by the
probability of failure in relation to the impact of failure. In the
examples above, we’ve suggested cases where the risks were either
improperly managed or ignored altogether. A comprehensive review
and preventative maintenance inspection should be performed when
considering any deferral to ensure that you do not get trapped in
one of the pitfalls.
- condensed from Justin Tudor Keller Engineering.com
Want to be a published author? A benefit of CCI membership is
the opportunity to write an article forpublication inCCI-SSK "Condo
voice" quarterly magazine. If you are a condominium director with a
stor to tell or advice torelay to other condominium boards, let us
know! If you are a professional or business partner company
offeringservices or products to condominiums and have a relevant
article, let us know!
The subject matter should be current, concise and helpful. The
topic should relate to the operation or management of condominiums
and not be of an ad ertisin nature. Articles can be between 500 -
1500 words in length.
Contact us at [email protected]
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CONDO VOICE SOUTH SASKATCHEWAN SPRING 2019
What is co-insurance? -from Insurance Institute of Canada
Material
Coinsurance may well be one of the most confusing and
misunderstood terms in insurance. While not all inclusive, this
article will cover the basic concept.
Coinsurance is the percentage of value that the policyholder is
required to insure. If you insure your property for less than that
amount your insurance company imposes a “coinsurance penalty” once
a claim is filed. The value is determined at the time of the loss
and if the amount of insurance is found to be under the stated
coinsurance percentage then a penalty is applied reducing the claim
payment.
Coinsurance is also a provision of an insurance policy that
provides that the insurance company and the insured will apportion
between them any loss covered by the policy according to a fixed
percentage of the value for which the property, is insured.
This clause makes sure policyholders insure their property to an
appropriate value and that the insurer receives a fair premium for
the risk, whether on a replacement cost basis or on an actual cash
value basis (subject to depreciation). The co-insurance clause can
also be found on business interruption policies where it ensures
that policyholders insure their revenue stream to an appropriate
value.
Insurance is intended to spread the risk of any loss among every
insured who purchases a policy from an insurance company and the
company itself. The likelihood that every policyholder will suffer
the loss that has been insured against is slim, and, therefore, an
insurance company should be able to compensate those who have
losses, if those policyholders have complied with the terms of
their policies.
Co-insurance divides the risk of loss according to the amount of
insurance purchased by each person through the payment of premiums.
The size of insurance premiums is based primarily upon the value of
the property covered by the policy. If a person fails to insure a
property for an amount close to its actual cash value or
replacement cost, then the person must accept a greater share of
the risk of loss than someone who pays larger premiums to insure
his or her property for an amount close or equal to its actual
value.
How does co-insurance work?
Generally, co-insurance is expressed as a percentage. The most
common clauses require policyholders to insure to 80%, (for
property insured on an actual cash value (depreciated value)
basis.) 90%, is normally used: for buildings and contents insured
for replacement cost, or 100% % is normally used: for profits
business interruption.
For instance, a building valued at $1,000,000 replacement value
with a co-insurance clause of 90% must be insured for no less than
$900,000. The same building with an 80% co-insurance clause must be
insured for no less than $800,000. There are other percentages and
applications used and your broker will advise you of the steps to
take to ensure your property is insured to a fair value and you
won’t end up on the wrong side of a co-insurance calculation.
What if I choose to insure for less than the amount required by
the co-insurance clause? If an owner chooses to insure for less
than the amount required by the co-insurance clause, the property
owner is essentially agreeing to retain part of the risk rather
than transfer it to the insurance company. He or she thus becomes a
‘co-insurer’ and will share the loss with the insurance company
according to a simple calculation.
Here are two examples that demonstrate how the clause works:
Building Value $1,000,000 Co-insurance Requirement 90% Required
Amount of Insurance $ 900,000
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CONDO VOICE SOUTH SASKATCHEWAN SPRING 2019
Actual Amount of Insurance $ 600,000 Amount of Loss $
300,000
The co-insurance formula is: (Actual Amount of Insurance) X
Amount of Loss = Amount of claim (Required Amount of Insurance)
Inserting the amounts above in the formula produces the
following calculation: ($600,000) X $300,000 = $200,000
($900,000)
So, the owner absorbs a $100,000 co-insurance penalty. Since he
chose to retain one-third of the risk himself rather than transfer
it to the insurer, he absorbs one-third of the loss. If the
building had been insured to the amount required by the 90%
co-insurance clause then the co-insurance calculation would look
like this:
(Actual Amount of Insurance) X Amount of Loss = Amount of claim
(Required Amount of Insurance) ($900,000) X $300,000 = $300,000
($900,000) In the second example, since the owner met the
co-insurance requirement, he was not a coinsurer and his claim gets
paid without penalty.
Will insurance companies allow the deletion of the co-insurance
clause?
Generally, insurers will not allow the co-insurance clause to be
deleted. They want to ensure they receive a premium which fairly
reflects the total reconstruction value of the property insured,
and covers the risk assumed by the insurer. Under certain
circumstances, an insurer will replace the percentage co-insurance
clause with a “stated amount co-insurance” clause.
With the stated amount co-insurance clause, a pre-agreed value
replaces the percentage amount. If the amount insured is not less
than the amount agreed to, the property owner cannot become a
co-insurer and won’t face the penalties created by underinsurance.
If the property is insured for less than the agreed value, the
stated amount co-insurance clause reverts to the standard 90%
clause – and the potential for an underinsurance penalty
returns.
To obtain the stated amount co-insurance clause, the
policyholder must satisfy the insurer the amount of coverage is a
fair approximation of the true cost. Normally, a “reconstruction
appraisal” will be required. Market value or purchase price can be
dramatically different from replacement cost. Relying on them can
produce some nasty surprises following a loss.
Always check with your insurance broker for expert advice!
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CONDO VOICE SOUTH SASKATCHEWAN SPRING 2019
CCI South Sask. Condo 100
SAVE THE DATE Regina
May 25,2019 Our Second This Year Now 4 hours 9am-1pm
More Details Soon Condo 100 Course
Special Thanks to Lindsay Oliver and Kelsey Kreklewich -Olive
Waller Zinkhan & Waller LLP for an engaging,interactive Lunch
& Learn on Battling Bylaws.They gave lots of insight into what
we can and cannot do as Directors, when to usesmall claims or Court
of Queens’ Bench and so much more.
Was ana ropert ana e ent
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CONDO VOICE SOUTH SASKATCHEWAN SPRING 2019
BREAK BAD CONDO BOARD HABITS
-Liron Daniels
Much like people, condo boards can develop bad habits that are
hard to break. Even good condo boards, from time to time, need to
break out of bad habits.
Conflicting Public Opinions
Condo boards can and should have disagreements. This remains the
best way to come to the best possible solutions. Once there has
been a majority vote the board should speak with a unified voice.
Whether giving direction to management, dealing with vendors or
communicating with residents a condo board should speak with a
single voice. Directors voicing dissenting opinions outside of
board meetings can weaken a condo board.
Failure to Vote and Record Decisions
After deliberation and decision, condo boards can neglect to
have a formal vote or record decisions. Lack of formal records,
meaning undocumented actions, are not legal. They can place any
policy or financial decision at risk.
Fabricating Problems to Address
Serving as a condo director is hard enough without creating
“problems” that don’t exist. Avoid demanding new procedures or
processes likely to create more problems. That vendor who fails to
perform as expected or resident who fails to abide by condo rules
is more likely to be an isolated situation rather than reason to
deliberate and question the way things are currently being
done.
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CONDO VOICE SOUTH SASKATCHEWAN SPRING 2019
A checklist for setting condo budget priorities
- By Van Smith for Condo Business
Some may think of condo budget review as a yawn fest; however,
others may spend hours working out the smallest of details. That’s
because a budget is basically a financial plan — not sexy, but
extremely important in the condominium industry. Budgeting is so
important that the Condominium Act requires all corporations to
maintain an operating budget and a capital budget for the repair
and replacement of major components.
The elected directors for a condominium corporation meet
annually to review a preliminary budget —early enough to allow time
for review and final approval of the budget before it gets
distributed to the unit owners.
Management firms put several days into preparing the budget and
the supporting documents to justify the budget categories and
amounts. Much data is gathered, including historical data from
prior years, new utility rates, insurance estimates, WCB rates, and
contracted services, all to assist with budget packages.
Setting priorities
How does a board determine budget priorities when faced with
rate increases? Well, this challenge normally presents itself when
increases are excessive.
Numerous condominium corporations are faced with double-digit
rate increases for different reasons. In new buildings, the
second-year budget tends to rise significantly due to costs
deferred by the developer. In older buildings, unanticipated
repairs or higher than anticipated repairs may also lead to
dramatic increases.
The challenge for most directors is accepting an increase that
will have a financial impact on their neighbours and themselves.
Consider the following checklist when sitting down as a board to
discuss budget priorities.
Review director responsibilities: The role of the director is to
perform the duties and obligationsof the corporation, regardless of
cost. If the roof is leaking and requires major repair, the board
mustbudget to repair the roof even if it is expensive and will
increase maintenance fees.Determine who has priority: Sometimes a
small group of vocal unit owners makes requestssuch as that the
five-year-old gym equipment be replaced. Although it would be nice
to change theequipment, it is likely that the equipment will last
another 10 years. Determine whether items are apriority for most
owners or a select few.Maintain the standard: Condominiums are like
hotels, as they can either offer several amenitiesand services, or
a just a few. Buildings with high-end and wide-ranging services are
generally occupiedby people who want to live a certain lifestyle
and will pay for those luxury services. Budget to maintainthe
standard owners have come to expect.Consult with professionals:
Professionals can evaluate buildings and document the condition
ofitems such as the roof or the underground garage, as examples.
They are also able to prioritize amaintenance schedule to help
directors plan for the repairs or replacement of items.
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CONDO VOICE SOUTH SASKATCHEWAN SPRING 2019
Building improvements: Consider establishing an ongoing budget
category for buildingimprovements, such as installing an automatic
door operator to provide easier access for residents.Some other
examples include energy conservation/retrofit projects and signage
upgrades. When facedwith budgetary constraints, consider small
projects that have a big impact.Operating versus reserve: Although
a reserve fund can be used to replace a window, it’s best tobudget
an amount within the operating budget to handle some replacements.
For example, a 10-year-oldbuilding with 600 window units should
consider an annual operating budget of one per cent (or six
units)for repairs and replacement. The reserve fund should be used
for a complete or phased replacement ofthe windows in accordance
with the reserve fund study. Windows are just one example; the
sameprocess applies for all reserve fund items.
Over/under budget
Setting budgets isn’t a perfect science. The idea is to set
realistic estimates based on the information available and stick as
closely to that framework as possible. Unforeseen events can lead
to budget shortfalls, or more happily, budget surpluses. Here’s a
note about budget surpluses, though:
Ever heard stories about public sectors unnecessarily spending
all their budget? This also happens in the private sector, where
departments may try to use up remaining dollars before year end.
The concern is if they don’t spend all their budget, then their
budgets will be cut in the following year.
This isn’t quite the same in condominiums as the common expenses
are collected based on each unit owner’s proportionate share of the
corporation’s expenses. If there’s a surplus at the end of the
fiscal year, the common surplus can be applied to the reserve fund
or used toward future operating expenses.
Setting budget priorities involves making difficult decisions.
This process can be made more manageable by using the above
checklist as a guide. It should help directors focus on meeting
their responsibilities by regularly maintaining and improving the
building while delivering the services residents expect within the
corporation’s means.
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CONDO VOICE SOUTH SASKATCHEWAN SPRING 2019
Q & A Q: Is there a maximum percentage that the corporation
can increase monthly maintenance fees by each year?
A: There can be no upper limit to costs; whatever it costs to
operate the condominium each year has to be paid by the owners. The
only way to significantly reduce costs in the long run is to reduce
or eliminate services presently enjoyed by owners and this leads to
a building that becomes run down and a poorer place to live.
Q: Do we have to have Sask. WC?
A: Generally, you must register if your firm:
• Works in an industry that is defined as mandatory under the
Act, and
• Employs and pays workers on a regular, casual or contract
basis.
• Has a director that reports employment income on a Canada
Revenue Agency T4 income tax slip.
• Condo Associations are a mandatory industry and are required
to register if they hire workers orcontractors. If registration
does not occur within 30 days of employing workers, a late
registration penalty will beapplied.
• Condo owners pay fees to the Condominium Corporation which may
include maintenance of common areas, wasteremoval, building
repairs, etc. which require workers.
If you don’t register
It is against the law to avoid registering with us. If you don’t
register, you could be:
• Fined, even if a worker is not injured.
• Required to pay the total compensation costs of a worker’s
injury, and
• Required to pay three years in retroactive insurance premiums,
even if a worker is not injured.
Q: Does my Condo have to file with CRA?
A: All Canadian condominium corporations must file a corporate
income tax return each year, even if there is no tax payable.
Generally, condominium corporations are considered non-profit
organizations that are exempt from tax under paragraph 149 (1)(l)
of the Income Tax Act (ITA). A condominium corporation’s taxation
status is based on the particulars of the condominium corporation
each fiscal year.
1. What returns does a condominium corporation have to file each
year?
A condominium corporation must file a Corporation Income Tax
Return (T2) or a T2 Short Return.
(Visit our CCI South Saskatchewan website for more detailed
information on this in FAQ under the Resource Tab.)
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CONDO VOICE SOUTH SASKATCHEWAN SPRING 2019
Q: How often does the reserve fund study need to be
conducted?
A: The initial reserve fund study is required within three years
of the date of the corporation’s first annual meeting. If the
condominium was created through conversion of an existing apartment
building, a reserve fund study must be undertaken by the developer
before the sale of any unit. After the initial reserve fund study,
a new one is required every five years thereafter.
Clause 58.1(3)(a) and Subsection 58.1(4.1) of the Act and
Section 51.2 of the Regulations
Q: Why do we need a new study in five years?
A: The reserve fund plan once it has been created must be
adaptable enough to allow for any changes due to circumstances or
occurrences that happen during the 5-year life of the plan. The
reserve fund plan once it has been created must be adaptable enough
to allow for any changes due to circumstances or occurrences that
happen during the 5-year life of the plan.
The Condominium Property Act is designed to provide consumer now
specifies enhanced professional qualifications for eligible Reserve
Fund Study providers. See Section 51) of the Regulation which
details the methodology, and experience required of Reserve Fund
providers in the operation and maintenance of depreciating
property. Additionally, directors and employees of the corporation
are prohibited to act as Reserve Fund Study providers. Section 51
of regulations
A Reserve Fund Report must assess each listed item of
depreciating property in terms of age and time remaining before its
maintenance and replacement is likely. This assessment includes the
probable cost incurred at the time of the actual maintenance and or
replacement. The resulting document projects a stream of Reserve
Fund cash outflows, based not on the Board priorities, but only on
the current condition and on the standard useful service life
expectancy of each listed item.
A Reserve Fund Plan, which meets the requirements of the Act,
will provide a high degree but not an absolute degree of assurance
that enough funds will be available in any one year for necessary
repairs and replacements of the listed depreciating property. Even
if Reserve Contributions are collected and used only for purposes
in accordance with the Act, there is a small possibility that
reserve funds will be depleted and a special assessment will be
required
Boards should, therefore, monitor and ensure that some minimum
balance is projected in the Reserve Fund Account in case that
required repairs will come in earlier and at higher costs than
estimated. It is a mater of probabilities determined by experts and
the Act explicitly prohibits Boards from second guessing a
qualified Reserve Fund Provider who has adhered to the methodology
prescribed in Regulation .1 1. . However, legislation provides
Boards with the authority to change and update Reserve Fund Plans
by changing the amount and time of each Reserve Fund Contribution
projected in each year
. Each reserve fund plan is somewhat unique to the
Condominium.
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CONDO VOICE SOUTH SASKATCHEWAN SPRING 2019
More Condominium Terms to know: Condominium Plan The Survey Plan
that was registered under the Condominium Property Act of
Saskatchewan at Land Titles. It defines the unit boundaries and the
property of the Corporation.
Exclusive Use Areas The Board has the authority to grant
exclusive use of the common property to any Owner. For example, a
deck or parking stall. Owners can be responsible for the
maintenance of any exclusive use areas that they have been
granted.
Reserve Fund That portion of the annual budget that is set aside
by the Corporation for the repair and replacement of the common
property, portions of the units and the Corporation’s property that
are not repaired or replaced annually.
Standard Unit Description
Standard unit description means the standard unit description
for each unit or class of units that is: (i) prepared by the
developer and accompanies an application to issue titles pursuant
to section 5.1; or (ii) contained in the bylaws;
Title
“Title” means, respecting a condominium unit, the right to: an
ownership share in the condominium unit; and (ii) a share in the
common property;
Unit The premises owned by you. (i) in the case of a building, a
space that is situated within the building and described as a unit
in a condominium plan by reference to floors, walls or ceilings or
other monuments as defined in The Land Surveys Act, 2000 within the
building; and (ii) in any other case, land that is situated within
a parcel and described as a unit in a condominium plan by reference
to boundaries governed by monuments placed pursuant to the
provisions of The Land Surveys Act, 2000 and the regulations made
pursuant to that Act respecting subdivision surveys.
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CONDO VOICE SOUTH SASKATCHEWAN SPRING 2019
KEEPING IT CONFIDENTIAL
Confidentiality is sometimes required for the Board of a
condominium corporation. Difficult issues arise that require tough
decisions to be made in every condo one time or another. These are
best discussed behind closed doors, and details should not appear
in meeting minutes that might later be circulated to owners.
This can require a bit of juggling in some cases. Some
condominiums have open Board meetings, so that other owners are
informed and feel involved. But if the Board is discussing possible
liens on units whose owners are not paying their contributions to
common expenses, the non-board members should be asked to leave,
and minutes should omit the suite numbers and names of those
affected.
Other issues that require confidentiality would be a situation
that could embarrass an owner. An alleged transgression could be a
simple mistake, and it wouldn’t be fair to publicly discuss the
noise thought to be coming from one unit, for example, when it
later turns out it was coming from next door. In short, any
potential discipline issue or concern affecting a homeowner’s
personal situation or finances should be discussed privately.
As
well, Directors should be reminded not to disclose those names
to owners who are not members of the Board.
Minutes should still be recorded fully. In this case, Board
members, other owners, and even potential home purchasers reading
the condominium documents, all have a right to know how many suites
are in arrears, what the impact is on the operating budget, and
what steps are being taken to collect the needed money. Condominium
owners reading the minutes will be reassured to know that their
Board is protecting the collective interest. But specifically,
which suites are involved is not essential knowledge for owners who
are not Board members.
We must remember that while condominium corporations are legal
entities, they are also political organizations. Human relations
are important, as is fair dealing with individuals, consideration
for their circumstances and, of course, confidentiality on
sensitive issues.
Whether you are self-managing 12 units in a three-storey
building or govern a100-unit townhouse development with
professional management, we should be sensitive to how it would
feel if you were the party being discussed. Behind closed doors
your Directors can have a full discussion, all the options for
actions can be explored, minutes can record what was decided, but
no one will face embarrassment among their neighbors beyond the
Board.
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CONDO VOICE SOUTH SASKATCHEWAN SPRING 2019
Ten Condo Safety Tips to Consider -Micron
1) Be aware of your surroundings. Acquaintingyourself with your
neighbors will give you a betteridea of their regular arrival and
departure times soyou will be better prepared to spot
irregularities inthe building and respond in kind.
2) Know the location of all fire exits andstairwells in your
building; this includes indoorparking and storage areas. If your
buildings garageis equipped with panic buttons knowing thelocations
of those buttons can help you respondquickly in an emergency.
3) Part of being aware is keeping an eye onaccess control. Most
condo owner’s mistakeaccess control for security, but they are not
thesame. Access control is selectively restricting entryto the
building; security, however, would work withaccess control to alert
personnel of a perimeterbreach, or if a door remained open longer
than theallotted time. While access control working withsecurity is
more desirable there are still preventativemeasures that tenants
can implement to increasebuilding safety.
4) Unwanted visitors can gain entry to the buildingthrough the
parking garage. When entering, orexiting, the garage, stop and make
sure that thegarage door is completely closed before drivingaway,
or parking, to thwart unwanted visitors fromslipping into the
building. If you notice an exteriordoor being propped open notify
the buildingmanager about a potential breach. While it mayseem nice
and neighborly to hold the door forsomeone unless you know them you
could beputting the rest of the building at risk.
5) It is important to note that you should neverpursue someone
trying to gain access to yourbuilding. Notify authorities, your
buildings securityforce or your building manager of the situation
andkeep a safe distance away.
6) Keep your unit locked at all times, not onlywhen you are
gone, but also when you are home.Also, make use of your peephole;
if you do not
have a peephole talk to management about getting one installed.
If you do not know the person on the other side of the door take
precautions before opening the door.
7) Personal safety is important in condos. Whenfirst moving into
a condo make sure the locks havebeen changed since the previous
tenant. If youmake copies of your keys keep track of how manythere
are and who is in possession of them. Youshould never hide or leave
a key outside of yourunit.
8) As a new resident you should take theprecaution of not
putting your full name on yourmailbox. Instead you should only use
your initials,or your last name. This will prevent unwantedpeople
from trying to trick your neighbors intobelieving they know you and
thus letting strangersinto the building.
9) Use caution if you live on the lower floors ofyour condo
building. Make sure you do not leaveyour valuables on display,
particularly when you arenot home. Also, make sure to keep the
balconydoors locked when not in use, even if you arehome.
10) The final tip is probably the easiest to enforce.Report any
burnt out lights in entry ways, hallways,stairwells and parking
garages. Lighting is one ofthe cheapest deterrents to crime. By
notifying thebuilding maintenance about dimmed or burnt outlights
you are increasing the condos safety.
These tips are all transferrable safety measures that can be
used outside of condos to help keep yourself and those around you
safe. Don’t forget to share these tips to help keep family, friends
and neighbors safe!
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CONDO VOICE SOUTH SASKATCHEWAN SPRING 2019
Did you know? The GeniePad website has a message forum where you
can ask questions of CCI members and see answers from other owners?
Sign up- it’s free for CCI members? Go to:
ccisouthsask.geniepad.com to Register.
Did you know?
Education of your directors is an investment for a better
administration and the educational cost should always be covered by
the corporations. Many corporations have a line in their annual
budget to make sure their directors do attend these seminars.
Did you know?
An insurer may have a duty to defend an insured in a lawsuit
filed against the insured by a third party. This duty usually
arises if the claims in the suit against the insured fall within
the coverage of a liability policy.
If a third party caused a loss covered by a policy, the
insurance company may have the right to sue the third party in
place of the insured. This right is called Subrogation, and it is
designed to make the party that is responsible for a loss bear the
burden of the loss. It also prevents an insured from recovering
twice: once from the insurance company, and once from the
responsible party.
An insurance company can subrogate claims only on certain types
of policies. Property and liability insurance policies allow
subrogation because the basis for the payment of claims is
indemnification, or reimbursement, of the insured for losses.
Conversely, life insurance policies do not allow subrogation.
Subrogation definition and example:
n. assuming the legal rights of a person for whom expenses or a
debt has been paid. Typically, subrogationoccurs when an insurance
company which pays its insured client for injuries and losses then
sues the partywhich the injured person contends caused the damages
to him/her. Example: Fred Farmer negligently builds abonfire which
gets out of control and starts a grass fire which spreads to Ned
Neighbor's barn. Good HandsInsurance Co. has insured the barn, pays
Neighbor his estimated cost of reconstruction of the barn, and
thensues Farmer for that amount. Farmer will have all the
"defenses" to the insurance company's suit that he wouldhave had
against Neighbor, including the contention that the cost of
repairing the barn was less than Neighborwas paid or that Neighbor
negligently got in the way of firefighters trying to put out the
grass fire.
And now you know!
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BE CODE SMART
The best way to protect yo urself from discrimination and from
complaints is to know and respect The Saskatchewan Human Rights
Code.
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Policy on Support Animals
“...every person is free and equal in dignity and rights...”
(Section 3, The Saskatchewan Human Rights Code)
The Saskatchewan Human Rights Code The Saskatchewan Human Rights
Code (the “Code”) requires the accommodation of persons with
disabilities. The definition of disability includes mental
disorders. Pursuant to s. 2(1)(i.1) “mental disorder” means a
disorder of thought, perception, feelings or behaviour that impairs
a person’s:
(i) judgment;(ii) capacity to recognize reality;(iii) ability to
associate with others; or(iv) ability to meet the ordinary demands
of life.
Emotional Support Animals An Emotional Support Animal is one
that has been proven to be effective at alleviating symptoms of
certain mental disorders. These animals provide therapeutic nurture
and support to their handlers/partners. Emotional Support Animals
may be prescribed by a professional or be proven retroactively
where they started out as a pet but result in a person’s disability
improving and are therefore identified by a professional as
necessary. Typically, Emotional Support Animals are for at home
support but they may be required for other forms of supports by
some people. Emotional Support Animals do not require specialized
training.
Case Law Emotional support animals have been recognized as
alleviating symptoms of certain mental disorders.
Court decisions in Ontario have found that landlords and
condominium associations have a duty to accommodate an emotional
support animal where medical evidence establishes that
the resident requires the animal to alleviate symptoms of a
mental disorder.1 In some cases, however, the medical evidence has
been found to be insufficient to support the requirement for a
support animal.2
Housing The Commission accepts and investigates complaints in
housing where a complainant provides sufficient medical evidence to
establish that an emotional support animal is required in housing.
If a person establishes a requirement for an emotional support
animal, a “no pets” policy in rental or condominium housing does
not apply. People with certain mental disorders rely on support
animals for everyday living, and require accommodation in
housing.
(i) Requesting rental housing with a supportanimal
Being able to substantiate the disability is essential in order
to request an accommodation. It is also essential for the person
with a disability to establish that the use of a support animal is
necessary to assist them in their home. The tenant
ATTENTION: NEW POLICY FROM HUMAN RIGHTS ON EMOTIONAL SUPPORT
ANIMALS
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SASKATCHEWAN HUMAN RIGHTS COMMISSION
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need not disclose the details of his or her disability, nor
provide a detailed medical history. Rather, the tenant must
establish only that the tenant: (1) has a disability, (2) requires
the support animal because of their disability and (3) would be at
significant risk of an adverse health consequence in the absence of
the animal. The tenant will be able to establish these requirements
with a letter or prescription from an appropriate professional such
as a physician or psychologist.
(ii) Considering the requestOnce the disability and requirement
for a supportanimal is established, the tenant’s request shouldbe
considered using a “reasonableness test”. It israre that a request
for accommodation to allowsupport animals in rental accommodation
willconstitute an undue hardship. Accommodationmay not be possible
if there is another tenantwith a medically substantiated allergy
who wouldbe affected or if the tenant fails to properlycontrol the
animal. Each request foraccommodation must be assessed
individually.Conflicting requests for accommodation shouldbe
carefully examined to determine if it ispossible to reconcile the
requests.
When the request for accommodation is accepted, the “no pets”
policy is lifted. Lifting the “no pets” policy is a form of
accommodation and recognizes that support animals are not pets. No
other measures such as extra damage or security deposits may be
taken where the “no pets” rule is lifted.
Accommodating a tenant with a support animal may result in some
additional expense or inconvenience to the landlord. Unless the
expense or disruption impacts the landlord’s operation in a
fundamental way (to the point of undue hardship) the expense or
inconvenience must be accepted. In the event that a support animal
causes significant damage to a rental unit, the tenant may be held
financially liable.
Emotional Support Animals in Public Services, Employment and
Education The duty to accommodate emotional support animals in
public services, employment and education is a developing area of
the law. The duty to accommodate a support animal was recognized in
one Ontario decision, but it contained little analysis of the
medical evidence.
Emotional support animals do not have the same training
requirements as a service animal. The prospect of undue
interference with the rights of third parties is enhanced. This
issue will need to be assessed on a case by case basis to balance
the rights of the person with a disability with the rights of
businesses, educators and the public.
Footnotes: 1 Niagra North Condominium Corp. No. 46 v. Chassie,
1999 CanLll 15035 2 Strumecki v. Capital Regional Housing Corp.,
2005 BCHRT 386 and Simcoe Condominium Corporation No. 89 v.
Dominelli, 2015 ONSC 3661 3 Sweet v. 1790907 Ontario Inc. o/a Kanda
Sushi 2015 HRTO 233
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SASKATOON OFFICE Sturdy Stone Building 122 – 3rd Avenue North,
Saskatoon SK S7K 2H6 PHONE 306-933-5952
TOLL FREE 1-800-667-9249
EMAIL [email protected]
FAX 306-933-7863
WEB www.saskatchewanhumanrights.ca
20141106
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Canadian Condominium Institute / Institut canadien des
condominiums2800 14th Avenue, Suite 210, Markham, Ontario L3R 0E4 •
Website: www.cci.ca Tel: (416) 491-6216 • Fax: (416) 491-1670 •
E-mail: [email protected]
DIRECTORS’ CODE OF ETHICS
RE: CONDOMINIUM CORPORATION NO. .
I have consented to act as a Director of the Corporation and I
agree to comply with the following Directors’ Code of Ethics
throughout my terms as a Director:
Honesty and Good Faith – I will act honestly and in good faith.
I will do nothing to violate the trust of the unit owners I
serve.
Care, Diligence and Skill – I will exercise the degree of care,
diligence and skill of a reasonably prudent person in comparable
circumstances. Iwill make a concerted effort to attend all Board
and owners’ meetings. I will act responsibly and with due diligence
to become familiar with the affairsof the Corporation and to uphold
its Declaration, Description Plans, By-Laws, Rules, Resolutions,
Policies, Agreements and Requirements of theCondominium Act and
other legislation.
Conflict of Interest – I am not currently aware of any actual or
potential conflict of interest with respect to any contract,
transaction, buildingdeficiency claim, warranty claim, legal
action, proceedings or any matter detrimental to the Corporation.
If I become aware of any conflict, I willimmediately disclose it to
the Board. I will not promote my own interests or those of any
owner, resident, family member, friend or contractor to
thedetriment of the Corporation. I will not seek any special
benefits or privileges as a Director or Officer or accept any
compensation either personally oron behalf of any other person
except as permitted by a By-Law. I will act only in the best
interests of the Condominium Corporation as a whole and I willnot
favour the interests of any individual or group of owners or
residents.
Confidentiality – I will not disclose to any person (including
my spouse) information decided by the Board to be confidential or
privileged orwhich reasonably ought to be deemed confidential. When
in doubt, I will request determination by a resolution of the
Board.
Good Conduct – At all times, I will conduct myself in a
professional and businesslike manner at meetings of Directors or
Owners. I will approach allBoard issues with an open mind,
preparing to make the best decisions on behalf of the Corporation.
I will act ethically with integrity and in accordancewith legal
criteria. I will comply with rules of good conduct and will deal
with others in a respectful manner. I will comply with principles
of goodgovernance and procedural rules of order.
Support – I will abide by decisions of the majority of the
Directors even though I may disagree, but I reserve the right to
express my own views toowners upon non-confidential issues.
Defamation – I will not make erroneous or defamatory statements
about the Corporation or any owner, resident, director, officer,
manager, staff orcontractor of the Corporation.
Minimize Conflict – I will attempt to prevent or minimize
conflict and disruption and will promote good relations amongst
persons involved in ourCondominium Community. I will promote a
first class image for our Corporation, its units, owners and
residents.
Education – recognizing that governance of a Condominium
Corporation involves complex and changing requirements, I will
continue to educatemyself by reading relevant magazines (such as
any publication published by your local CCI Chapter, CM Magazine or
Condominium Business Magazine).I will support attendance by one or
more Board members at any condominium seminars presented by the
Canadian Condominium Institute (CCI),including CCI’s various levels
of courses for Directors at the cost of the Corporation.
Agreement – I hereby agree to comply with the provisions set out
in this Directors’ Code of Ethics.
Dated at this day of , 20
WITNESS:
SIGNATURE
PRINT NAME OF DIRECTOR UNIT NO.
[You are free to use this Code of Ethics in its current form; if
you alter this document in any form, you must note it is modified
from the CCI originaldocument.] If your Condominium uses this code,
please let CCI know – e-mail: [email protected]
CONDO VOICE SOUTH SASKATCHEWAN SPRING 2019