Condominium boards and property managers are under increasing pressure to add value, be transparent and keep properties, residents, and equity safe. But covert corruption — secret deals, kickbacks, simply looking the other way when bad behaviour occurs — can erode trust, drive up fees and impact property values.

To see how these risks play out, let’s look at four common ways people might put their own interests first. These examples show how such actions can damage trust in a condo community.

Each of these scenarios can arise when a new board is established or a new issue occurs.

The transition period is especially susceptible, providing a unique opportunity for management, developer declarants, slick directors, or wily contractors to exploit. The following examples are not necessarily true, but will serve to illustrate ways in which persons charged with protecting a corporation’s financial assets may take advantage of their position for personal profit. Any similarity to real persons or organizations is purely coincidental.

Suspect # 1: “I’ll Handle This!”

If you have ever gone to an auto body shop for an estimate, the first thing they usually ask you is, “Who is paying, you or insurance?”

That’s because insurance companies don’t always shop around for savings or get multiple quotes like you or I might. In a condominium property, as well, if a large, insurable loss occurs, the insurer will typically accept the prices of its approved contractor without question. I know of a management company executive who, after a large fire, insisted on meeting with the restoration company and then asked the on-site manager to leave the room.

Now, this doesn’t prove collusion, but it certainly is suspicious. Opportunity is not necessarily culpability, but there might be intent. This could be contract manipulation that hides the tricks and ultimately costs honest, hard-working condo owners.

Suspect # 2: “I Was Just Curious…”

A single bad member of a board of directors could seek opportunities that every person should be aware of.

I know of a board member who offered to gather all the quotations for a major contract. All quotations were properly sealed – until they weren’t! The other directors then had to choose between accepting and moving forward based solely on faith and trust, or confronting the one director who opened the quotations and starting a fight.

To maintain transparency, all tenders should be gathered at the management office. The board should insist on opening all quotations simultaneously with all members present, or at a minimum, a quorum of directors represented in person; anything less presents a cloud of uncertainty.

However, problematic activity is not restricted to management and board members. Contract employees can also engage in these illicit activities.

Suspect # 3: “Super Tricks”

Once, a very honest manager had to recommend to the board that a superintendent be replaced due to his outbursts and personality issues. The super refused to vacate the suite that came with the job, even after he was no longer employed on site.

This forced the corporation to retain counsel and file an application with the Landlord and Tenant Tribunal, which is a time-consuming process at best.

Once the super was gone, two different members of the replacement staff independently informed the on-site manager that a self-proclaimed and independent handyman, who focused on working in the building and was close friends with the superintendent, had approached them asking for supplies. Was there any profit or cost savings involved?

When the handyman did not receive his request right away, he stated. “But my buddy (the previous super) always gave it to me?” It was widely acknowledged that the super and handyman were best friends of convenience.

The handyman then formed a group of gullible and general malcontents (every building has them), who went door to door throughout the building. I don’t know how they interacted with their neighbours; however, management received reports using language such as “harassment, intimidation, and bullying”. Every experienced condo manager and lawyer understands how this ends.

Suspect # 4: “Whose Contractor is it?”

Graft can occur in even the most newly formed condominium corporation. A new development in the Greater Toronto Area, within the year one Tarion period, may have the best contractors available, or they may be assisting the declarant or manager in protecting or increasing their profits.

When a board member requested the Ontario Bill 7 information, as required under the Employment Standards Act (ESA, 2000, S. XIX), the condo manager who had been hired by the declarant, responded with a cascade of misdirection and disinformation.

“Don’t ask, they are Mafia!” was the manager’s covert response when a director asked him about the status of recovering considerable arrears from the declarant. Later, in response to the director’s request for information regarding on-site contract workers, as required by Ontario Bill 7, the Protecting Ontario Workers section of the ESA, the manager said the material was neither pertinent nor necessary. He responded this way twice. Whether this manager is operating in the condominium corporation’s best interest is called into question by these actions.

Most people, whether in the condominium industry or elsewhere, are honest and genuinely want to create great communities. That is why many enter the profession, to help develop and build communities and assist people. Regrettably, others must learn the value of doing the right thing, but only if they are capable of becoming good, useful members of society. Unfortunately, the third group has ingrained entitlement and must be closely watched because their ethics are incompatible with a system that was designed with the assumptions of honesty and integrity.

Those of us who have positions of authority, whether as parents, managers, directors, or through our ability to communicate and teach effectively, should always seize the opportunity to serve as examples because, as the sayings go, “What comes around, goes around,” “Karma is a bitch,” and “We reap what we sow.” Integrity brings its own reward!<

William (Bill) Colucci, BA, RCM, OLCM, HtgTech, BES, ACS, ALB, is highly experienced in condo management. He serves as a director for several condominium corporations, and willingly shares his expertise by speaking and mentoring his fellow managers.

YourCondoInfo.ca

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