Financial Obligations of a Condo Board

Introduction

Serving on a condo board comes with real financial responsibilities. Understanding what’s required helps you fulfill your duties — and protects you from liability.

Collecting and Managing Condo Fees

The board sets the annual budget and determines each unit’s monthly contribution. Fees must be collected consistently and deposited into the correct accounts. Arrears need to be tracked and pursued — letting them accumulate is a breach of the board’s duty.

Maintaining the Reserve Fund

The board is responsible for ensuring the reserve fund receives its planned contributions and that those funds are invested prudently. Reserve fund money must be held in low-risk investments. The board should review the reserve fund balance at every meeting.

Approving Expenditures

The board approves all significant expenditures. Most bylaws set a threshold below which management can spend without board approval, and above which a board resolution is required. Know your thresholds.

Financial Reporting to Owners

Owners have the right to receive financial statements and to review the corporation’s financial records. The board has an obligation to provide this information at the AGM and upon reasonable request.

Maintaining Adequate Insurance

The board must maintain adequate insurance on the common elements and the corporation itself. Gaps in coverage can leave the corporation — and individual owners — exposed.

The Fiduciary Duty

Board members have a fiduciary duty to act in the best interests of the corporation: making decisions prudently, keeping accurate records, maintaining proper separation of funds, and avoiding conflicts of interest.

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Disclaimer: For general informational purposes only. Not legal, financial, accounting, or tax advice.