Shedding light on condo associations

Shedding light on condo associations

A condo association is much more than just a group of condo owners. As a legal entity in its own right, like a business, the condo association oversees the management, maintenance and upkeep of common areas on the property.

All co-owners are members of the condo association, but do not necessarily participate on the board of directors.

Condo board of directors… for day-to-day management

Condo association members elect board directors at the general assembly of co-owners.

Besides managing maintenance work, a condo board of directors administers the condominium property like a business: bank account, income and expenses, income tax returns, annual updating declaration to the enterprise register, keeping and preserving official documents, etc.

Through condo common fees, it also ensures there is an adequate contingency fund and new self-insurance fund in case of any problem.

Know what insurance coverage you need

It goes without saying that insurance goes hand in hand with building management. Indeed, a condo association must take out condominium insurance and co-owners must have individual home insurance to cover their property and civil liability.

Condominium insurance consists of several types of coverage:

  • Property insurance: it covers the value of the building if it needs to be rebuilt as new, furniture in common areas, pool (if applicable), outbuildings on the property such as a garage or shed.
  • Civil liability of the property: it covers damages and bodily injuries that are involuntarily caused to another person.
  • Civil liability of board members: it covers the financial implications of mistakes they may make.
  • Condo common fees: it pays for any common fees in the event of unavoidable condo vacancy.

The condo association must also keep a registry describing the private portions of a standard unit. In the absence of such a registry, the condo association’s insurance company would have to pay for co-owner improvements that are deemed to be part of the original building.

Co-owners general assembly… to follow up on decisions

While the board of directors manages their property’s day-to-day issues, the general assembly, where all co-owners are convened, serves to review the decisions taken by the board.

It is the perfect time for all co-owners to have their say on the following:

  • Budget set by board members
  • Rules adopted by the board
  • Election and compensation of board members
  • Past management of board members

In some cases, co-owners may vote to amend a condo rule or authorize the renovation, expansion or improvement of common areas.

Condo rules… living together in harmony

All the rules, obligations and responsibilities that co-owners must live by can be found in the condo rules (also called a condo charter or co-ownership agreement).

It is always recommended to consult this important document before buying a condo in order to make an informed choice.

Condo board members are responsible for enforcing co-ownership rules.

Note: This blog post is provided for information purposes only. In no way should it be considered as sound legal advice. For advice specific to your personal situation, always speak with your lawyer. SSQ Insurance cannot be held responsible for any decision made as a result of reading this blog post.