What are the duties of a condo board director in Ontario and can they be sued?
Under the Condominium Act, 1998, every director of a condominium corporation must act honestly and in good faith with a view to the best interests of the corporation, and must exercise the care, diligence, and skill that a reasonably prudent person would exercise in comparable circumstances. Directors are not paid professionals and the standard is that of a reasonable volunteer, but the duty is real and enforceable.
Directors can be personally liable if they act in bad faith, breach their fiduciary duty, or wilfully violate the Act. However, corporations are generally permitted by their by-laws to indemnify directors who acted honestly and in good faith, and many corporations carry directors' and officers' (D&O) liability insurance for this purpose.
Common pitfalls for directors include failing to maintain adequate reserve funds, entering contracts without proper authority, or enforcing rules selectively. If you believe a director has acted improperly, you may raise the matter with the Condominium Authority Tribunal, the courts, or the Condominium Authority of Ontario in appropriate circumstances.
Key takeaways
- Directors owe duties of honesty, good faith, and reasonable care to the corporation.
- Directors can be personally liable for bad faith or wilful violations.
- D&O insurance and indemnity by-laws provide some protection for well-intentioned directors.
- Improper director conduct can be challenged through the CAT or the courts.