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Management contract:

Can the Board of Directors of a syndicate enter into it without the approval of the co-owners?



The board of directors of a syndicate, regardless of the size of the syndicate in terms of the number of units or co-owners, must manage large sums of money and deal with problems of all kinds. In many cases, the board of directors decides to retain the services of a management firm specialized in this field. Such a decision can have a considerable impact on the common expenses which will necessarily increase.




In many cases, the board of directors decides to retain the services of a management firm specialized in this field.





Competence of the board of directors


The Civil Code of Québec provides that the granting of such a contract is a decision which falls under the jurisdiction of the board of directors, unless otherwise provided for in the declaration of co-ownership. As for the fees which result from such a contract, a consultation of the general assembly of co-owners is required. For the syndicate, its organs are the board of directors and the general meeting of co-owners or any other entity useful for the management of the syndicate. The functions of the board of directors are listed in the Civil Code of Québec and its functions include the management of the affairs of the syndicate.



Management contract


Thus, article 1085 CcQ allows the board of directors to entrust the day-to-day administration of the syndicate to a manager. The board of directors must determine the extent of the powers that will be delegated to the manager, in return for a remuneration.


Duties of the manager


The duties and obligations of the manager are defined in the contract that the syndicate, represented by the board of directors, signs with the manager. This contract is in the nature of a service contract. However, the expense relating to the fees of the management firm acting as manager of the syndicate must be approved by the board of directors, after consultation with the general meeting of the co-owners pursuant to article 1072 CcQ, as it is a common expense.


Obligation to consult


The obligation of the board of directors is to consult the general meeting of the co-owners regarding the sums necessary to meet the expenses arising from the co-ownership. The general meeting of co-owners does not have to give its approval to such expenses. It must only be consulted.


A consultative vote could be held to ensure that all co-owners express their views on these expenses and thus proceed to a more concrete consultation. Failure to consult the general meeting of the co-owners on expenses which constitute common expenses may result in the cancellation of a notice of assessment for such expenses.


Therefore, although the board of directors may decide to engage the services of a management firm, the resulting expense being a common expense, must be the object of a consultation with the general meeting of the co-owners in order to validate it. A consultative vote could be a means of proceeding with such a consultation or, failing that, of drafting minutes detailing the discussions which took place during the meeting of co-owners.


It must be remembered, however, that such a consultation does not bind the board of directors, as it is, in this case, the decision-making body. However, despite the fact that the board of directors nevertheless decides to entrust certain functions to a management firm, it remains legally responsible for the management duties entrusted to the management firm because the delegation of its functions does not in any way discharge it from its responsibilities.


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