- Fraudulent acts (fraud) : Fraudulent acts (fraud)
Definition : Fraudulent acts (fraud)
Serious misconduct in the exercise of a mandate (director, provisional director, condo manager). Such acts of misappropriation include several types of serious misconduct such as embezzlement, diversion of assets, and accounting or financial frauds (e.g. falsification of accounts). In the case of fraud affecting a syndicate of co-owners, any interested party can ask the court to determine if the directors who participated in the misdeed or have made a profit therefrom are liable for the damage suffered by the syndicate.
The director of a co-ownership is called to play a key role in the sound management of the co-ownership and preservation of the patrimony of the co-owners. To strengthen and maintain the relationship of trust with them, every director must be fair, honest and loyal toward the Syndicate and the co-wners. The director must also respect ethical standards and the Code of conduct stipulated by the Civil Code of Quebec and the declaration of coownership.
February 16, 2017- It is sometimes difficult for co-owners to figure out, at the organizational stage of their syndicate, their rights and obligations .The function of director is often complex, but it is even more so when the first directors replace the provisional director of the syndicate, in essence the representative of the developer.
The day-to-day administration of the syndicate may even be entrusted to a co-ownership manager who may, but need not be, chosen from among the co-owners. The syndicate of co-owners can thus delegate to the co-ownership manager other tasks and responsibilities that are generally the responsibility of the board of directors (collect the syndicate's claims, publish a notice of legal hypothec on the fraction of defaulting co-owner, instituting legal proceedings for all matters concerning his administration, giving releases and discharges, etc.). Yet, anyone who is in charge of administering property that is not his own or that is not only his own assumes significant responsibilities. That is why - and notwithstanding the co-ownership manager’s best intentions- it is advisable to take out insurance to cover his faults, errors or omissions.
Responsible for the orderly management, the manager plays a key role in a co-ownership. Its function is generally under the authority of the board of directors. Similarly to the directors, his function ensues from the preservation of the immovable for which he is responsible. The objective is to ease the director’s tasks, and not to replace them, so that they can better exercise their decision-making powers. Truly the one man band of a co-ownership, the manager must deploy his experience and knowledge for the benefit of the syndicate of co-owners for whom he works.
A review of the various aspects of his function.
Your co-ownership is not immune to fraud. It may be defrauded by directors, co-owners, condo managers, service providers and third parties. Therefore, it is in your best interest to be wary of the behavior of potential suspects. You should not indulge in a witch hunt, however, some warning signs should arouse suspicion and command vigilance.
The civil liability of a director for the tasks incumbent upon him is largely unrecognised. It should be noted that failure to act with prudence, diligence, honesty and loyalty in the performance of his duties may engage his personal liability. A director must always keep in mind the interest of the co-owners' community. Thousands of Quebecers who sit on an annual basis on a Board of Directors, such as yourself perhaps, are unaware of this reality.