Protecting the Corporation's Money: A Board's Duty of Care Doesn't End with the Vote
One of us watched a loved one come uncomfortably close to losing her life savings. An 87-year-old woman — someone who refused to even do online banking for fear of fraud — got a phone call from someone impersonating a family member in distress. It wasn't an email riddled with spelling mistakes or an unbelievable promise — it was a calm, urgent and credible enough phone call that she almost acted before she had time to question it. We caught it in time. It still shook her.
That kind of fraud isn't rare, and it isn't reserved for people who aren't paying attention. Canadians reported losing more than $704 million to fraud in 2025 alone, with over $2.4 billion lost since 2022 — and the real number is likely higher, since only 5 to 10 percent of fraud ever gets reported. If sophisticated fraud can catch a sharp, careful individual off guard, condominium boards handling hundreds of thousands of dollars of other people's money need processes built around the assumption that what looks legitimate sometimes isn't.
A Costly Lesson for Ontario Condo Boards
Toronto Star columnist Bob Aaron reported on Toronto Standard Condominium Corporation 2150, a 304-unit building at 126 Simcoe Street. [1] The board had approved investing roughly $324,000 of the corporation's operating surplus in guaranteed investment certificates. The documentation looked professional, and the institution appeared to be an established Canadian bank. It wasn't. The funds were diverted to an account controlled by people impersonating the institution — what the corporation's notice to owners called a “sophisticated investment fraud.”
A substantial portion of the money was recovered through the corporation's own efforts and its advisors, but not all of it — and the insurer denied the claim for what remained. The board is still pursuing other avenues to recover the balance. To its credit, the money came out of the operating surplus rather than the reserve fund, so daily operations and reserve planning weren't affected, and no special assessment was needed.
We're not suggesting this board was negligent. Fraud like this is built to look legitimate, and hindsight makes everyone an expert. The better question isn't whether this board should have known better — it's what every board can learn from what happened to them.
The Board's Duty of Care
Section 37 of Ontario's Condominium Act, 1998 sets the bar. Directors and officers must act honestly and in good faith, and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. Being a volunteer director isn't just showing up and voting yes on whatever's put in front of you — it means exercising judgment appropriate to the size and nature of the decision. The Act does give directors real protection when they rely in good faith on a professional's report or opinion, but that protection depends on genuine, good-faith reliance — not on rubber-stamping paperwork because it looked official.
Trust — But Verify Independently
Condo directors aren't spending their own money. They're stewarding funds collected from hundreds of owners, and for many corporations, the reserve fund is one of the largest assets they'll ever oversee. The larger and more unusual the transaction, the stronger the case for deliberate, independent verification before anything moves.
Some questions worth asking before authorizing a significant transfer:
Was the financial institution verified independently — not just through documents supplied as part of the transaction?
Was contact information sourced separately, rather than taken from an email or letter?
Was the destination account independently confirmed?
Does a transfer of this size require sign-off from more than one person?
Has the board gotten appropriate professional advice?
Does the corporation have written controls for significant transactions?
Has the board reviewed what its insurance covers in the event of fraud?
Professional-looking documentation isn't proof of legitimacy anymore. Verification needs its own channel — separate from whatever channel the request came through.
It's also worth knowing that standard property and liability coverage doesn't automatically protect against this. Crime or fidelity insurance, and cyber liability policies with a social engineering rider, are the coverage that responds to a fake-institution scenario like this one — and it's worth confirming with a broker who understands condominium risk whether your corporation has it.
What Does the Corporate Record Show?
This is where it comes back to minutes. If something goes wrong and, a year later, owners, auditors, insurers or lawyers start asking what the board knew and what it authorized, the record needs to hold up. Minutes shouldn't become a transcript of every verification step taken — but there's a real difference between “The Board approved investing $324,000 in GICs” and a record that shows the board considered the proposal, reviewed relevant information or professional advice, and then authorized the transaction. Good minutes document the decision-making process without turning into a narrative of the discussion — and that distinction matters most in exactly the moment you least want to be scrambling for it.
The Bottom Line
Telling directors to “be careful” isn't useful advice. Scammers rely on urgency, authority and increasingly convincing documentation — the fix isn't expecting volunteer directors to become fraud investigators. It's process: pause, verify independently, get the right professional advice, follow the financial controls that exist, and make sure the decision is properly recorded.
A board's duty of care doesn't end when hands go up. Good governance has to keep pace with how sophisticated the fraud has gotten.
— Patricia & Katherine
Wondering if your board's minutes would hold up if someone had to ask what was authorized and why? Let's talk.
Source:
[1] Bob Aaron, “Toronto condo corporation’s $324,000 fraud loss a warning to Ontario owners,” Toronto Star, Aug. 10, 2026.
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Disclaimer: The information provided on this blog is for general informational and educational purposes only. It does not constitute legal, financial, or professional corporate governance advice. While we strive to provide accurate information based on the Ontario Condominium Act, legislation and tribunal rulings are subject to change. Condominium boards should always consult with a qualified condominium lawyer, engineer, or Chartered Professional Accountant before making formal legal or financial decisions for their corporation.
