Condo owner questions loan bid
Question: Our condominium board is seeking a large loan to pay for repairs, some necessary and some unnecessary.
There are no estimates for the work to be done, just estimates from the company that did the 10-year replacement schedule.
The cost of the loan will be over $30,000 for each unit. Can we do anything about this?
Answer: Every condominium corporation in Alberta is required to obtain a reserve fund study to identify what needs to be replaced or maintained during a period of time, and allow the condominium corporation to generate sufficient funds through its monthly condominium fees for those eventual repairs or maintenance costs.
Your question suggests that your condominium corporation has done a poor job in preparing for future needs and does not have any reserve fund money available to pay for these future repair and/or maintenance costs.
It is possible that your monthly condominium fees are too low.
The condominium corporation is required to maintain and repair its property.
Therefore, if the reserve fund study has identified certain things that need to be done, the condominium corporation will have to proceed with the repairs and/or maintenance.
If the condominium corporation does not borrow the money, the only alternative is to levy a special assessment on each owner.
As well, it is important to review your bylaws to determine what borrowing powers the condominium corporation has in these types of situations.
Finally, I trust the board will follow a process in which they will get bids for the various projects to ensure that the owners are getting value for their money.
Helpful Hint: It is imperative for condominium corporations to set monthly condominium fees at a point where the money collected will not only cover day-to-day operations, but will also enable the condominium corporation to put some money aside for future needs.
Although from a marketing perspective it is attractive to have low monthly condominium fees, if those fees fail to meet both current and future
needs, then nobody wins.
Lawyer Robert Noce.