Condo owner ques­tions loan bid

Calgary Herald New Condos - - New Condos - ROBERT NOCE

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.

Cal­gary Her­ald Ar­chive

Lawyer Robert Noce.

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