Older Condos Face Large Repair Bills

Older Condos Face Large Repair BillsThere are more than 7,000 condominium buildings in the GTA and some are more than 40 years old. By a conservative estimate, more than 25 per cent of these buildings are in trouble, meaning there is not enough money in the reserve fund to pay for necessary repairs. Click here to view the full article.

 

If you are a long time homeowner, you are no doubt familiar with the financial pain that results from an unexpected failure of your roof or furnace. The pain can be easily avoided: the life expectancy and replacement cost of these items is well known, and so a small monthly contribution to a “repair fund” would do the trick. Of course, homeowners very rarely do this and therefore must scramble when the inevitable failure happens.

Condominium buildings are like this. Future repair and replacement costs can be fairly accurately predicted and, in fact, condominium corporations have been required since 1998 to conduct Reserve Fund Studies to do just this. These studies project how much money should be set aside for major repairs in the Reserve Fund, and must be updated on a regular basis. Like individual homeowners, however, condominium corporations sometimes fail to set aside as much money as they should, and run short of money when a larger repair bill comes along. When this happens, the corporation must levy a “Special Assessment“, basically a surcharge on the maintenance fees for all owners, to raise the funds for the repair work.

If you are buying a condominium unit, especially in a building that is more than10 years old, it is very important for your lawyer to review both the reserve fund and the reserve fund study to make sure that the corporation is setting aside enough money to cover future repairs.