The Ottawa Citizen recently reported about a 275-unit condominium building that was facing costs of approximately $15.3 million to complete a major overhaul of the entire brick and cladding façade to stop water penetration in the units. Unfortunately, the condominium corporation’s reserve fund only contains $200,000.
It is estimated that individual unit owners will face special assessments ranging from about $40,000 to $66,000, depending on the size of their unit. Although the condominium corporation was giving owners the option to pay the special assessment in installments through to 2017, this is a big financial hit for all of the individual owners. Unfortunately for some of them, they will not be able to afford this special assessment and will likely need to sell their unit. In addition, their ability to sell the unit and the market price will be detrimentally affected with this special assessment looming, as buyers will be reluctant to buy into a condominium property where the Board has levied or intends to levy such a significant a special assessment.
In order to prevent situations like this, the Condominium Act Review Stage 2 Solutions Report recommends that condominium corporations have a reserve fund budget. This will allow owners to be more aware as to the state of the reserve fund and hopefully avoid large “surprise” special assessments. The report also recommends increasing the amount of reserve fund contributions that owners are required to make, in order to more adequately ensure that reserve funds will contain enough money to carry out necessary repairs when needed.