Owners won’t (or can’t) pay for urgent repairs

Sunday, November 30th, 2008

Tony Gioventu

Dear Condo Smarts: Our strata owners have tried unsuccessfully at two separate general meetings in the past year to pass a special levy for the replacement of one of our building’s roofs. The roof should have been replaced over five years ago, and since then our strata has paid almost $70,000 for emergency repairs. The assessment is going to cost our owners an average of $5,000 each, but we have a large group of new owners who purchased with high mortgages who are voting against the resolution, mainly because they can’t afford the cost. However, we can’t afford to delay this repair any longer. Several suites are damaged, and we’re facing a pending lawsuit if we don’t get the work done. Are there any alternatives?

Dear CS: Unfortunately, voting against a resolution because an owner can’t afford the payment is becoming quite common.

This is a symptom of insufficient reserve planning by the strata corporation, aging buildings, and the effects of high-ratio mortgages in aging strata properties.

As buildings age, the rate of deterioration accelerates and so do the costs. We receive many calls from owners who can’t pay their assessments and may lose their homes. In essence, they could afford to buy the strata but they can’t afford to own it. By the time they add up monthly strata fees, mortgages, taxes and utility costs, they are often too overextended to be able to manage a special levy.

I suspect that in addition to your emergency costs, the failing roof also now requires significant roof deck restoration and replacement. C.S.’s

— C.S.

building is a sobering example for any strata that is considering deferring repairs.

The costs are likely 50 per cent or higher than this strata would have paid had they replaced the roof five years ago, and now they’re on the verge of lawsuits.

Here are the options if the owners won’t approve the levy: The strata might consider a loan for the project that could provide the strata with the funds up front but defer the payment schedule over five or 10 years. There is the cost of the borrowing, but the sooner the repairs are conducted, the sooner the costs stop rising. Another option is to adjust the special levy so that payments, with a contractor’s consent, may be spread out over six months or longer. The strata corporation must maintain and repair the common assets. Seek legal counsel if your strata can’t pass the required resolution for repairs. If the strata doesn’t proceed with repairs, the courts will eventually intervene at a much greater cost to all.

Tony Gioventu is executive director of the Condominium Home Owners’ Association

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