Tony Gioventu
Province
Dear Condo Smarts: Our strata corporation voted to repair condo leaks on July 28. There was an expectation that those in financial hardship could apply to the Homeowner Protection Office for interest-free loans.
On July 31, we learned that the loan program was cancelled by
the provincial government. Now we find at least 20 owners will not be able to pay the assessments on
Oct. 1. The property manager
told us that we must enforce the resolution and, if an owner doesn’t pay, we must proceed with a court-ordered sale.
Surely, there are other options.
— Karen Richardson, Burnaby
Dear Karen: There are several options but, first, I recommend that the strata council has a discussion with its lawyer to determine which funding options are legally permitted and, if an owner defers, amends or delays his repairs, he still meets his obligations under the Strata Act.
The strata corporation does have an option of convening a special general meeting so that members may contemplate amending the 3/4 resolution that you passed earlier, and consider funding alternatives.
A strata corporation is permitted to borrow funds in the same manner as a person.
In your strata, repairs are $3.8 million, with a property estimate value of $15 million. You will likely be seeking a commercial loan through a lending institution or private lender, with a five-year term that can be amortized over as long as 25 years.
The current average market rates for a strata are averaging six to nine per cent, and the strata corporation may decide to either repay the amount monthly, as either a special levy or as part of a budget item included in the strata fees. This would add $200 to $300 per month to the average strata fees.
One benefit of the strata corporation borrowing is that the loan does not reflect the personal titles or credit of each owner. But beware of predatory lenders that hide commissions, financing fees and high rates.
The council could also phase the repairs over a longer period, with a scaled payment schedule in smaller amounts, or simply phase the payment schedule over a longer period.
Each of the options has associated pitfalls.
Borrowing funds increases monthly fees and adds costs. Phasing a project drags out the repair time and elevates construction and site costs, and phased payments on the full repair may not resolve the financial crisis for 20 of your owners.
If you don’t amend your resolutions, then yes, you will be
proceeding with collections and repairs and, eventually, owners may lose their homes.
In addition to legal advice, it may be time to call an information meeting of your owners before the clock runs out on payment deadlines.
Tony Gioventu is executive director of the Condominium Home Owners’ Association. E-mail Tony at [email protected] or check the association’s website at www.choa.bc.ca
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