Aging condos in Ontario will need expensive repairs in the future, report finds

  8/11/2022 |   SHARE
Posted in Condos For Sale by Terra Realty| Back to Main Blog Page

Mississauga Ontario

About 15 per cent of Ontario households currently live in condominiums and more than half of new homes being built in the province are also condominium units.

There are 900,000 condominium units in the province that are managed by 11,000 condo corporations and some units that are more than 30 years old are starting to show their age.

A recent research report released by the Canadian Institute of Actuaries found that condo boards should be making sure there are enough reserve funds being budgeted to help pay for expensive repairs in the future.

Jon Juffs, with McIntosh Perry, an engineering firm which has expertise in reserve fund studies said that condominium boards need to make sure they have funds ready for unexpected repairs.

“A large number of condo corporations can realistically expect to suffer a special assessment because the planning horizons are so short and the decisions around the costs are driven by either deferrals or trying to get the least expensive repairs which maybe won’t last as long,” said Juffs.

A special assessment is when owners are asked for an additional payment on top of their monthly maintenance fees to cover a major expense such as replacing roofs, exterior glass walls, balconies, foundations and parking garages.

While condo owners pay maintenance fees each month to look after their building, there may not be enough money collected to cover major renovations when they are needed.

Also, compounding the issue is that many condo owners put pressure on their boards to keep monthly maintenance fees as low as possible.

"When you're not doing the proper increases you’re not saving enough money when the big bills come due," said Mark Weisleder, a real estate lawyer with the firm RealEstateLawyers.ca LLP.

Special assessments can range from a few thousand dollars to as much as $50,000. The assessments are usually divided by the number of units in a building or complex although the assessments may varying depending on the square footage of the units.

If a roof for a building is needed and the cost is $1,000,000 and there are 200 unit holders, a special assessment would be issued of $5,000 each to the 200 owners.

In the event someone refuses to pay a special assessment a lien could be placed on their unit.

While a rise in condo maintenance fees can be frustrating for owners if it is helping to top up the reserve fund that can prevent special assessments in the future.

“If a larger percentage is going into your reserve fund than people should understand that they are putting money away and that is a good thing because it means the money will be there when repairs are needed” said Weisleder.

If your building is in need of repairs now and they're deferred for too long, the situation could get worse and more expensive to fix later.

“If you are already noticing deterioration (in your building) and you are putting it off that deterioration is only going to get worse and the cost will get bigger to repair," said Juffs.

It's important when buying a condo to check it's status certificate to see the state of the building's finances and to check if there are any lawsuits or special assessments pending.

Source: CTV News



Condo Buyers, Condo Fees, Condo Living, Condo Owners, Ontario Living