July 2024
Last year our board passed a borrowing by-law as we had major repairs that needed to be done. Very little of it would be paid by funds from the reserve fund.
As unit owners are we not entitled to know loan details including amount, interest rate and repayment terms?
We do receive details on our reserve fund status and increases in maintenance fees. Why not loan details?
What law protects management and board from not revealing this information to us?
E. K.
Response from Toronto Condo News
The condo board has authority to arrange a loan if one is deemed necessary. This usually occurs when condo fees are set at too low a level and the reserve fund has not been adequately funded.
This decision would occur at a board meeting and require a vote of directors. You should be able to find this information in the meeting minutes which can be requested at any time.
Each year you receive audited financial statements which should also include this information.
If your community has need of a loan, there are many other questions that should be asked which include:
- How will this affect monthly condo fees going forward?
- Is the loan amount sufficient for all necessary work? If not, what additional monies are needed and how will it be obtained?
- What is the status of the reserve fund? Is it adequate for future needs? If not, what measures can be expected to bring the reserve fund to a suitable level?
- How did we get to this point where a loan is necessary and how can we ensure future loans will not be required?
Requiring a condo loan likely means there have been serious problems in your community for many years. It is better to understand what has happened and take measures to correct the problems than remain in the dark.
See Special Assessment vs. Condo Loans in the Condo Archives for options to a condo loan.
Best of luck.
