April 2025
Nearly 70 percent of condominium corporations have inadequate funds set aside and higher contribution amounts averaging 50 percent are necessary according to Auditor General Bonnie Lysyk in her report Value-for-Money Audit: Condominium Oversight in Ontario (2020). In their survey, nearly one-third of condominium corporations reported raising funds through special assessments within the last five years.
More recently, the Canadian Institute of Actuaries has published a similar warning in a research paper on condominium corporation risk management. It states that low reserve fund contributions will likely lead to overwhelming annual increases and require lump-sum payments from owners to cover shortfalls.
Results are similar In the United States. A review of over 60,000 reserve fund studies found insufficient cash and substantial deferred maintenance for a third of them.
YCC 82 is likely a leader in having low condo fees. They owe $8 million and repairs in the amount of $14 million are necessary. Owners are required to pay a special assessment ranging from $30,000 to $42,000. In the United States, Champlain Tower South in Surfside, Fla. was likely a leader in low condo fees until a partial collapse killed 98 people. Low fees were achieved by choosing not to undertake building repairs.
When condo fees are insufficient to pay for necessary work, owners receive a bill for this work called a special assessment which can be particularly difficult on retirees with fixed incomes.
Residents become complacent when evaluating their own home after a number of years. They fail to notice doors that no longer fully close, paint peeling, common area furniture that is worn and unrepaired, spaces not cleaned as frequently or as well, and other signs of deterioration. There can be too much emphasis on having low condo fees. Many avoid speaking out about problems for fear that fees will increase. Directors are re-elected when they promise to keep fees low without consideration of the consequences.
It is easier to accept all this rather than speak out or get involved with management by serving on a condo board. When superficial issues go unresolved, this is a sign that underlying and more serious problems are likely unnoticed until too late. By the time owners are aware of problems in their high-rise home, there are few alternatives to an immediate and dramatic cash infusion to undertake repairs that are now much more expensive.
It is not a good thing when condo fees are low, and fail to increase as the cost of maintaining a building increases.
