November 2018
Among successful condo buildings throughout the city are some that can best be described as distressed; in a precarious financial position.
These are properties in crisis. Condo owners may not be paying condo fees. The corporation may be lacking financial resources to undertake needed repairs and maintain the infrastructure.
These are not neglected condo suites. In fact, many of the suites may be in excellent condition. Owners may be current with their mortgage and condo fees.
Distressed condo buildings differ from distressed condo suites. While individual suites may be in excellent condition grounds may not be maintained, the roof may need replacement, a swimming pool may not be adequately heated and lights may not be functional.
When an individual is unable to pay their expenses perhaps because of job loss, downsizing or health that required condo fee may be harder to maintain. If too many condo owners experience similar financial problems the burden of maintaining the condo corporation can fall on remaining condo owners.
Toronto sees few distressed condos because of protections afforded to condo corporations in the Condo Act. When a mortgagee fails to pay their condo fees, a mortgage holder is likely to make these payments to retain ownership of the suite. This allows them to resell the unit to recoup financial losses.
Should a condo owner fail to make required payments, or mortgage holder fail to make these payments, a condo corporation that has complied with the condo lien process can sell the property to recover funds owed to it with the remainder going to the owner or mortgage holder.
This has protected Toronto from the proliferation of distressed condos that occur elsewhere.
