January 2023
A 250-unit condominium corporation has had minimal maintenance for the past 10-15 years. Routine maintenance such as snow plowing and lawn cutting was done. Larger items such as lighting, painting, HVAC and elevator maintenance, underground parking area repairs and water issues have been ignored, deferred or patched. The focus has been on keeping costs and condo fees as low as possible per directive of the condo board. Newer owners are increasingly concerned about the backlog of necessary maintenance, repairs and upcoming building system replacements. Their reserve fund is nowhere near adequate for this level of expenditure and current condo fees are barely adequate for ongoing operational costs.
This fictional scenario, the current state of communities failing to maintain their properties and choosing not to increase condo fees, is a significant challenge for any volunteer condo board. The first step is to acknowledge the problem and commit to fixing things.
Management Company
The condominium manager and management company work for the board. Determine if they were following directives by the board or are part of the problem. All they may require is to report to a board interested in fixing the problem and willing to follow their advice. If current management truly supports the status quo, it may be best to replace them.
Condo Fees and Reserve Fund
The corporation has reached this point by keeping condo fees too low and maintaining an inadequate reserve fund.
Develop a plan to fund operational expenses, necessary repairs and replacements, and fund the reserve fund. Condo fees should be set to ensure all recurring expenditures and maintenance items can be paid. An additional amount should be added to pay for the backlog of work that needs to be undertaken. Then add an additional 15 to 20 percent to rebuild the reserve fund. This surcharge can be eliminated once the reserve fund is properly funded and the corporation is on solid financial footing.
Owners will be upset at the increase in monthly condo fees, particularly if fees have not increased more than nominally on an annual basis for many years.
Communicate
Opposition could be fierce. Owners are unlikely to be thrilled with the prospect of monthly condo fees increasing by 20 percent or more. Angry people and boisterous meetings can be expected. Some will want to blame the current board. Others will claim the increases are not fair, fraudulent or the result of mismanagement.
The best approach is to be open. Remind owners that their home is degrading because nobody has been paying their fair share for many years, and that the current board is committed to preventing problems from worsening while avoiding problems expected to occur if the status quo is maintained. Nothing can be done about the past but mistakes will be rectified. Explain the importance of regaining a sound financial footing, protecting their investment and prospering in the coming years. Doing otherwise will result in a declining standard of living and an inability to sell their home for top dollar when the time comes.
When the yelling dies down, the corporation will be stronger. The board will be respected for taking action, and better able to carry out its mandate of maintaining, protecting and improving the community.
