Struggling Condo Communities

July 2021

The main reason condo corporations get into trouble is lack of funds.  Recognizable symptoms of financial shortages include major repairs and regular maintenance failing to get done.  Work orders issued by the city may be incomplete creating a danger to residents.  Building upgrades, even those intended to save money, are not undertaken.  Contractors are unpaid for completed work.  Allegations of mismanagement or theft by prior condo boards are whispered.

Word of these problems can’t be kept hidden for long.  Soon the resale value of units can drop.

Raising funds to fix problems can be a challenge.  Higher condo fees may not bring in funds as quickly as required.  Special assessments may be delayed by owners requisitioning a meeting to remove directors supporting them.  Internal battles then focus on elections for control of the board rather than solving problems.

Borrowing funds may offer the only immediate or viable solution.  Other solutions may include:

  • Sale of assets, such as a superintendent suite or guest suites, that may be convertible to condo units available for purchase.
  • Contracting out of management for guest parking to a third-party service allowing them to charge parking fees to guests or the public.
  • If demand exists, space on a roof may be leasable for placement of telecommunications equipment.
  • Unused or underutilized land could be sold to a developer.

More extreme solutions include applying to the Superior Court of Justice to have an inspector or administrator appointed.  (Condo Act, sections 130 and 131).  An inspector can inspect or conduct an audit of records and make recommendations.  An administrator may be given all powers and duties of the board or have limited jurisdiction to resolve a single matter.  The cost of an inspector or administrator is paid by the condo corporation.

Whatever challenges exist, struggling condo corporations are advised to devise and implement a solution before costs escalate to exceed what the community can afford.