Condos in Financial Crisis

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Over the past few years, more and more condominium associations in the U.S. have had to deal with issues that most have never had to face before; owners walking away from their condominium units due to the economic downturn and associations unable to meet their operating expenses because maintenance fees have not been paid by the owners.

Fortunately in Canada, condominium corporations have rarely had to face similar circumstances. Although owners may fall into arrears from time to time, most condominium corporations are able to secure the payment of those expenses by lien and have those arrears either paid by a mortgagee or the owner. The collection process enables the condominium corporation to collect arrears and pay the operating expenses to properly maintain the property.

Although the Condominium Act requires that condominium corporations conduct a reserve fund study and implement a plan for funding the reserve fund, there are some boards that ignore those requirements and continue to be motivated by "low maintenance fees". The result is that those condominium corporations produce annual budgets which fail to address required maintenance and repairs and then do not collect funds from the owners for current and future repairs.

Please see full article below for more information.

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Published In: Business Organization Updates, Civil Remedies Updates, Finance & Banking Updates, Residential Real Estate Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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