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Condominiums - FAQs {Part 2}

Condominiums - FAQs {Part 2}

More answers to your condominium questions!

Q) What is a reserve fund? Is it the same as a reserve fund study?

A) A reserve fund is a fund that is used for the purpose of major repair and replacement of the common elements and assets of the corporation. It is not the same as a reserve fund study. A reserve fund study is a periodic review to determine whether the amount of money in the reserve fund and the amount of contributions collected by the corporation are adequate to provide for the expected costs of major repair and replacement of the common elements and assets of the corporation.

Q) My friend said he just received notice of a special assessment that he HAS to pay! What is a special assessment?

A) Special assessments occur because the condominium corporation incured unexpected or unbudgeted expenses (that the Reserve Fund can't cover) that the corporation does not have the money to pay for. It is each owner's responsibility to pay their proporationate amount to cover these expenses.

Q) But does he HAVE to pay?

A) Yes.

Q) He said he's going to refuse. They can't make him.

A) The condo corporation does have remedy to collect what he owes. If an owner refuses to pay their common expenses or a special assessment, the condo corporation is within their right to place a lien on his property. This lien can then be enforced the same way as a mortgage, by sale of the property. Further, the condo corporation can collect all interest owing and all reasonable legal costs and reasonable expenses that the corporation incurs in connection with the collection or attempted collection of the amounts.

Q) But he doesn't have the money! What can he do?

A) Often times, in the case of a special assessment, the owners are given the option to pay in a lump sum OR make monthly payments. He should contact the Property Management company, or a member of the Board of Directors in the case of a self managed corporation, and discuss his options.

Q) When I have a problem, I contact a "Property Management" company. Who are they?

A) Most condominium corporations will "outsource" the day to day maintenance and administration of the corporation to a Property Management company. Often times, these companies will be responsible for collecting the condo fees, maintaining the property, handling unit owner complaints, having the Reserve Fund Study completed and scheduling Board meetings. Some (often smaller corporations) will be "self managed". The Board of Directors will handle all of the day to day business.

Q) What is a "status certificate"?

A) A Status Certificate is a 3 -4 page "snap shot" of the financial and legal status of the condo corporation ON THE DAY IT WAS ISSUED. When you request a "Status Certificate" during the course of a purchase you will receive a complete "condo package". The condo package is a collection of the condominium's by-laws, the rules and regulations, the financial statements (financial health of the corporation) and other legal documents and declarations. The Status Certificate should be reviewed by your lawyer before finalizing any purchase of a re-sale condo. They will be able to indicate if the condo is in good financial shape (do they have any large un-budgeted expenses currently on the books or about to take place), or if the by-laws prohibit what you plan to do, or how you plan to live within the condo (for example no home based businesses or a prohibition against pets).

Q) Who is in charge of a condo corporation?

A) The Board of Directors carry out the day to day operations of the corporation. They are elected by the owners of all the units.

Q) How do I become a Director?

A) When a position on the Board of Directors becomes available (due to someone leaving, the term is up, etc.) the condo corporation will let the unit owners know. You would then inform the corporation of your intent to run for election. The condo corporation will then have a meeting at which votes will be cast and the new Board members will be announced.

Q) How do you know all this?

A) A decade of selling Real Estate including A LOT of condominiums of all types, owning a condo, being a board member and several courses on condos and condo law.

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