CONDO FINANCES: WARNING SIGNS FOR BUYERS

The reserve fund is intended for major repairs and replacement of the corporation’s common elements and assets. A reserve fund study estimates future needs and informs the funding plan.

A dollar balance alone cannot show whether the building is adequately prepared. Compare the planned work, projected costs, contribution schedule, and the board’s funding plan. If the plan departs from the professional recommendations, ask what the difference means for future contributions and your budget.

Useful questions include: What major work is approaching? What funding increases are planned? Are the assumptions still consistent with the building’s circumstances? A lawyer can identify legal concerns; technical or accounting questions may also require the appropriate professional.

Source: CAO: Reserve Funds.

A special assessment is an additional one-time charge to owners. It may arise from unexpected repairs, costs that exceed a budget, or litigation. Its existence does not automatically establish wrongdoing.

Ask what the assessment funds, whether it has been approved or discussed, and whether more costs may follow. Your lawyer should also review what has been disclosed and how the purchase agreement addresses the transaction. Do not assume that the timing of a demand alone determines whether the buyer or seller bears the cost.

Source: CAO: Special Assessments.

Start with records and specific questions, rather than accusations. Relevant materials can include budgets, financial statements, reserve funding plans, and meeting minutes. An eligible person can use Ontario’s prescribed records-request process, subject to the rules governing access and redaction.

A missing record or an unexplained expense warrants further inquiry; it does not prove theft or misconduct. Keep a written timeline and seek advice about the appropriate next step. A records dispute and a claim about financial wrongdoing may require different processes.

Source: CAO: Condo Records Issues.