Special Assessments - questions and advice needed

[marsh]

Just received notice from our Board for a Special Assessment for $10,000 to pay for balcony repairs. They want this money by April 30 or we can pay in 2 equal installments by April 30 and May 30th.

We knew the board was considering special assessment to fund these repairs but until this letter, we had no clue of the amount or when it would be levied.

Does anyone know the legal requirements for issuing a special assessment? Is there a notice period? Can the condo owners overturn the Board's decision on this?

I just think its unfair to spring this people at the last minute and completely unrealistic to ask people to come up with $10,000 within a month. I also don't understand the urgency of the repairs. The Board wants to proceed this Spring but as far as I'm aware there is no structural issues or other safety concerns that would require us to proceed immediately - at least nothing communicated by the Board. As far as I can tell the balconies are old but that's all.

I don't understand why the Special Assessment can't be pro-rated over a period of time say 16 months and the repairs done at a later time.

Anyways, any advice would be appreciate.

Thanks

 

[Edward Skira]

We had a special assessment to redo our roof. We had the option of one payment or 12 monthly payments over a year (basically tacked on to our maintenance payments). The monthly payments added up to a little bit more but was easier to budget for.

 

[Migos]

Do you mind sharing what building this is? I can't imagine receiving an unexpected invoice for $10k due the next month.

It's also odd to me that the condo board didn't account for this in the maintenance fee. If there was a sudden and unexpected issue that demanded immediate attention, I would understand a special assessment. However, if the balconies are just getting old and need to be repaired, I would think the board would be capable of planning for regular maintenance like this?

 

[marsh]

Do you mind sharing what building this is? I can't imagine receiving an unexpected invoice for $10k due the next month.

It's also odd to me that the condo board didn't account for this in the maintenance fee. If there was a sudden and unexpected issue that demanded immediate attention, I would understand a special assessment. However, if the balconies are just getting old and need to be repaired, I would think the board would be capable of planning for regular maintenance like this?

This might be a duplicate but it doesn't look like my original reply went through.

I'd rather not publicly name the building. Quick background, the consultants hired by the Board to do the last Reserve Study made a huge error in estimating the cost of repairing the balconies. This error wasn't discovered until the Board tendered the work and the estimates came back 3x higher that what was originally provided for in the Reserve Study. Hence the significant shortfall and the Board decided to fund the balconies repairs by a special assessment. I don't dispute the need for the balconies to be repaired but don't understand the urgency of doing it this Spring and I think it absolutely ridiculous to ask people to pay $10,000 on a month's notice (or $5,000 over 2 months). I'm sure this is going to cause financial hardship for many owners. And I don't understand the urgency - as I previously mentioned, there doesn't seem to be an immediate emergency in terms of structural or safety issues that would require this work being done now. Anyways, just trying to find out what our legal options are.

 

[TheKingEast]

How old is the building? To ask for $10K in 1 month is ridiculous.

 

[AndreaPalladio]

I am surprised that there wasn't a special general meeting to discuss.

That said, better to do it in two close together payments. If the payments are spread out, the special assessment stays on the status certificate until the payment period ends. Which could scare off buyers. Which could lower prices.

 

[UD2]

For the following reasons I find this fishy

1. $10K per unit and assuming your building has 100 units is $1 million. Given how a condo generally allocates maintenance fees to operations and reserve, $1.0 million should have taken over 9 years to accumulate. Over the course of 9 years, there would have been 3 full reserve fund studies. So unless three seperate engineers messes up 3 consecutive times, this should not have happened. Belcony renovations would have been budgeted when the condo was incorporated, the board should've known of this for decades.

2. Belconies are not structural and are usually apart of the common elements. the condo corp can easily block access to the belconies and delay the repairs needed until the money is in place. There is no reason for owners to cough up $10K in 2 months. I find this unreasonable. Unless your board has already booked the contractor without realizing that you didn't have the cash. If this is the case then you need replace the board and management company immediately because financials are reviewed and approved at board meetings every month. So there should be no excuse for something like this to happen with this time frame.

3. If the $10K is incremental, then what was the original budget? Is this a 30 year old building with those concrete Belcony railings?


Lastly. Petition to hire a third party auditor selected by a mediator to audit your building's books, this doesn't smell right.

 

[marsh]

For the following reasons I find this fishy

1. $10K per unit and assuming your building has 100 units is $1 million. Given how a condo generally allocates maintenance fees to operations and reserve, $1.0 million should have taken over 9 years to accumulate. Over the course of 9 years, there would have been 3 full reserve fund studies. So unless three seperate engineers messes up 3 consecutive times, this should not have happened. Belcony renovations would have been budgeted when the condo was incorporated, the board should've known of this for decades.

2. Belconies are not structural and are usually apart of the common elements. the condo corp can easily block access to the belconies and delay the repairs needed until the money is in place. There is no reason for owners to cough up $10K in 2 months. I find this unreasonable. Unless your board has already booked the contractor without realizing that you didn't have the cash. If this is the case then you need replace the board and management company immediately because financials are reviewed and approved at board meetings every month. So there should be no excuse for something like this to happen with this time frame.

3. If the $10K is incremental, then what was the original budget? Is this a 30 year old building with those concrete Belcony railings?


Lastly. Petition to hire a third party auditor selected by a mediator to audit your building's books, this doesn't smell right.

Thanks for your comments - just to clarify - we're a small townhouse complex of about 30 units and about 30 years old. You raise good point about prior reserve fund studies and whether this error was previously made. I think the Board just started to seriously look at balcony repairs at the last reserve study. I know balcony repairs were originally supposed to start last summer and then were cancelled after the tenders came in and the "error" was discovered. The Board had advised they were reveiwing the situation and that a special assessment may be required but that was the last I heard of anything until this notice.

I think they have already booked the contractors - we've been told we'll be getting further updates shortly about when work will commence and the work schedule. So maybe there is nothing to be done. Maybe its best to bite the bullet and get the work done and over with it.

I was on the Board briefly and during my time, I generally felt things were well managed and the Board was doing a good job. But this has been very poorly handled.

 

[marsh]

I am surprised that there wasn't a special general meeting to discuss.

That said, better to do it in two close together payments. If the payments are spread out, the special assessment stays on the status certificate until the payment period ends. Which could scare off buyers. Which could lower prices.

Good point about stretching payments over too long a time.

 

[DSC]

I sit on a Condo Board and we had a Special Assessment last year. It was to bring forward hallway redecoration so was not "urgent" and we first asked owners if they wanted the project to go ahead several years ahead of the time scheduled in the latest Reserve Fund Study. The answer was an over-whelming yes and we imposed an Assessment of ca$2000/Unit. We gave owners 2 options; pay all at once or spread over 12-months. About 10% chose to pay all at once. In our case the project was not urgent and we managed to 'borrow' from the Reserve Account so managed to get the job done quite fast and certainly well before all the SA $$ were received. Getting a bill for $10K to be paid at once is clearly not good but if the work is urgent .... Several people selling during that time paid the Assessment before putting their Unit on the market.

 

[marsh]

The board is taking the position that the work is urgent. They also have included chimney repair work on the basis on the basis that it is cheaper to do all this work at once then to schedule it separately. The claim the chimney repair is urgent as well but haven't provided any details as to what the problems are.

I sent out a letter to owners asking if anyone wishes to organize a meeting with the Board. I think the Board should have a called a special meeting to discuss these repairs and the financing.

Does any one know the rules about calling Board meetings? I assume owners have right to do this; I just don't know what percentage is required and how much notice is required.

Thanks

 

[BMO]

That's rough. I put an offer on a condo a few months back, and it was accepted. But when I saw the status certificate for the building I was appalled. You have to be so vigilant nowadays when it comes to maintenance fees and condo boards. The whole experience of what I went through, combing through the engineering report and finances really opened my eyes to what condo living really is. It's not really "carefree" living. You can get hit with a special assessment at any time, and if the work has to be done it has to be done, if you don't pay they'll put a lien on your unit that will have to be paid off. You also can't do anything but attend condo meetings and voice your opinion. If it gets struck down by the board you're going to have to pay it.

In the future, keep an extra $10K or so in your back pocket in case another special assessment comes down the line so you're not caught scrambling for the money. $10K is a lot of money, but I've heard horror stories that are even worse. This city really needs to get a grip on maintenance fees. I've noticed a bunch of units in VERY desrieable areas go for really low prices because condo fees are so high.

But why would I spend $300K to live on-top of a subway station if I have to basically pay $1000 a month on maintenance fees for a 1B? It's lost money, and an ongoing cost that doesn't do anything to increase the value of your investment.

TL;DR always be prepared for a special assessment

 

[DSC]

The board is taking the position that the work is urgent. They also have included chimney repair work on the basis on the basis that it is cheaper to do all this work at once then to schedule it separately. The claim the chimney repair is urgent as well but haven't provided any details as to what the problems are.

I sent out a letter to owners asking if anyone wishes to organize a meeting with the Board. I think the Board should have a called a special meeting to discuss these repairs and the financing.

Does any one know the rules about calling Board meetings? I assume owners have right to do this; I just don't know what percentage is required and how much notice is required.

Thanks

An owner cannot call a meeting of the Board but owners CAN call a Special Meeting of ALL owners. Take a look at the Condo Act http://www.e-laws.gov.on.ca/html/statutes/english/elaws_statutes_98c19_e.htm

46. (1) A requisition for a meeting of owners may be made by those owners who at the time the board receives the requisition, own at least 15 per cent of the units, are listed in the record maintained by the corporation under subsection 47 (2) and are entitled to vote. 1998, c. 19, s. 46 (1).

Form of requisition

(2) The requisition shall,

(a) be in writing and be signed by the requisitionists;

(b) state the nature of the business to be presented at the meeting; and

(c) be delivered personally or by registered mail to the president or secretary of the board or deposited at the address for service of the corporation. 1998, c. 19, s. 46 (2).

 

[UD2]

That's rough. I put an offer on a condo a few months back, and it was accepted. But when I saw the status certificate for the building I was appalled. You have to be so vigilant nowadays when it comes to maintenance fees and condo boards. The whole experience of what I went through, combing through the engineering report and finances really opened my eyes to what condo living really is. It's not really "carefree" living. You can get hit with a special assessment at any time, and if the work has to be done it has to be done, if you don't pay they'll put a lien on your unit that will have to be paid off. You also can't do anything but attend condo meetings and voice your opinion. If it gets struck down by the board you're going to have to pay it.

In the future, keep an extra $10K or so in your back pocket in case another special assessment comes down the line so you're not caught scrambling for the money. $10K is a lot of money, but I've heard horror stories that are even worse. This city really needs to get a grip on maintenance fees. I've noticed a bunch of units in VERY desrieable areas go for really low prices because condo fees are so high.

But why would I spend $300K to live on-top of a subway station if I have to basically pay $1000 a month on maintenance fees for a 1B? It's lost money, and an ongoing cost that doesn't do anything to increase the value of your investment.

TL;DR always be prepared for a special assessment

I'm a little confused on why the city need to keep check on maintenance fees. These fees are driven by budgets which are set by expenditures to maintain the building. The decisions to spend money on maintain the building are made by board members who are elected by the owners. It's not like the condo corp makes a profit.

 

[BMO]

I'm a little confused on why the city need to keep check on maintenance fees. These fees are driven by budgets which are set by expenditures to maintain the building. The decisions to spend money on maintain the building are made by board members who are elected by the owners. It's not like the condo corp makes a profit.

City as in the general market. Toronto's fees are on average higher than vancouver's for some unknown reason. Seems like a lot of the newer buildings are going up quicker and faster but so are the maintenance fees due to lack of quality construction. It's a market feedback that needs to occur eventually or maintenance fees will continue to rise as developers build ridiculously unnecessary amenities that do nothing more than sell a unit initially but leave residents with huge climbing fees.