When Should A Condo Board Borrow A Condo Corporation Loan
According to the law, it is the duty of a Condominium or Condo Board to make the necessary arrangements when it comes to the maintenance of common areas in a Condominium. The Board must repair common property as and when needed and cannot dismiss the completion of essential requirements on the property, especially structural corrections and deficiencies. However, to meet these commitments, the Board needs to have sufficient financial backup.
Usually, the Board has a reserve fund to finance maintenance work, but these funds may be barely enough when it comes to major repairs. In such a situation, to garner the required amount, the Condo Board, along with the Property Managers, may opt for a special assessment. A special assessment redirects the maintenance costs to unit owners who will individually be held responsible for their share of the assessment. Unfortunately, when a special assessment is initiated, it can lead to financial strain on the unit owners. This strain primarily occurs if they don’t have:
a. Enough money in their savings or investments.
b. Access to sufficient credit to cover the costs
c. Adequate equity in the property to refinance the mortgage to cover the costs
To avoid putting unit owners through the financial distress caused by a special assessment, the next solution at the Condo Board’s disposal is a Condominium Corporation loan. This is generally the best solution to eliminate an individual assessment and making the owners pay a large lump sum of money.
What is a Condominium Corporation loan?
A Condominium Corporation loan, Condo Corp loan, Condo Corporation financing, or Strata Corp financing is a financial product designed to help Condominium Corporations or Boards to pay for repairs and unexpected costs. Availing of this loan also allows the Condo Board to maintain a healthy reserve fund and expedite necessary repairs. Other benefits of choosing a Condo Corp loan include spreading the project’s cost over an extended period and maintaining or increasing the equity value of the property and condo financials.
Besides this, there are advantages for the unit owners to enjoy as well. They include:
a. Reservation of personal savings and investments
b. Retainment of resale value
c. No additional debt reporting on the credit report
d. No credit applications and credit inquiries
e. No unnecessary visits to the bank
f. No need for a new mortgage or increasing current mortgage financing
To learn more about Condominium Corporation loans and how they work, please click here or reach out to Jordan St. Pierre at The Mortgage Centre. I am a leading mortgage broker in Spruce Grove, Stony Plain, and Edmonton Alberta, and I specialize in several mortgage products, including Condominium Corporation loans. All of my mortgage services are tailored to your requirements, and my efforts are designed to educate you and ensure you are comfortable throughout your mortgage journey.