Special Assessments
A special assessment is a charge levied by the condo board against unit owners to cover unexpected major expenses or underfunded reserve accounts. Special assessments differ from regular monthly condo fees and can total thousands of dollars per unit.
Common reasons for special assessments include roof replacement, foundation repairs, elevator maintenance, and building code upgrades. Most provincial condo acts require condo boards to provide unit owners with reasonable notice before imposing special assessments.
Financial impact:
A $20,000 special assessment per unit in a 100-unit building represents $2 million in aggregate costs. Owners cannot refuse to pay special assessments—failure to pay may result in lien against the unit.
Underfunded Reserve Funds
Condo boards are required to maintain reserve funds for major building components with limited lifespans (roofs, siding, parking structures, elevators). Reserve funds must be sufficient to cover predictable replacement costs.
Underfunded reserves mean the condo building does not have sufficient funds set aside for anticipated major repairs. This exposes unit owners to future special assessments or deferred maintenance.
Provincial requirements vary:
Ontario
Condo Condominium Act requires reserve fund studies at least every 3 years, with detailed analysis of reserve adequacy. Boards must disclose reserve funding status to purchasers.
British Columbia
Strata Property Act requires reserve fund studies and mandates that 50% of the annual contribution be made to the reserve fund.
Status Certificate Red Flags
A condo status certificate is a document provided by the condo corporation disclosing the financial condition, reserve fund status, pending assessments, and governance issues. Purchasers rely on status certificates during the purchase process.
Warning signs:
- • Reserve fund less than 70% funded
- • Multiple special assessments planned
- • Increasing monthly condo fees (over 10% annually)
- • Deferred maintenance or known building defects
- • Litigation between board and owners
- • Major capital replacements needed soon
What to investigate:
- • Request detailed reserve fund study
- • Review meeting minutes and board decisions
- • Ask about planned capital projects
- • Interview current owners about satisfaction
- • Conduct visual building inspection
- • Consult a real estate lawyer
Condo Board Governance
Condo boards are elected by unit owners to manage the corporation and common property. Boards have significant power over finances, operations, and enforcement of building rules. However, boards must act in accordance with governing condo acts and have fiduciary duties to the corporation and unit owners.
Board fiduciary duties:
- • Act in good faith and in the best interests of the corporation
- • Maintain adequate insurance and reserve funds
- • Enforce rules consistently and fairly
- • Provide transparent financial reporting
- • Make decisions following proper procedural requirements
- • Avoid conflicts of interest
Disputes may arise when boards fail to fulfill these duties, such as failing to maintain reserves, enforcing rules selectively, or making decisions that benefit individual board members.
Provincial Condo Acts
Each province has a condominium statute governing condo corporations and establishing rights and obligations of boards and unit owners. These acts provide the legal framework for condo governance, financial management, and dispute resolution.
Ontario: Condominium Act, 1998
Establishes detailed requirements for governance, reserve fund studies, disclosure to purchasers, and dispute resolution through ombudsman services.
British Columbia: Strata Property Act
Governs strata corporations (BC's equivalent to condos) with requirements for financial management, owner meetings, and dispute resolution.
Alberta: Condominium Property Act
Provides condo governance requirements and establishes condo tenancy law alongside provincial property law.
Dispute Resolution
When disputes arise between unit owners and boards, or among unit owners, several resolution mechanisms are available depending on the province and nature of the dispute.
Ontario Condominium Ombudsman
Independent government office that investigates complaints against condo boards regarding governance, financial management, and rule enforcement. Ombudsman services are free to unit owners and provide mediation and investigation.
Court proceedings
Unit owners may pursue court action against condo boards or other owners for breaches of governance or bylaws. Courts apply remedies including injunctions, damages, and mandatory board action.
Mediation and arbitration
Some provinces allow parties to pursue mediation or binding arbitration to resolve condo disputes before resorting to court. This may be faster and less expensive than litigation.