Anne Burgoon Eastern Ontario Property Management Group
Cover Story
A Loan Was Exactly What They Needed Loan Can Spread the Expenses Across Potentially More Than One Owner Of A given Unit The price tag for repairs was estimated at $5 million.
“We have to write this article” was an often-repeated phrase when Ryan Griffiths and I got on the topic of loans for condominiums. So it is, that I write this for the benefit of anyone ever contemplating a loan for their condominium, as this one was truly a great success story. In July of 2015, we were asked by a group of owners, who as investors, had bought into a condominium corporation in the GTA, to take over management of a townhouse condominium. As a matter of fact of the 200 units in the corporation, all were rentals with the exception of one owner occupied unit. The majority of the owners were from the Ottawa area and wanted a manager that they could have meetings with, locally in Ottawa. It was very clear from our first site visit that this corporation had not been properly maintained. There were literally chunks of concrete loose and falling off of the overhead terraces in the stacked townhouse layout. We soon discovered that the complex had been a rental property that was converted to a condominium in 2001 but not run as a condominium with only one owner. In 2010, the Declarant finally sold off the units which were bought by different owners as investments. At $225,000/unit this was seen as a deal. Unbeknownst to these new investors though, it did not come with a funded reserve fund…as a matter of fact, the
condo corporation had never had a reserve fund study completed. (You may wonder how this was not captured by legal counsel in the course of these purchases, and that would be a completely separate article).
We were fortunate enough to be introduced to Ryan Griffiths who walked all of the directors through the various steps required to secure a loan. When they are all broken down, and you take them one at a time, it really was an easy process. Other loan companies were interviewed but the corporation chose Ryan because he was able to lay things out so clearly for them.
The first thing we did when we saw the state of things was to bring in an engineering firm to assess the various components of the complex. We were informed, as we suspected, that the roofs, asphalt, retaining walls and concrete components were at the end of their life and some to the point that the corporation was at great risk of liability.
Given this was a corporation that had not had an AGM in 3 years because the previous manager said it was not worth it as no one would attend, there were concerns about having quorum to pass a by law. No worries…an email with the subject line ‘urgent meeting required to secure $5 million” got their attention and we had 136 owners CONDOVOICE FALL 2021
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ILLUSTRATION SANDRA DIONISI
After the board of directors got over the shock, and I stopped all of them from resigning en-masse, we set about trying to figure out how to raise that much money. In very short order it became clear that the options were either a special assessment or a loan. There was no viable way to defer this work…the corporation needed the money now. The board also knew that most of the investors owned several units and as such a special assessment would be unaffordable for most.