What happens when your condo corporation goes bankrupt?
Recently, during the Annual General Meeting of the Botanica Private condos and the reveal of a reserve fund study that called for a special assessment (which many people were unhappy about, hence the increase in condos for sale in the building,) I got to thinking, over the past few years we have seen banks, cities, almost some countries go bankrupt…so what would happen if your condo corporation went bankrupt.
So I asked, and I’d like to share the answer with you.
According to Ontario’s Condominium Act, 1998 a condo corporation must undergo a “Reserve Fund Study” every 3 years by an elected auditor. The study projects the corporations finances for 30 years, and if at any point in the study the reserves would dip below $0 the board of directors must address the issue within 2 year, this usually results in the dreaded “Special Assessment”, which is still often more palatable that a permanent raise in condo fees.
© Dave Williams 2011