Many of us have read the story about the Jane St condo building in such a state of disrepair they have given their owners 15 days notice to pay $30,000 to $42,500 in a special assessment. It was reported that they no longer have cleaners, security or a superintendent and that their reserve fund has $1.75 and their operating fund had $5000. This is shocking and a sad state of affairs. For owners to come up with such a large sum of money in such a short period of time is ridiculous. The building is now putting liens on the units that haven’t paid their special assessment yet.
How did this building reach such a state of disrepair?
I’m sure we asked ourselves the same questions about the Champlain Towers in Surfside, Florida after it collapsed. As someone who has sat on numerous condo boards, I can easily see this happening if you have a board made up of inexperienced and fiscally irresponsible people. While the property manager does bear some responsibility for the advice that it provides to the board, if the board won’t take their advice, what can the property management company do? The property management company who works on this building is experienced and does manage many buildings in Toronto.
Being on a condo board can sometimes be a thankless job as owners don’t understand all of the challenges. It’s also hard to get people to run for the board because many owners don’t want to take the time to get involved. Except, it’s their money, their property and they need to be engaged and involved every step of the way. That clearly has not happened at this Jane Street condo building. I would imagine those who joined the condo board over the last 10 or so years only wanted to be liked and did not do the responsible thing by increasing maintenance fees many years ago.
Condo buildings are required to have a reserve fund study completed every 3 years. The reserve fund study is conducted by an engineering firm who take a serious look at what major repairs will be needed in the years ahead. The report always includes a recommendation as to the cost of future repairs and how much money needs to be placed in the Reserve Fund in today’s dollars to meet tomorrow’s expenses. This board of directors clearly did not heed anyone’s advice but their own.
In fact, this Jane Street building pays $80,000 per month in interest for an $8 million loan taken to cover repairs. They also owe more than $1 million to the City of Toronto. Another sign of the lack of money management skills by the consecutive condo boards over the years.
How can condo owners protect themselves from this kind of disaster in the future?
- Get involved.
Join the Board of your condo building. It’s your money. Make sure it’s spent wisely.
- Pay attention.
Attend all board meetings and don’t gloss over the financials at the meetings. Take a serious look and if you feel uncomfortable with financial statements, ask someone you trust to look them over for you.
- Stop electing board members who promise not to increase your maintenance fees!
An election for a condo board should not be a popularity contest where you vote in the person who tells you what you want to hear.
It is sad what has become of this building and the excruciatingly large special assessment now expected of the owners.
But I do feel as though this was preventable and can be used as a learning lesson for other condo buildings to make sure they don’t allow repairs to accumulate without being completed. Ignoring repairs will come back to hurt these buildings in the future. Look no further than the Champlain Towers in Surfside, Florida as a cautionary tale of what happens if you ignore the small increases in maintenance fees over the years, it will come back to haunt you. The problem becomes so large that coming up with millions of dollars becomes impossible.
The question becomes how many other condo buildings in Toronto are in a similar situation facing this amount of disrepair and lack of fiscal responsibility.
Only time will tell.
Questions? Comments? Reach out to me!
(416) 509-3286 or Davelle@BosleyRealEstate.com