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Magnum York recently hosted a Zoom webinar with Kelly McFadyen – Director, Condominium Finance, Western Canada from CWB Maxium Financial to discuss the ins and outs of successful project financing and risk mitigation for Condominium Associations.
Kelly McFadyen joined CWB Maxium in August 2016, bringing with her 13 years of experience in the financial sector. Kelly works with clients in the Condo/Strata and Healthcare divisions for BC and Alberta to help them find the best financial solutions for their needs.
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Who is CWB Maxium Financial?
CWB Maxium Financial is a specialized division of the Canadian Western Bank Group, focusing on condominium project financing. CWB is the 7th largest bank in Canada, with its head office located in Edmonton, which makes them a proud supporter of Alberta’s economy.
How can CWB Maxium Financial help Condominium Associations?
CWB Maxium Financial provides solutions to help associations stay on top of their capital repair and maintenance schedules when struggling with funding. There are a few options associations have when it comes to funding large capital repairs.
- Through the Reserve Account – Ideally associations have enough funds in their reserve account to cover the cost of the project.
- Implementing a Special Assessment/Levy – This is a one-time cash call from the owners which the Board of Directors has the power to request under the Property Act.
- Through a bank loan – Financing from an institution, which is what CWB Maxium Financial specializes in.
- Hybrid of the above options.
What is a Condominium Association Loan?
It is an unsecured commercial loan to the condominium association.
What are the rates with these loans?
The loan rates do vary and work differently from a mortgage rate as this would be an unsecured loan. A few factors may go into the rate so CWB Maxium Financial will not know until working with the association.
When should Condominium Associations consider financing?
A loan is an alternative to a special assessment/levy. Due to the financial hardship from the pandemic as well as rising inflation, owners are becoming more financially conservative. Condo Associations are turning to finance options instead of implementing a special levy to avoid adding financial pressure to owners.
Due to inflation and the rising costs of materials and labour shortages, projects are going over budget. Financing can ensure the projects are not delayed due to financial shortages and ensure they continue to move forward.
What are the steps in the process to finance?
Firstly, CWB Maxium Financial would contact the property manager to set up a Board meeting to discuss the property and the financing needs. A meeting would then be arranged with the ownership where an information package would be prepared to ask owners to vote on a resolution if they want to go ahead with the financing. A resolution can only be passed when 75% of the ownership and 75% of unit factors agrees.
Top 5 Questions and Answers:
- Q: What would happen if an owner could not make payments on their fees?
A: This would be the same process as any other fees owing to the association. The Board of directors would follow the collections process. - Q: When working with the Boards, would you advise they keep funds in the reserve account even when borrowing?
A: It is always a good idea to have funds in the reserve account for other expenses that may come up such as an emergency leak or insurance deductible payout. The financing would only cover the specific project approved by the special resolution. - Q: What happens if you are making payments towards the loan and decide to sell and move?
A: If the whole Corporation is paying the loan then the new owner would take over the new payment. However, if a payment plan was made, the current owner would pay off the remaining balance before selling unless the new owner agreed to take over the monthly payments. - Q: When financing a project, do condo fees increase?
A: Typically, yes. The increase would depend on the property and if some funds can be taken from the reserve and if increases can be staggered over a period of a few years. - Q: Can smaller projects be done through financing?
A: While it is recommended that financing be used for large projects, it can be used for smaller projects if needed. This would have to go through the approval process to ensure the majority of owners agree and if it’s in the best interest of the condo association.
To discuss if financing options may be right for your condominium association, reach out to your property manager who can arrange a discussion with Kelly McFadyen from CWB Maxium Financial.
Thank you to all those who attended the webinar and asked such great questions! To sign up for future webinars visit https://magnumyork.com/webinar/.
Further Resources:
- CWB Maxium Financial – https://www.cwbmaxium.com/en
- Condominium Property Act
- New Bill 37 Effective August 29, 2022: Promptly Pay Contractors or They Could Lien Your Property.
- 5 Things You Should Know About Your Condo Fees
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