---

Associa recently hosted a webinar featuring Ryan Griffiths, the Managing Director of Condominium Lending Group. The session focused on the funding challenges faced by Canadian condominium corporations and explored various solutions, including loan structures, community impacts, and effective communication strategies with condominium owners.

Who are Condominium Lending Group?

Condominium Lending Group is a privately held Canadian Finance company offering tailored solutions and revolutionizing the lending experience for condo and strata boards. Their team, consisting of licensed condominium managers, educators, and financial specialists, is readily available to cater to your needs. Their objective is to offer solutions that support the needs of the condo corporation, the board of directors, and unit owners.

Current Trends in Inflation & Construction Costs

Ryan highlighted the significant rise in construction costs, which have outpaced general inflation rates. This increase has placed many condominium corporations in difficult financial situations, especially when planning for major repairs and maintenance.

The construction inflation chart highlighted in the below video shows that while consumer prices grew at 2-3% annually, construction costs increased by 8-9% per year even before the COVID-19 pandemic. Post-pandemic, these costs surged even higher, with some areas experiencing a 62% increase over three years.

Impact on Condominium Fees

The rising costs affect condominium corporations’ short-term and long-term financial planning. Operating budgets are under pressure due to increased costs in landscaping, insurance, and utilities, leading to higher condominium fees. He emphasized that reserve fund studies, which predict future repair costs, often underestimate the actual inflation in construction costs, resulting in significant budget shortfalls. This discrepancy forces condominium corporations to increase fees to cover the gap.

Funding Options for Major Projects

Ryan outlined several funding options available to condominium corporations, including:

• Deferring Work: Postponing major projects to save more funds. This option, however, can lead to higher future costs due to inflation and additional mobilization expenses.
• Special Assessments: Collecting additional funds from unit owners. This method is straightforward but can be financially burdensome for owners, especially those who have recently purchased units.
• Loans: Utilizing loans to spread the cost over time. Loans can be structured in two main ways:
  • Corporation-Wide Loans: The entire condominium corporation takes a loan, and repayment is included in the condominium fees.
  • Hybrid Loans: Owners can choose to pay a special assessment upfront or opt for a loan, making separate monthly payments.

Navigating Financial Challenges

The session provided strategies for managing financial challenges, emphasizing the importance of communication and planning. Ryan stressed the need for transparency with unit owners and the benefits of involving them in decision-making processes. He shared that effective communication can alleviate stress and foster a sense of relief and optimism among board members and owners. Key strategies include:

• Early Communication: Informing owners about potential issues as soon as they are identified.
• Detailed Planning: Evaluating all options and creating realistic financial plans.
• Engagement: Holding information sessions and town halls to keep owners informed and involved.
• Utilize Resources: Your reserve fund planner and lender can be an asset to help you structure information on the options for your community.

Effective Communication Strategies

Ryan shared insights on how to communicate with condominium owners during financial challenges effectively. He recommended starting with written communication, followed by information sessions or town halls to ensure owners are well-informed and engaged. He highlighted the importance of sharing detailed reports and updates regularly to prevent misinformation and build trust within the community.

Conclusion

The webinar concluded with key takeaways, including the importance of planning, exploring all funding options, and maintaining open communication with unit owners. Ryan encouraged boards to seek expert advice and involve owners in the decision-making process to navigate financial challenges successfully. He emphasized that while inflation and rising costs present significant challenges, there are viable solutions and resources available to help condominium corporations manage these issues effectively.

Questions and Answers

Q1: What is the benefit of opting for a loan over waiting out inflation?

• A1: While general inflation might be around 3%, construction costs often rise faster. Loans can provide immediate funds and spread the cost over time, potentially saving money compared to future higher construction costs.

Q2: What happens if a condominium corporation defaults on a loan?

• A2: Condominium corporations rarely default due to strong collection rights. If necessary, the corporation can take legal action to recover unpaid amounts from unit owners.

Q3: Who signs the loan documents for the corporation?

• A3: The board of directors signs the loan documents in their capacity as directors, not personally. They are covered by the corporation’s insurance.

Q4: What is the minimum loan amount?

• A4: This varies by lender, but some institutions, like Condominium Lending Group, do not have a minimum loan amount and can assist with both small and large projects.

Q5: How do lending rates for condominium loans compare to mortgage rates?

• A5: Condominium loans typically have rates about 1.5% to 2% higher than residential first mortgages for similar terms.

---

Further Resources:

• Condominium Lending Group – https://condolending.com/
• Have questions or concerns? Submit a service ticket: https://magnumyork.com/service/
• Stay up to date with future webinars – https://magnumyork.com/webinar/

Follow us on social media!

• Twitter
• YouTube
• Facebook
• LinkedIn