Legal Matters
I live in a condominium and received notice of
a special assessment. What does this mean?
Hamilton Spectator
Sponsored Content
01 June 2015
This means that your condominium requires additional funds to perform
the objects and duties of the condominium.
The objects and duties of a condominium include managing the property
and assets of the condominium and controlling, managing and
administering the common elements and assets of the condominium. For
example, depending on the particular provisions contained in the
condominium’s Declaration, the condominium may be responsible for the
maintenance and repair of common elements such as roofs, roadways,
sidewalks and fencing. In order to carry out its objects and duties a
condominium must have adequate funds.
The funds necessary to carry out the objects and duties are obtained by
a condominium in three ways.
Common element fees
The primary manner in which a condominium obtains funds is through the
common element fees paid by the unit owners which are collected by the
condominium on a monthly basis. The common element fees paid by unit
owners is determined in accordance with Schedule “D” to the
condominium’s Declaration, which provides the percentage contribution
to the common expenses and proportionate common interest.
Each year the
Board of Directors must prepare a budget for the condominium. The
budget together with Schedule “D” is used to determine unit owners’
common element fees. The budget is divided between an operating account
and reserve account, with the former being used for every day expenses,
such as landscaping, and the latter being used for major repair and
replacement items, such as the replacement of a roof.
Loan
A condominium may also obtain funds by way of loan from a financial
institution. If the loan is not included in the condominium’s current
budget a borrowing by-law must be passed to specifically authorize the
loan. Like all by-laws, a borrowing by-law is made by resolution of the
Board of Directors, approved by a majority of all of the unit owners at
a duly constituted owners’ meeting and registered on title.
Special assessment
The third most common manner in which a condominium obtains funds is by
special assessment. The amount of the special assessment owed by a unit
owner is determined by Schedule “D” to the Declaration, the percentage
contribution to the common expenses and proportionate common interest.
This means that, unless all of the units have the exact same percentage
allocated to them, the special assessment amounts will not be identical
for each unit.
In exercising the powers and discharging their duties, the Board of
Directors of a condominium is required to act honestly and in good
faith and to exercise the care, diligence and skill that a reasonably
prudent person would exercise in comparable circumstances. This means
that, if a condominium requires additional funds, for example to repair
a roof that was damaged during a windstorm, and the condominium does
not have sufficient funds in their reserve fund (which is funded by
unit owners as part of their contributions to the common expenses and
may only be used for the major repair and replacement of the common
elements and assets of a condominium), then the Board must determine
whether it is in the condominium’s best interest to fund the project by
special assessment or loan.
The Board should consideration a number of
factors, including the amount of the funds necessary to complete the
project, the nature of the project and the unit owners overall
financial position.
But for unit owners’ right to vote for or against a
borrowing by-law, unit owners do not have a right to vote on how a
project will be funded; it is the Boards ultimate decision to determine
how a project will be funded.
If unit owners do not agree with the
Board’s decision to complete a repair and/or how such repair will be
funded, or believe that the Board is not acting in the condominium’s
best interest, the only recourse is to requisition a meeting to remove
the Board and to get elected in their place.
Maria Durdan
Maria Durdan is the head of the Condominium Practice Group at
SimpsonWigle LAW LLP; she specializes in condominium law, development
and administration. Maria supports over 650 of the firm’s residential
and commercial condominium clients throughout Ontario.
Maria has also
obtained her Associate of Canadian Condominium Institute (ACCI)
designation in law, which recognizes that she has achieved a high level
of knowledge and skill of condominium law.
Maria is a Director on the
Canadian Condominium Institute – Golden Horseshoe Chapter and the Chair
of the Education Committee. Maria’s practice includes advising boards
of directors, property managers and developers on all areas of
condominium law.
top contents
appendix
previous next