What does this mean?
Condo corporations have unlimited liability, so its tough for them to go bankrupt. If your condo corporation
gets itself into a serious financial mess, the owners must cough up
their portion of the costs.
When you buy a condo unit, you have become a business partner in a
non-profit corporation. You become a guarantor on all debts, loans,
lawsuits, liabilities, settlements and construction defects.
Your financial obligations to the
condo corporation only ends when you no longer own your condo unit. The
condo corporation has the power to lien all units that fall behind
in their monthly payments or fails to pay any special assessments when
they come due.
The corporation always has the ability to raise money to pay its
raising the common element fees, levying special assessments on the
unit owners and taking on loans.
You can be financially ruined if the builder constructed a shoddy
building and then went out of business leaving serious structural
defects and the city issues
work orders or condemns the structure. It is the same if there is a
major fire that
forces many of the owners to evacuate their homes as you still have to
pay your common element fees and your mortgage along with the costs of
You can also be on the hook if the majority of the board
of directors are either ignorant, crooked, lazy or deliberately fails
fees to maintain the building and adequately fund the reserves.
Another common problem is when the majority of owners refuse to allow
the board to raise the monthly condo fees to pay for required building
In times of financial or political crisis, a condo corporation can
apply to the
courts to have an administrator manage the corporation. The
administrator has the power to raise fees and levy special assessments
that have, in some situations, been so high, they have driven up to a
third of the unit owners out of their homes.
If any of the above conditions exist at your condo, and it does not get
rectified fast, you may end up trapped in a unit that you can't sell as
you will get too little to allow you to buy elsewhere. (This is a
problem in many older condos.) Worst case, you could lose almost
everything you own.
You are responsible if your tenant, their guests or their visitors
breaks the condo's rules, floods the
lower units or sets your
unit on fire. It's worse if he uses the unit to run a grow-up or
Be careful who you rent to.
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