Let’s take a look into what these two bills actually propose and obligate, why they’ve been put into place and how they help and protect co-owners and property buyers.
This law requires condo associations to create a self-insurance fund, a new addition to the existing operating fund and contingency fund. The new fund must contain the equivalent of the highest deductible (the amount that the insured party has to pay in case of an insurance claim) among all insurance contracts purchased by the board. Often the water damage deductible is the highest, if excluding earthquake and flood damage, and it tends to increase as claims are made. Condo associations must have a municipal property assessor determine the value of the property every five years. They’ll determine the depreciation of the property, which will subsequently cause the deductible to increase or decrease. The idea here is to not delay repairs/renovations if ever an insurance claim is made due to co-owners not having the necessary funds available.
Think of this, Your neighbour downstairs, irresponsible joe decided to use his BBQ tonite, and unfortunately forgot to turn off the gas and the burners. By some freak accident, at some point in the middle of the night, his BBQ lit up, and destroyed the buildings, brick, some windows, aluminium railings, drywall and exterior emergency exits before the fire department could put it out. Now an insurance claim has to be made but your condo association does not have enough in the fund to pay the deductible, nor do the renovations themselves. So they have to ask you to pay $1,500 each co-owner to get the deductible going, so that the repairs can be done. Obviously some people will have the money ready, but some won’t, and now what?
The government is acting to protect co-owners from that type of situation exactly, and make buying condo buildings more appealing to young buyers now that their funds are properly set up and all works are addressed.
So the next time you question a building’s condo fees, take the time to properly look at their budget, the minutes of meetings and understand if they have respected and updated their policies to follow both bill 16 and bill 141. If they haven’t? get ready for a hefty condo fee increase in the future!