DV Capital: Mortgage Broker & Private Lender Services.
Condominium Corporation & Strata Loans.
Ontario, British Columbia & Nova Scotia.
What is a Condominium Corporation?
A condominium corporation is not the same as an incorporated business and is actually ‘created’ upon the registration of a declaration and a description in the Land Registry Office by the developer that owns title to the condominium lands. Any and all related information, policies, restrictions and conditions are found with the condominium declaration. Condominium corporations are governed by The Condominium Act, 1998 (the Condo Act) and must comply with numerous requirements ranging from adequately maintaining records, maintaining the property and ensuring the safety of individuals in the common elements and condo units.
What is a Strata Corporation?
Strata properties in British Columbia are akin to Condominiums in Ontario and are likewise a popular housing house given its convenience, security and amenities and can also include condos, townhouses and duplexes as well as industrial and commercial real estate. Again, similar to a condominium, the owners own their units and in some cases parking spots and a locker and and a share of common elements along with other unit holders. A strata corporation is a legal entity and the lot/unit owners are members of the strata corporation, hence why if a strata corporation is responsible for paying a judgement, the owners are personally liable to pay their proportionate share.
What is a Special Levy or Special Assessment?
The condo corporation board may need to levy a special assessment against unit holders for a variety of reasons. A typical situation is when unforeseen expenses arise, such as when the reserve fund is depleted and funds are required to complete major renovations. Other issues may include under-budgeting or losing a lawsuit which requires money over and above whatever balance is sitting in the reserve fund, which gets carried over to the unit holders. This is more or less the same that applies to strata properties in British Columbia. Keep in mind that a special assessment is not the same as regular scheduled strata and/or condo fees, any special assessment levies are additional expenses.
What is a condo corporation or strata Loan?
A condo corporation & strata loan is alternative method of addressing one or more expenditures including repairs or upgrades as opposed to utilizing the reserve fund or exposing the unit owners to a special assessment. Condo and strata corporation financing is a very niche product that is not readily available through traditional mortgage lenders, mainly because there isn’t tangible real estate security as the loan cannot actually be registered against the units as if the unit holder themself were obtaining a mortgage that gets registered against title of the unit.
Benefits of a Condo or Strata Corporation loan.
- Spreads the cost of upgrades and repairs over a period of time.
- Avoids costly and stressful special assessments.
- Prevents unit holders from having liens registered against their units.
- Prevents reserve fund deficits which is not a great look for current and/or prospective owners.
- Alleviates the burden of unit holders needing to scramble to come up with funds.
- Helps prevent maintenance deferrals that may lead to more expensive future issues.
Typical Purpose of Funds.
- Repairs, upgrades, replacements and renovations:
- New windows.
- Underground garage and parking lots
- Exterior wall and facade.
- Building envelope repairs.
- Common elements.