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July 27, 2009

Condo Classroom - Issue 52

The Condominium Corporation

Paulette Marsollier

When buying a condominium, always understand that you have just become a shareholder in a corporation. As such, you have a stake in how that corporation is run. Would you naively buy into any financial corporation around town without first analyzing the financials, budgets, etc., and determining their cash flow just because you fell in love with the well-designed “reception area” of the company? Highly unlikely. But many buyers do something similar to that every day. It is critical to understand the financial aspect of any condominium before putting your money on the table.

New condominium construction does not require a Reserve Fund or a bank account. The Reserve Fund Study need only be completed two years after the condominium plan has been registered.  Apartment buildings converted into condominiums do have a Reserve Fund  so be aware of the three distinct differences. Insurance providers may withdraw coverage when reserve funds are insufficient.  All three categories of condominium: new, conversion or resale are equal equity growth products but simply packaged differently and purchased with three distinctly different Offer to Purchase Contracts.   CL

Paulette Marsollier is a realtor with Sutton Group Canwest with 21 years of real estate experience.  She has specialized in condominium marketing and education for the past 18 years. Paulette is a Professional Member of the Canadian Condominium Institute and serves on the Board of Directors of a Strata Council in B.C. The Condo Classroom was created in 2003 to facilitate a broader consumer knowledge base of condominium hybrids, construction and contracts.
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