Personal Finance

If you were me and had to try to borrow money, what would you do?

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[OP]
Newbie
Jan 29, 2008
35 posts
1 upvote
Calgary

If you were me and had to try to borrow money, what would you do?

Every condo owners worst nightmare.

When I bought in 2007 I had a lawyer go through and assess the reserve fund and history of the corporation. Healthy reserve fund, some past issues that had been resolved and enough to pay for a siding replacement within the next few years.

Buyer beware - even doing your homework before you buy sometimes doesn't help when the unexpected happens. Reserve fund depleted due to lawsuits, roofing nightmare, water issues not going through insurance. Siding project must go ahead, condo president and board votes on highest price, nicest looking siding for resale purposes - obviously money is not an issue for them.

My portion of the special assessment is around $20,000. I don't have it lying in a savings account to access so I need to try to borrow. Since the banks are tightening their belts, which option would best. My dad is on the mortgage with me, he is 1/3 owner of a duplex that is owned outright so he has equity in that if we need it.


#1) Should we try for a LOC, secured LOC or a loan?

#2) The mortgage is through Scotiabank, but we don't have our accounts there. In nearly 2 years our payments have basically just been paying down the interest and we don't have much equity because we bought when the market was high and now it is not. Should we even bother trying them?

#3) My dad has a history with BMO (he did have a mortgage, 3 loans which were paid off before due and 1 current loan in good standing) plus both he and I do all our banking at the same branch of BMO. Would it be better to try here?

#4) Our condo corporation is demanding payment in full. Should we try instead to do a promissory note because this would be easier on us and by law they have to accept that, our reserve fund is so low (1/6 of what my mortgage is) that all they could do is put a lien on our property until we pay it all back in full they couldn't take over the unit to buy from the bank. Someone else in our building is pursuing this option.

#5) Any other options? LOL.

Thanks for any advice.
31 replies
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Aug 18, 2005
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Holy crap, that's terrible!

I am going to speculate here based on Ontario condo law, and assume that Alberta condo law is similar.

The first thing I would do in your situation is review Alberta's condo laws with respect to the disclosures made to potential buyers. I don't know about Alberta's law, but in Ontario it is called a Status Certificate and it must show accurately any information about special assessments that have been discussed by the board, any known lawsuits that been filed against the corp, the true status of the reserve fund, etc.

I also expect that you would have the right to see the condo's board meeting minutes. I suggest you get the minutes for the 12 months before you purchased your unit, and look for any evidence of these lawsuits and consideration of special assessments for repair damages that were known to the Board but not disclosed to you as a potential buyer.

If you can find that the info was not disclosed, then the condo may have been in violation of the law, and you should contact a condo lawyer to tell the corp that you are not paying the applicable portions of the assessment because it was not disclosed to you as required by law.

But if the corp has its ducks in a row... I would take on 3 jobs or something just to kill it off ASAP. If you need to borrow, try doing a balance transfer through those 0% MBNA/Citi MasterCards that are discussed in the Hot Deals forum. They also have a 1.99% for life MBNA card.

But this totally sucks. Big time. Every time I hear a story like this, it makes me want to sell my unit.
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May 28, 2007
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Nowheresville
emlty wrote: Every condo owners worst nightmare.

When I bought in 2007 I had a lawyer go through and assess the reserve fund and history of the corporation. Healthy reserve fund, some past issues that had been resolved and enough to pay for a siding replacement within the next few years.

Buyer beware - even doing your homework before you buy sometimes doesn't help when the unexpected happens.


How would a lawyer know the state of the physical condition and construction of a building? Wouldn't a building inspector (something like a homeowner getting a home inspection) have been a logical idea?
emlty wrote: Reserve fund depleted due to lawsuits, roofing nightmare, water issues not going through insurance. Siding project must go ahead, condo president and board votes on highest price, nicest looking siding for resale purposes - obviously money is not an issue for them.

My portion of the special assessment is around $20,000. I don't have it lying in a savings account to access so I need to try to borrow. Since the banks are tightening their belts, which option would best. My dad is on the mortgage with me, he is 1/3 owner of a duplex that is owned outright so he has equity in that if we need it.


I think the lesson here is that every home/condo owner should budget for at least $20,000 in their own liquid personal reserve fund.
emlty wrote: #5) Any other options? LOL.
Thanks for any advice.
I'm glad I read this post. I would never buy a condo/house without having a good amount of money in a personal reserve fund.

Getting into even more debt sounds like it's going to lead you into a very dangerous spiral downwards.

It would suck but some more feasible options could be:
Redeem and access RSP money if possible.
Redeem and access your other investments if possible.

Longer-term solutions:
Taking a second and third job to help start paying off the principal of your outstanding debt(s). If you're only paying the interest it sounds like you made a very bad decision faciliated by your father to buy at the height of a market with money you don't have.

Good luck.
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Jun 19, 2006
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emlty wrote: When I bought in 2007 I had a lawyer go through and assess the reserve fund and history of the corporation. Healthy reserve fund, some past issues that had been resolved and enough to pay for a siding replacement within the next few years.
Why a Lawyer? Why not a Professional [Civil] Engineer? Why would a Lawyer be qualified to offer an opinion as to the structural and physical integrity of a condominium, and the adequacy of funds set aside to maintain it and correct deficiencies?

My portion of the special assessment is around $20,000. I don't have it lying in a savings account to access so I need to try to borrow. Since the banks are tightening their belts, which option would best. My dad is on the mortgage with me, he is 1/3 owner of a duplex that is owned outright so he has equity in that if we need it.
#1) Should we try for a LOC, secured LOC or a loan?
Do you have sufficient equity in the condo to do a secured LOC? That would be the best option. Or a mortgage refinancing, depending on how the numbers work out. How quickly could you repay $20k?
#2) The mortgage is through Scotiabank, but we don't have our accounts there. In nearly 2 years our payments have basically just been paying down the interest and we don't have much equity because we bought when the market was high and now it is not. Should we even bother trying them?
Yeah you should try them. If you have no equity, and if the price has gone down, and you default, then they're going to get the priviledge of picking up the pieces. Because your dad is also a creditor, I think you need to have a very serious talk with him, because this is also his problem as well.
#3) My dad has a history with BMO (he did have a mortgage, 3 loans which were paid off before due and 1 current loan in good standing) plus both he and I do all our banking at the same branch of BMO. Would it be better to try here?
BMO, Scotia, RBC, CIBC, TD, etc. all, more or less, have the same policies and procedures, and the outcomes will be similar. Either you have equity and property that can be financed, or you don't. If you default on the condo, then they will go after your father. It will result in a hit against his assets. Either he helps you, or he's screwed, if you have no equity. Terrible situation, I know, but basically, he needs to get a mortgage or LOC on one of his properties to pay the assessment, and he would need to qualify for that in the usual fashion.
#4) Our condo corporation is demanding payment in full. Should we try instead to do a promissory note because this would be easier on us and by law they have to accept that, our reserve fund is so low (1/6 of what my mortgage is) that all they could do is put a lien on our property until we pay it all back in full they couldn't take over the unit to buy from the bank.
Well, if you can do that -- that would be desirable, because then you wouldn't have to try and find financing. But what would be the terms associated with such a lien? Would the existence of such a lien place you in default of the terms of your existing [bank] mortgage?
#5) Any other options? LOL.

Thanks for any advice.
Good luck! I'd look into whether the lien would trigger a technical default of the mortgage (or cause a renewal problem), and, of course, your father has to be brought on-board right away because his own finances are at grave risk because of his joint and severable liability for repayment of the mortgage loan.
"I worked with several H1B employees that were/are borderline ********. One of them wanted to spray an electrical patch panel with solvent to see if it would make the “network go faster”". <--- lol (source)
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Jun 19, 2006
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ShopSmart wrote: How would a lawyer know the state of the physical condition and construction of a building? Wouldn't a building inspector (something like a homeowner getting a home inspection) have been a logical idea?
This is where a P.Eng. should have been involved in the first place. A 'building inspector' really isn't held to the same standard of professionalism, and they're in no position to offer an opinion on structural issues, or repair costs. Are these 'home inspectors' even licensed or subjected to any professional discipline?

Maybe people should write their MLA's and ask that it be made a requirement of condo corporations that a licensed Civil/Structural P.Eng. be engaged to render an opinion, every few years, on the structural integrity of a condominium project that is offered for resale. A complete and thorough structural assessment by a P.Eng. probably isn't affordable for an individual condo unit buyer (much of the cost being insurance against errors and ommissions!), but I think it would certainly help reduce the shennanigans that are happening out there.

Also, a scheme of 'structural integrity' insurance might be a useful requirement for a condo corporation as well. "Reserve funds" aren't really structured to handle catastrophic issues.
I think the lesson here is that every home/condo owner should budget for at least $20,000 in their own liquid personal reserve fund.
Why just $20k? The way that some of the condos were slopped together in the past couple years, $20k would be a dream come true to fix them.
Longer-term solutions:
Taking a second and third job to help start paying off the principal of your outstanding debt(s). If you're only paying the interest it sounds like you made a very bad decision faciliated by your father to buy at the height of a market with money you don't have.
The tragedy is that since the father co-signed on the mortgage, this problem is going to bite him in the a**.
"I worked with several H1B employees that were/are borderline ********. One of them wanted to spray an electrical patch panel with solvent to see if it would make the “network go faster”". <--- lol (source)
Sr. Member
Apr 9, 2007
698 posts
3 upvotes
Can you please post or PM which building this is?
emlty wrote: Every condo owners worst nightmare.

When I bought in 2007 I had a lawyer go through and assess the reserve fund and history of the corporation. Healthy reserve fund, some past issues that had been resolved and enough to pay for a siding replacement within the next few years.

Buyer beware - even doing your homework before you buy sometimes doesn't help when the unexpected happens. Reserve fund depleted due to lawsuits, roofing nightmare, water issues not going through insurance. Siding project must go ahead, condo president and board votes on highest price, nicest looking siding for resale purposes - obviously money is not an issue for them.

My portion of the special assessment is around $20,000. I don't have it lying in a savings account to access so I need to try to borrow. Since the banks are tightening their belts, which option would best. My dad is on the mortgage with me, he is 1/3 owner of a duplex that is owned outright so he has equity in that if we need it.


#1) Should we try for a LOC, secured LOC or a loan?

#2) The mortgage is through Scotiabank, but we don't have our accounts there. In nearly 2 years our payments have basically just been paying down the interest and we don't have much equity because we bought when the market was high and now it is not. Should we even bother trying them?

#3) My dad has a history with BMO (he did have a mortgage, 3 loans which were paid off before due and 1 current loan in good standing) plus both he and I do all our banking at the same branch of BMO. Would it be better to try here?

#4) Our condo corporation is demanding payment in full. Should we try instead to do a promissory note because this would be easier on us and by law they have to accept that, our reserve fund is so low (1/6 of what my mortgage is) that all they could do is put a lien on our property until we pay it all back in full they couldn't take over the unit to buy from the bank. Someone else in our building is pursuing this option.

#5) Any other options? LOL.

Thanks for any advice.
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Dec 11, 2005
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ShopSmart wrote: I'm glad I read this post. I would never buy a condo/house without having a good amount of money in a personal reserve fund.
It is different with a house though.

Yes, if you own a house you need to have a reserve fund for emergencies. However, with a house you do not have a condo board basically telling you how much to spend on repairs and when.

Like you own a house and there is a leak in the roof one day. You can either spend thr 5/10 grand on it now and fix it properly, *OR* if you don't have the money, you can consider getting a $10 tar patch kit, get onto the roof yourself, and patch it good enough to hold up 6 months while you *do* save up the money.

This kind of thing is not an option with a condo, at all.

Dealing with idiot condo boards is one of the massive downsides to owning a condo. The board at th eOPs building sounds like a very sketchy one. a), why have there been so many lawsuits against them? And b) The idea that having an upgraded siding is going to increase resale enough such that it would pay for itself is simply WRONG. Anyone who knows real estate knows that siding is one of those things you have to do when you need it, but you never make money off of doing it. People don't pay extra for premium siding.

It is akin to paving a driveway - everyone wants it but no one will pay extra for it. If it costs 10K to pave a driveway it does not increase resale by 10K, because having a paved driveway is just expected. The same is true of siding. unless you are talking about a luxury condo or luxury home, having luxury siding is just a waste of money.
To be nobody but yourself - in a world which is doing its best, night and day, to make you everybody else - means to fight the hardest battle which any human being can fight; and never stop fighting. -- E. E. Cummings
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brunes wrote: It is different with a house though.

Yes, if you own a house you need to have a reserve fund for emergencies. However, with a house you do not have a condo board basically telling you how much to spend on repairs and when.

Like you own a house and there is a leak in the roof one day. You can either spend thr 5/10 grand on it now and fix it properly, *OR* if you don't have the money, you can consider getting a $10 tar patch kit, get onto the roof yourself, and patch it good enough to hold up 6 months while you *do* save up the money.

This kind of thing is not an option with a condo, at all.

Dealing with idiot condo boards is one of the massive downsides to owning a condo.
If you were on the condo board you would make the same decision, I guarantee you.

Even though the condo board has as much autonomy as they want, they can also be held personally liable under certain circumstances. In Ontario, if you take the advice of your engineer or lawyer, then you are guaranteed to be covered under the corporate liability insurance that is mandated under the Condo Act.

And even if you think that you want to pursue a less expensive or slower option to spread out the expenditures over a longer period of time, that means you are going out on your own. And you may not be covered by corporate liability insurance in that case. Would you want to go into this situation, knowing that you could PERSONALLY be on the hook and sued for millions of dollars in repairs that might not have been necessary if the engineer's advice had been taken?

Condo boards do not really run condos, it is the lawyers, engineers, management companies, etc. Smart boards take the recommendation from these people to protect themselves because most people are not civil engineers, lawyers, etc. Better to fix the problem now than let it escalate into an even bigger and more expensive problem.

Some condo board members are idiots, no question, but boards really have their hands tied in most things and you would make the same decision if you were in their place to protect yourself.
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Jucius Maximus wrote: If you were on the condo board you would make the same decision, I guarantee you.

Even though the condo board has as much autonomy as they want, they can also be held personally liable under certain circumstances. In Ontario, if you take the advice of your engineer or lawyer, then you are guaranteed to be covered under the corporate liability insurance that is mandated under the Condo Act.
I know all this. Hence why I said it was a huge downside to owning a condo.
To be nobody but yourself - in a world which is doing its best, night and day, to make you everybody else - means to fight the hardest battle which any human being can fight; and never stop fighting. -- E. E. Cummings
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what would happen if the OP refused to pay the $20K?
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Mar 15, 2006
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For those of you who do not completely understand the concept of a lawyer going through the reserve fund, it is pretty standard. The reserve fund is responsible for funding current liabilities as well as forecasted liabilities. Reserve funds are usually mandated to enlist physical condition reports of buildings... as well as project capital expenditures... Reports for the reserve fund are usually issued every year with all the financials and physical findings summarized. That is why you have a lawyer go through the report.

To answer your question about borrowing, go to all the banks, explain your situation and see what the cheapest line of credit you can get is. How you pay it back is up to you.
The things you own end up owning you.
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someguy91 wrote: For those of you who do not completely understand the concept of a lawyer going through the reserve fund, it is pretty standard. The reserve fund is responsible for funding current liabilities as well as forecasted liabilities. Reserve funds are usually mandated to enlist physical condition reports of buildings... as well as project capital expenditures... Reports for the reserve fund are usually issued every year with all the financials and physical findings summarized. That is why you have a lawyer go through the report.
Sounds like something you'd want an Accountant and an Engineer looking at, not a lawyer. If lawyers are rendering opinions on the adequacy of reserve funds, as professional opinions, then they should be prosecuted for practicing accounting or engineering without a license.
To answer your question about borrowing, go to all the banks, explain your situation and see what the cheapest line of credit you can get is. How you pay it back is up to you.
The OP couldn't qualify for financing the place on his own (hence needing the father as a co-signer); how is he going to qualify for an additional line of credit ontop of that???
"I worked with several H1B employees that were/are borderline ********. One of them wanted to spray an electrical patch panel with solvent to see if it would make the “network go faster”". <--- lol (source)
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Narci wrote: what would happen if the OP refused to pay the $20K?
The condo strata would sue him, get a judgement against him and he would probably end up in court ordered sale of the unit. Condos are a nightmare for stuff like this. Nothing but money pits.
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May 28, 2007
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pitz wrote: This is where a P.Eng. should have been involved in the first place. A 'building inspector' really isn't held to the same standard of professionalism, and they're in no position to offer an opinion on structural issues, or repair costs. Are these 'home inspectors' even licensed or subjected to any professional discipline?

Maybe people should write their MLA's and ask that it be made a requirement of condo corporations that a licensed Civil/Structural P.Eng. be engaged to render an opinion, every few years, on the structural integrity of a condominium project that is offered for resale. A complete and thorough structural assessment by a P.Eng. probably isn't affordable for an individual condo unit buyer (much of the cost being insurance against errors and ommissions!), but I think it would certainly help reduce the shennanigans that are happening out there.


Pitz, are you an engineer? Your suggestion to force every single condo board to hire an engineer every few years would increase maintenance fees for every condo resident. How much would engineers charge for an entire building inspection? I'm guessing it would be substantial. I'm sure the engineer types would just love for naiive people to take your advice because it means a tonne of more work and more importantly money for them.

You say an individual couldn't afford to hire an engineer to assess a building. So how much would it be?

Anyway, you've got the whole picture WRONG again. Why don't the people who first built the building in such a 'sloppy' way be held accountable. Make THEM pay the OP and other condo residents' fees.

Engineers and architects that designed and worked on the building in the first place NEED to be held accountable and punished - not the condo residents who bought them or keep buying them as they get recycled and flipped to unsuspecting purchasers.

You said engineers have insurance to cover their shoddy work. So my suggestion would be for the condo residents to put a class action lawsuit against everyone who was accountable for the sloppy work that is happening in the condos and get the condos fixed where possible.

My experience is that certain dishonest people are only deterred when you attack them where it hurts ppl with no values or integrity - their money.
pitz wrote: Also, a scheme of 'structural integrity' insurance might be a useful requirement for a condo corporation as well. "Reserve funds" aren't really structured to handle catastrophic issues.


Another short-sighted suggestion. Where does insurance money come from? THe sky? Your suggestion would cause everyone's insurance to go up and condo insurance to go up even higher and it would give insurance companies another cash cow. The consumer pays eventually and in that case, you'd be paying for more administration costs, it would take longer to resolve issues and it could possibly force the condo residents to give up control over how they want to handle the problems.

Either there is a structural problem or not. The people who first helped put the condo up need to be held accountable. Otherwise there's no deterrent for them to keep on doing what they're doing and making tonnes of money as well.
pitz wrote: Why just $20k? The way that some of the condos were slopped together in the past couple years, $20k would be a dream come true to fix them.
Slopped together thanks to engineers, developers and tradespeople who didn't blow the whistle as long as the money was coming in from greedy developers. Lots of skilled people belonging to their professional associations.

Just because people have a degree doesnt' mean they're going to do a good job or even that they're competent or that they care that they're putting up shoddy buildings without any second thoughts impact others, communities, etc.

That's the real issue.
pitz wrote: The tragedy is that since the father co-signed on the mortgage, this problem is going to bite him in the a**.
As far as definitions of tragedy go, I would not say this is a great example.

The father made a decision to enable his son to purchase something he wasn't able to earn himself. I actually don't know a lot of people who borrow from their parents. In fact most ppl I know help support their parents.

IMO, the father is just as responsible as the son unless he was forced to sign the mortgage agreement against his will. These days no one wants anyone to be accountable unless it's the govt, company, or someone else. Everyone is accountable for their own actions and decisions.

It's a sad situation but is it a hapless tragedy? I've seen worse.

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