Why are Condo Boards having difficulty regulating their Cash Flow Plans?
In Alberta, a Reserve Fund Study is required every 5 years according to the Condominium Property Act? But what happens over the next 5 years when expenses can cost more and or deferred for later dates or years? Or not raising contributions when required?
Adjustments are necessary if this is not regularly planned. Over time the Corporation can easily loose track over the coming years. When this happens, this can cause shortfall of funds in Reserves and or increases in costs on deferred expenses that can end up with large unexpected Condo Fee increases and or Special Assessments.
These issues are the responsibility of the Corporation to inform Owners and potential Buyers with the most recent up to date information in Reserves and ongoing Expenses that will give confidence that the Corporation is run well.
This all can be very confusing and disappointing for Buyers who base their decisions on reviewing the Condo Documents and surprising for the Owners thinking the Corporation has been well run? It is estimated that up to approximately from 35% to 45% of Condominium Corporations are operated this way.
The Board consists of Owners who may not have all the skills of operating a Corporation and therefore managing may be based on their personal financial decisions rather than the decisions required to run a business as a Corporation.
In most cases Owners are unaware of the financial position of the Corporations health. This includes Management Companies who may not be well advised or connected to the Corporations financial standing either by having lack of information or simply their contract did not require their service for day to day Operations and or Capital Expenses.
However, Condo First Review Ltd. has developed a Reserve Fund Study Cash Flow Plan that can be easily integrated and adjustable in their budgeting. The program includes setting up the system with training and ongoing coaching for the Condo Corporation. It is cost effective and will save Corporations many hours of time and management.
We would love to hear from you if you have any questions