A large majority of Quebec co-ownerships have difficulties in setting up the management mechanisms necessary to efficiently collect their condo fees*. This has serious consequences for the value and financial performance of condos. Here are some tips that should correct the situation and better protect your investment.
Increase interest charges
Delayed payments of condo fees from a few co-owners can cause difficulties to all co-owners, notably by putting in an overdrawn situation. Make sure that the interest rate for the offenders is high, 2% per month should be a standard. Too often, declarations of co-ownership show low interest rates that are difficult to determine. The rate must be clearly identified, and it must be a deterrent.
Making pre-authorized payment mandatory is a great way to reduce delays while dramatically reducing processing time, a low-performing task. Why waste time in the queues at the bank, in addition to managing piles of cheques and paying bank processing fees? Specialized Montreal-based providers offer online services at competitive, often advantageous prices. Eliminate cheques, they are from another era. At the end of the day, the administrators of the co-ownership will no longer have to constantly relaunch the latecomers, a frustrating and ungrateful job. The time saved can be put to better use.
Make the bad payers pay
As an additional measure, a minimum administrative fee of $100 per N.S.F. (not sufficient funds) transaction should be charged, in addition to bank charges of course. N.S.F. transactions cause liquidity problems for all co-owners, not to mention the collection efforts required to rectify the situation.
Modify your declaration of co-ownership
All that is needed is to amend your declaration of co-ownership to raise interest charges, eliminate cheques and impose an administrative fee on bad payers. However, you should be aware that the declaration of co-ownership can only be modified by the Assembly of co-owners. Consult a notary specialized in co-ownerships to be well supported. The advantages of the modifications made will greatly outweigh the notary’s fees. Despite the updating of your declaration of co-ownership, it is likely that some co-owners remain resistant to the changes. Be vigilant and enforce the new rules; changing the culture of a co-ownership is tedious, but it is worth the effort. The quality of your investment is at play.
The consequence of doing nothing
The condominium market is getting more complex. The number of condos for sale has greatly increased recently as the number of buyers stagnates. Badly managed buildings will be severely punished at one time or another. Co-owners adopting a casual attitude will lose big. Protect your investment, the game is worth the effort!
*Condo fees are the necessary sums of money necessary for management, maintenance and preservation of common areas of a co-ownership and are payable by its co-owners.
Article published by the Ordre des administrateurs agréés du Québec / May 2017