Under the Condominium Property Act, condo corporations have a way to recover costs from the developer when the developer has underestimated expenses while selling the condo.
If a corporation’s total actual expenses in the 12-month period after contributions are first levied are more than 15% above the projected total expenses in the proposed budget, then the developer must pay the difference in expenses above the 15%.
The corporation has 90 days after preparing the financial statements for the first fiscal year in which contributions are levied to notify the developer. The developer has 60 days after receiving the notice to pay the corporation the difference in expenses above 15%.
The developer is not responsible for paying certain increased expenses, for example:
- expenses that were not reasonably foreseeable when the proposed budget was prepared
- increases in:
- insurance premiums or deductibles
- utility charges at the time of the proposed budget
- costs of a reserve fund study
- expenses resulting from cancelling a developer’s management agreement and entering into a new agreement for same/similar services
- charges for the corporation’s legal services after holding the meeting to elect first board
Seek legal advice if you have a dispute with your developer over underestimated expenses.
Last updated: August 2022