Daily Commercial News reports on a trend emerging in response to the deteriorating physical and financial condition of older condominiums — "lender tenders."
The article cites a report by GRG Building Consultants showing that condominiums built in the 1970s are in worse shape today in terms of their building envelope and structure compared to complexes built in the 1980s and 90s. Moreover, increasingly stringent reserve fund requirements in the Condominium Act since the 1980s have created a financial gap between condominiums built in the 1970s and those constructed afterwards. The 1970s condominiums are less likely to have a properly-funded reserve to pay for major repair and replacement of the common elements than condominiums constructed since then.
For this reason, and to avoid financially devastating their unit owners, it is little wonder that older condominium corporations are increasingly turning to lenders to finance necessary repairs.
Some contractors quoting on condo retrofit work in older buildings are now including in their tender a rate quote from a financial institution prepared to loan the condo corporation the necessary funds to finance the work.
This concept of “lender tender” seems strikingly similar to the offers by retailers like The Brick and Leon’s, etc, who lend money (or arrange loans) to consumers for the purchase of furniture, electronics and appliances. This development suggests that lending to condominium corporations is becoming more common than ever before and will probably become more competitive over time, especially if contractors begin lending their own money on favourable terms designed to secure the contract.
I just wonder how long it will be until we see condo corporations being offered loans for repairs on the basis of “Zero Down! Zero Interest! and Zero payments until next December!”
See the full article in DCN here.
Hat tip to Jason Tower at Waste Solutions Group for sharing this news.