An Ottawa condo board's loan cost owners more than a levy

The situation

The first time Brandon, Senthil, and Vaishali came to us about their Ottawa condo unit was two years earlier, when a reserve fund study had flagged a shortfall in the building's roof and elevator replacement accounts. At that time we had told them plainly what a status certificate review does and does not catch, and had recommended they attend the annual general meeting, ask for the board's funding plan in writing, and push for a special assessment structured as a single, transparent levy rather than something folded into ongoing costs. They had nodded, thanked us, and then, busy with work and family, none of them had gone to the meeting.

Brandon, a sales director, and Senthil, a software developer, had bought the unit together with their sister Vaishali as a long-term investment, splitting costs three ways and treating the monthly condo fee as a fixed, predictable number in their budgeting. For two years it mostly was. Then the fee increased by an amount that seemed larger than ordinary inflation would explain, and buried in the notice was a single line referencing a 'reserve fund financing arrangement' with no further detail.

What the board had actually done, it turned out once records were requested, was borrow against the corporation's future assessment authority rather than issue the special assessment the reserve fund study had recommended. A loan meant no single large bill landed on any owner's desk at once. It also meant interest costs, a repayment schedule stretching years beyond what a lump-sum levy would have taken, and total cost to owners that would run meaningfully higher than the shortfall itself once the loan was paid off.

Borrowing is a legitimate way for a condominium corporation to fund a reserve shortfall, but it is not something a board can simply decide on its own: the corporation generally has to pass a borrowing by-law, and a by-law does not take effect until the owners approve it. The Act also requires clear financial disclosure to owners, and the siblings had seen none of the detail: no loan terms, no interest rate, no explanation of why borrowing had been chosen over a levy, and no vote they could recall being asked to cast.

Three years of fee increases into a mortgage they had not agreed to in any meaningful sense, the siblings called our office again, this time with the status certificate, two years of AGM minutes they had finally requested, and a plain question: was this legal, and was there anything left to do about it now.

The complication

The complication was timing, and it cut against the siblings from the start. The board's decision to borrow rather than levy had been made, and ratified through whatever internal process the corporation's bylaws required, well over a year before Brandon, Senthil, and Vaishali came back to us. Challenging a decision that far after the fact, one the owners had already approved through a validly passed borrowing by-law, meant working against both a limitations clock and a practical reality: the loan had already been drawn, spent on the roof and elevator work, and was already being repaid.

Adding to the difficulty, the loan had been drawn against the corporation's future common expense revenue as its security, a lawful and common structure, but one that left no separate asset to trace or unwind even had the siblings pushed harder. Undoing it now would have meant asking the corporation to repay the lender early and replace the financing with a fresh special assessment, which would simply have shifted the same cost onto every owner at once rather than removing it, and would have required a new board resolution the siblings had no realistic path to force.

The second complication was the one that stung more. When we pulled the AGM minutes the siblings finally requested, the borrowing decision had in fact been discussed and voted on at the annual meeting they had been advised, two years earlier, to attend. A quorum of owners had approved the general direction, though the specific loan terms had been left to the board's discretion in a resolution most owners in the room likely had not scrutinized closely. Had Brandon, Senthil, or Vaishali been there, they would have had a vote and a voice in the terms, or at minimum an early, accurate understanding of what was coming instead of a vague line item two years later.

Ottawa's condo board had also not been especially forthcoming since. Requests for the loan agreement itself, its interest rate, and the corporation's amortization schedule had gone unanswered for weeks before the siblings escalated to us, which raised a separate and more current question: whether the corporation was meeting its disclosure obligations now, independent of what had or had not happened at that earlier meeting.

There was also a financial reality the siblings had to absorb regardless of what the paperwork showed. The loan, once fully repaid over its term, would cost the ownership group as a whole more in total dollars than a special assessment would have, because a levy carries no interest. That was not a legal defect. It was a cost the board had chosen, within its authority, to spread thin and long rather than concentrate and short, and the siblings' unit would carry its proportional share of that extra cost regardless of any advice they wished they had followed the first time.

What we did

1. Requested the full financial record under the corporation's disclosure obligations. We sent a formal request for the loan agreement, the interest rate, the repayment schedule, and the board's minutes from the meeting where borrowing was approved, because owners are entitled to this information and a corporation that has been slow to provide it voluntarily often moves faster once the request is in writing from counsel.
2. Confirmed the board's approval was procedurally valid. We reviewed the AGM minutes against the corporation's bylaws to check whether quorum, notice, and voting requirements had been met, since a defect there would have reopened the decision regardless of how much time had passed. The vote held up; the process had been followed correctly, even if the room had been thinly attended.
3. Explained plainly why a retroactive challenge was not a realistic path. Rather than let the siblings spend money pursuing a reversal of a properly approved board decision that had already been acted on, we told them directly that the loan was not going to be unwound, and that the better use of their time and ours was managing what came next rather than relitigating what had already happened.
4. Pressed for current and ongoing disclosure, not historical vindication. We shifted the file toward what the corporation owed the siblings going forward: a clear, written repayment schedule showing exactly how much of each future fee increase was loan repayment versus ordinary operating cost, so the family could budget accurately instead of being surprised again by a number they could not break down or explain to each other.
5. Negotiated a commitment to itemized notice on future increases. The corporation agreed, in writing, to break out loan-related costs as a separate line on future fee notices for the remaining life of the loan, which gave Brandon, Senthil, and Vaishali the transparency the original notice had lacked, even though it did not change the underlying cost or shorten the years left on the repayment schedule.
6. Set up a standing practice for the siblings so this would not repeat. We put in place a simple annual check-in: one sibling would request AGM minutes and the reserve fund study update every year, regardless of who could attend the meeting itself, so a future funding decision would surface immediately rather than two years later in a fee notice.
7. Calculated the actual cost delta so the family understood the number, not just the principle. We worked through the loan's total interest cost against what a special assessment would have cost the three of them directly, so they had a concrete figure for what the missed meeting had cost them, rather than a vague sense of having been wronged, and could decide for themselves whether further disputing the decision was worth the money it would cost them.

The outcome

The loan stood. Nothing in the corporation's process was defective enough to challenge, and the siblings' unit continues to carry its share of a repayment schedule that will run for several more years and that, in total, costs meaningfully more than a lump-sum levy would have. That is the loss, and it is real: a decision the siblings could have influenced, or at least understood in advance, went through without them because they had not acted on advice they had already been given once.

What changed was disclosure going forward, and the family's own habits. The corporation's written commitment to itemize loan repayment separately on future fee notices means Brandon, Senthil, and Vaishali will see any further increase coming with enough detail to evaluate it, rather than discovering it after the fact in a single opaque line. Combined with their new annual check on AGM minutes and the reserve fund study, the surprise that prompted this second visit to our office is unlikely to repeat in the same form.

The siblings also came away with a concrete number: the interest cost difference between the loan the board chose and the levy it did not, weighed against the roughly proportional monthly cost their unit was now carrying. It did not change anything about what they owed, but it turned a vague grievance into a fact they could hold, and stopped them from spending further money chasing a reversal that was never going to happen.

This was not the outcome the siblings wanted when they first called, and we told them early on it was not going to be. The loss from the first missed meeting was already locked in. What was still available, and what we delivered, was making sure the next decision would not be missed the same way.

What you can learn from this