If your Strata Corporation is looking to raise funds for a major project, and you don’t have the funds simply sitting around in your CRF, then a strata loan might be a good option rather than a special levy.
How would my strata corporation get a loan?
Just like raising funds via a special levy, a loan can be authorized by a ¾ vote at an AGM or SGM. One single loan is then made to the strata corporation, which essentially becomes an unsecured commercial loan. This loan isn’t a mortgage, and won’t encumber your individual strata lot title, or the common property.
How does a strata corporation loan work?
Generally speaking, most commercial banks will have some form of strata loan program. Your Strata Council or Property Management Company will negotiate the term, which will typically be from 20 years to much less, even 5 years. The strata corporation would then be responsible for collecting the loan payments on a monthly basis from the owners. The higher the borrowed, the better the rate.
Is borrowing for a strata loan a good idea?
Borrowing funds for major projects such as envelope repair, new windows, pipes, elevator, or even a new roof can be a good way to manage your strata corporation finances, especially if owners aren’t willing or able to buck up for a special levy. Sometimes funds can be borrowed for a short-term period, then paid off via special levy down the road.
Looking for some strata management advice regarding strata loans? Reach out to our Property Management company here, and we’ll be happy to help you out!