Condo Lending

Condo lending has become more popular due to inflation, labor disruptions, and supply chain shortages. When a borrowing by-law is passed, the board can engage a condo lender to finance major repairs. The lender pays the contractor directly, and the loan may cross the financial year-end, leading to complex accounting disclosures. The reserve fund may be hit with a large charge, potentially putting it into a deficit. To handle the loan payments, a new reserve fund study may be needed to cover the cost of interest. The statement of operations should reflect increased condo fees and appropriations to the condo loan fund, while the statement of reserve fund should show positive equity. The statement of condo loan fund will show a negative figure, representing the loan balance. Proper tracking and disclosure of transactions are crucial to maintain transparency and avoid confusion for owners, management, and boards. The auditor should enhance clarity through financial statement note disclosures and explanations during the annual AGM.