For many Canadians, owning a condo is one of the most significant investments of their lives. However, the longevity of condo infrastructure in Canada is threatened by various risks that require more attention. To address this issue, the CIA has released a new insight statement that provides valuable information and recommendations for safeguarding this important investment.
Longevity of Condo Infrastructure emphasizes the importance of repairing, replacing and renewing common elements such as roofs, pools, elevators and parking lots within condo buildings, as well as having sound reserve funds. The authors of the statement, Henry Chio, FCIA, Jean-Sébastien Côté, FCIA, and John Nguyen, stress that owning a condo is a significant life investment for many Canadians, and it’s crucial that all stakeholders understand the value of this asset and its associated risks.
“By working together and taking proactive steps, we can ensure the longevity of Canada’s condominium infrastructure.”– Jean-Sébastien Côté, FCIA
The statement also highlights the need for a broader education system to keep boards and condo owners up to date on requirements related to insurance, legislation, finance and other relevant issues. This is particularly crucial since these risks cannot be faced individually.
“Condo owners need to understand that this type of investment involves sharing risks with others beyond their own unit.”– Henry Chio, FCIA
In addition, the statement outlines specific risks and recommendations related to climate change impacts on properties, financial management by condo boards and interest rates and inflation. It further emphasizes the need for stronger government intervention to guide proper estimation of the future costs of maintaining and repairing condo infrastructure as it ages.
These recommendations are not limited to condos and can be broadly applied to public infrastructure such as public buildings, roads, bridges and waterworks maintained by all levels of government. Therefore, it’s important for everyone to understand the risks associated with condos and properly forecast and mitigate them.
The authors encourage condo owners to be proactive in learning about the financial health of their condo association, getting to know their condo community and engaging with their board. By working together and taking proactive steps, stakeholders can ensure the longevity of Canada’s condominium infrastructure.
“Ultimately, condo owners, buyers, governments, municipalities, condo managers, board members and other stakeholders should better understand the risks associated with condos and properly forecast and mitigate them.”– John Nguyen
The statement serves as a valuable resource for anyone interested in owning a condo in Canada or maintaining public infrastructure. The authors joined the Seeing Beyond Risk podcast as guests to provide further insights into the results behind the statement, additional background information and more.
This new release draws heavily on an earlier research paper by Jean-Sébastien Côté and Jon Juffs which explores the Canadian condominium industry through an actuarial lens. This research paper reviewed condo reserve funds set aside for paying the future repair and replacement costs of common elements shared among condo owners in a building.