By Michael Ganley Buyer beware in the world of condominium purchases On the importance of asking the right questions about your “common elements.”

I live in one of 19 condos that make up Yellowknife Condominium Corporation No. 7. My wife and I didn’t think much about the “condominium” aspect of the property when we bought it. We liked the living space, the inspection was clean, and so we bought. What we never did was enquire about the adequacy of the condo corp.’s capital reserve fund.

“It’s what?” you might ask. Eventually, I did.

A capital reserve fund is a pool of money that condo owners should set aside a bit at a time to pay for major repairs to the “common elements,” the big expenses that come along every now and again, things such as re-roofing or paving the driveways or painting the entire place.

As always seems to happen when you don’t ask a question up front, the answer wasn’t great: Our reserve fund was, well, underfunded. We’ve recently increased our monthly fees to begin to make up for the shortfall. It’s a financial strain on some owners, and there was some opposition to the move.

Fortunately, it was nothing like what’s happening in the Northland Trailer Park.

Northland is Yellowknife’s biggest condo corp. About 1,100 people live in the 258 homes in densely populated Northland. It is the city’s largest concentration of low-cost housing, and it’s quite central, not too far from downtown and across the road from the Multiplex.

It’s also about $18-million short in its capital reserve fund. The sewage and water pipes in Northland are 40 year old and crumbling. Some have collapsed, forcing emergency above-ground sewage pipes. It’s gotten so bad the Canada Mortgage and Housing Corp. has said that it will not insure mortgages on properties in Northland until the mess gets cleaned up. Prospective buyers are going to have to cough up 20 per cent of the price to get a loan. If you have $40,000 or $50,000 to put down on a home, chances are you won’t be looking in Northland.

But there’s no money in the kitty to do the work. How did it come to this?

Tim Edwards and Northern News Services recently exposed many of Northland’s problems and the history behind them, but the bottom line is that tax dollars are ultimately going to be required if Northland is to be saved. “We have no choice but to find a way to fix it so that we don’t have a whole lot of people homeless on the streets of YK that used to be residents of Northland,” city councillor Bob Brooks told Edwards.

Some of the blame falls on territorial legislators. Only recently has the NWT inserted a clause into its Condominium Act requiring condos to conduct a “capital reserve fund study” every five years. These studies are meant to determine whether the amount of money in the capital reserve fund and the monthly contributions being made by members are enough to fund the expected costs of major repairs.

The legislation doesn’t go so far as to require condo corps to make sufficiently high monthly payments to meet the expected obligations, but it’s a start.

There is an element of buyer beware in all this. “It’s incumbent on people, when they buy real estate, to understand what they’re getting into,” says Murray Leitch, a lawyer with Lamarche Pearson in Whitehorse. A laudable sentiment, but clearly many people don’t understand, including me, with all my higher education.

The harm being caused by the debacle in Northlands – and by extension to the city of Yellowknife – is undeniable. Property values in the park have plummeted, and you can be sure that lawsuits will follow. Owners, past owners, realtors and lawyers will all be pulled into the fray.

Leitch says the Yukon has mostly escaped the blight of condo disasters. For one, there is not a long history of condo corps in the territory, but “in the last 10 years there have been a bunch of new ones,” says Leitch. “It may just be a question of time because, with new construction, you usually don’t have big problems until 15 or 20 years later.”

But they will crop up. Houses need major repairs now and again, and it is possible to hide in the anonymity of a condo corp. Possible, but not wise. The condos I live in are right at the upper limit of that age range. We now have our first capital reserve fund study. Now we have a sense of what needs to be done this year, next year, and further down the line. If we’re wise, we’ll ensure there’s enough in the kitty to cover the expenses, so there’s no chance of a giant mess somewhere down the road.