Quote:
Originally Posted by Winsor_Pilates
If they've already completed construction without going bankrupt, the chances of strata fees doing them in is slim to none. Financiers would have cut the strings during construction if the developer's finances are that bad and minimum sales requirements haven't been met.
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Most projects in Canada are financed at about 15% equity, with the remaining 85% financed. Probably about 65+% of suites need to close to get a project loan paid out, or interest on the remaining loan keeps on getting charged at an increased rate once the loan is past due. If a building is less than 50% sold, you have big problems, but paying strata fees is the least of them. Lots of developers have also been using mezzanine financing as their project equity with terms of up to prime +8 during construction and prime +12 after construction is completed which compounds this even more.
And financiers are very hesitant to cut lending strings during construction as it will most likely let existing sales contracts off the hook and delay the project for up to a year, which is almost always a worse option than working with the developer to finish the job, even if enough sales aren't in place.