Who is eligible?

To qualify for assistance through the Reconstruction Program:

• you own a leaky condominium or a home where the building envelope has deteriorated sooner than expected due to defective construction;
  
• you do not have savings or investments that could be used to pay for repairs (pension plan, RRSPs, and $10,000 in liquid assets are exempt from this calculation);
  
• you do not have enough equity in your home to qualify for a standard loan;
  
• you cannot afford the monthly loan payments of a standard loan to pay for repairs; and
  
• your home is located in the coastal climatic zone.

Are owners of townhouse, duplexes and single-family dwellings eligible to receive loans?

Yes.

What if I knowingly buy a unit in a building that has a premature building envelope failure?

You will not likely be eligible for the no-interest loan. You should call the Homeowner Protection Office for more information. The program was established to assist home owners that have been faced with significant deterioration in property values, and are facing financial hardship such that they may be faced with the loss of their primary residence as a result of premature building envelope failure. These homeowners have been victimized by leaky condo problems of which they had no knowledge when they bought their homes.

Am I expected to cash in my RRSPs?

No.  Homeowners will not be required to cash in their RRSPs, pension plan assets or their first $10,000 in liquid assets.

Can I get a no-interest loan if I do not live in the leaky-home?

Yes. If you moved out of the leaky home in order to rent it to help pay for the repair costs, then you still could be eligible. Also, if you cannot afford to repair the leaky home and cannot sell it for at least the combined amount of your mortgage and cost of repairs, then you could be eligible for the no-interest loan as long as you do not own other property that could be mortgaged to pay for the repairs of the leaky home.

Can I get a no-interest loan if I own three or more real estate properties?

No, in most cases you must own no more than two real estate properties (homes) in order to qualify for a no-interest loan. The mandate of the loan program is to ensure no one loses the home where they live because they cannot afford to pay for repairs to premature building envelope failures. The program recognizes that some people moved out of the leaky home to help afford repairs or because they could no longer live in the leaky home. The program also recognizes that some people bought homes not knowing that they were leaky with the intention of moving into them later, often after they retire. These people can still qualify for a no-interest loan even if they own another home as long as neither home can be mortgaged to pay for repairs to the leaky home. However, the mandate of the program does not extend to protecting real estate investments. People who make real estate investments take the risk that their investment decisions will be good ones just as people do who buy stocks. Although the losses caused by premature building envelope failures may not be foreseeable to the real estate investor so are the loses often suffered by the stock investor. Furthermore, real estate investors may be able to deduct the cost of repairs when preparing their income taxes. People who pay for repairs to their principal residence do not have this advantage.

The Reconstruction Loan Program mandate is to protect people from losing the home where they live but this mandate does not include the protection of people’s real estate investments. We conclude that homes are real estate investments when the owner owns all or part of three or more real estate properties. Nevertheless, even real estate investors can qualify for no-interest loans for the home in which they live.

If I have already started or even finished the repairs to my home, could I be eligible for a no-interest loan?

If you have already started or have finished the repairs to your home, but you meet all the eligibility criteria for the loan, you might be eligible to receive the loan and should submit an application. Each loan application will be evaluated on a case-by-case basis by a loans officer at the HPO.

If I do not have a mortgage, could I still be eligible for a no-interest loan?

Yes. Eligibility for the no-interest loans is based upon your ability to pay for the repairs to your home. If you have paid off your mortgage, but still have no means to pay for the required repairs, you should apply for the loan. Homeowners who might have savings, but limited or no income should also consider applying. Homeowners are not required to cash in their RRSPs, pension plan assets or their first $10,000 in liquid assets. Homeowners with the ability to pay for repairs will be required to do so.

Will I have to sell my car?

No. The liquid assets calculation on the loan application includes money in a bank account, term deposits, GICs, mutual funds, securities, stock, bonds, etc., not vehicles.

Are there any "hidden" costs to getting the no-interest loan?

There is a legal fee for preparing papers and registering your loan against your property. The amount of the loan would be increased to include these legal costs.

What is the maximum loan available?

There is no maximum. If you meet the eligibility criteria, you will be able to secure a no-interest loan for the full amount of the repairs.

What is the repayment schedule for the no-interest loans?

The repayment schedule varies depending upon your individual circumstances.

Your monthly payment on all mortgages plus the no-interest repair loan will usually be 25% of your gross household income and, in some extreme circumstances, the monthly payments can be a low as $50.

The term of the loan will normally be five years. Upon maturing, the outstanding balance on the loan must be refinanced by combining it with your first mortgage loan assuming at that time you are able to qualify for such refinancing.

If you do not qualify for this refinancing, then the loan can be renewed for another term of up to five years.

A list of qualified, licensed Building Envelope Renovators is available on the HPO Web site or by calling the Homeowner Protection Office.

Do I need to put up any security?

A mortgage will be registered against the title of your home as security. This mortgage will rank in priority after all existing mortgages on your home.

Will I have to pay tax on the no-interest loan?

No. The Homeowner Protection Office has confirmed with the Canada Customs and Revenue Agency that homeowners will not have to pay additional taxes as a result of receiving a Homeowner’s Reconstruction Loan to repair their home.

What process needs to be taken once a leak has been found in a condominium?

Your strata council should be notified immediately of any leaks that may be occurring within your building. Next, your strata council will likely contact a professional engineer to evaluate the extent of the water damage. If the strata council requires assistance or has any questions about the process to fix the building envelope, they should contact the HPO.  For more detailed information see "Managing Major Repairs:   A Condominiums Owner's Manual" and the Consumer Information page.

Last Updated: January 07, 2003