Buying a condo can be a great option for a first-time buyer, someone planning to downsize or as an investment property. It's important to understand what condo fees are & how they work. These are answers to some of the questions we are asked the most.
What are condo fees?
Condo fees (aka maintenance fees) are the monthly contributions made by the unit owners to the condo corporation. They are the same costs that you would incur as a homeowner but the money from all the condo owners is pooled together to fund the maintenance and general upkeep of the building. This is a fee that is in addition to your mortgage & must be factored in when applying for a pre-approved mortgage.
Who is the condo board & what do they do?
The condo board is made of elected members who are residents of the building. They manage the property on behalf of the residents. They set the fees, decide what are considered common costs, although typically they include utilities, a reserve fund, common area maintenance & the cost to maintain amenities.
Monthly fees
It is important to note that every building is different. As far as utilities are concerned water, heat and electricity are often included, but not always. It’s important to check with your realtor to make sure you are clear about what utilities are included in the fee.
What is a reserve fund?
The Condominium Act, 1998 requires that all condominiums have a reserve fund. The reserve fund is a special account that is separate from the operating fund. It is used for major repairs or replacements of common elements. A portion of each condo owners’ fees are deposited into the reserve fund every month. It is intended to ensure that the corporation has enough money for future repairs.
Common area maintenance
Common area maintenance can include everything from landscaping, snow removal & garbage pick up. It could also cover the salaries of property managers, security guards & cleaning staff.
Amenities
The better the amenities the higher the costs. Pools, saunas, concierge services, & shared roof tops all add to your condo fees but are often considered well worth it.
What is a special assessment?
If there is a budget shortfall, the condo corporation can force an extra one-time charge to cover unforeseen costs. This could include urgent repairs, changes in regulations… In a well-built, properly managed building this should be very infrequent.
If you are thinking about buying a condo, give me a shout. It can all be a bit confusing, I’d be happy to chat with you about the pros and cons…
Post a comment