So you want to buy a Condo?
Condo ownership can be an attractive alternative to traditional home ownership – with fewer repair and maintenance responsibilities, access to amenities, and other lifestyle benefits. Condominiums can be a great option for young professionals looking to live near urban cores, or seniors looking for access to a community with social and recreational activities. However, it’s important to weigh the benefits with some of the drawbacks: typically buyers will sacrifice living space, some privacy, and some freedoms to abide by the rules of the condo corporation.
Contrary to popular belief, a condominium is a style of legal ownership, not a type of construction. Condos come in many forms, including apartment-style high-rises, suburban townhouses, rural cottage country communities, and even vacant land. When buying a condo, you are purchasing a private dwelling “unit” – to be registered in the owner’s name. Typically, a condo owner will also share ownership of common building or community elements – including lobbies, corridors, elevators, gardens, and other amenities.
The Fees
In addition to paying monthly mortgage and property taxes, Condo owners are responsible for another monthly payment – condo fees. Condo fees generally cover the upkeep and replacement of common property elements, as well as contributions to condo corporation management costs and the reserve fund. The purpose of the reserve fund is to cover the estimated costs of future maintenance and repairs. Major common element repairs could include the roof, sewers, elevators, sidewalks, windows, or other building systems. A reserve fund study is typically conducted by an independent professional and used to tell condo owners how much money should be paid into the reserve fund. Depending on the state of the reserve fund, and the fluctuating nature of repair and maintenance costs, condo fees may be adjusted over time.
Governance
The condo corporation’s business affairs are governed by a board of directors, generally made up of individual condo owners, and elected by other condo owners. Condo boards hold regular meetings to handle the finances of the corporation, and make decisions regarding upkeep and repair of common elements. While the board makes many decisions on behalf of the rest of the condo owners, certain decisions are put to a vote among all unit owners.
A Condo Bylaw governs how the condo corporation is run. This document frequently covers matters such as the election and responsibilities of the condo board, how meetings are conducted, how condo fees are collected, and how rules are passed. Rules spell out the rights and obligations of individual unit owners. Condo rules typically cover pets, noise, parking, amenity hours, unit renovations, and short-term rentals (Airbnb).
Due Diligence
Reviewing the rules prior to purchasing a condo is extremely important, as the rules will ultimately impact how you are able to use your condo. Other important documents to review include the reserve fund balance and the reserve fund study, the bylaw, insurance information, and any other financial disclosures. Typically, this package of information is included in an Estoppel Certificate – to be reviewed during the condition phase of purchasing a condo. Like buying a traditional house, condos should also be inspected during this phase for any potential deficiencies.