Condo Questions You Never Thought to AskWritten by Jemima Codrington
First, reserve funds requirements vary from province to province, so if you’ve invested primarily in Ontario and are now looking at a property in B.C., be sure to check what the provincial stipulations regarding the review of reserve funds are. In Ontario, it is mandated a condo has to undertake a Reserve Fund Study “periodically”, but this can be anywhere between 3-5 years. Make sure the reserve is proportionate to the age of the building – the general rule of thumb is to invest in condos that have a reserve fund comprised of 10% of their operating budget.
It should go without saying, but do due diligence on who’s building your condo. Hot markets bring several developers to the area to start setting up shop, but have they a reliable portfolio? What is condition of their existing inventory? Which contractors do they work with? The CMHC advises reviewing paperwork such as a disclosure statement, technical audit, and documents regarding bylaws and zones, etc.
Take a look into the financial and legal history of the developer. Many major markets will have independent bodies that collect research on these kinds of statistics, plus you can utilize tools like the Better Business Bureau and your local condo board. Whether there are lawsuits between condo owner and developer, manufacturer, architect – it pays to get the facts to see what is being contended, and if it could wind up being a deal breaker.
The days of self-governing condo associations are fading as developments grow in size and scale. Many condo associations are opting for the help of a registered firm or individual to take care of issues such as budgeting, physical building maintenance and handling homeowner complaints. Knowing who takes care of these issues will help you gage how long it will take for them to be resolved.
A portion of monthly condo fees are put towards insurance for common areas, whilst individual homeowners can insure their own units and renters can opt for tenant insurance. Make sure to note which areas specially count as “common areas” and are therefore covered, and more importantly, which are not. Master Insurance policies can either be “Bare Walls-In”, which covers the physical property but not necessarily things like countertops and fixtures, or “All-In”, which covers installations as well as construction.