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Wednesday, 28 August 2013
Before you buy, be sure you understand – and can afford - your condo fees
By Todd Fryer
Condominium maintenance fees are a monthly charge the owner of a unit must pay to cover the costs of items such as building insurance, upkeep, repairs to common areas including the grounds, the heating and cooling system, water and sewer pipes and property taxes. A portion of those monthly fees are also set aside and put in a reserve fund, or rainy day savings account, for future expenses like a new roof or furnace.
In Ontario, when you buy a condo, your maintenance fee is predetermined by the developer and is outlined in the Schedule of Declaration. Based on the size of each unit, a percentage of the common expenses is allocated to each unit so that the sum of the whole adds up to 100 per cent.
A budget is then drawn describing and adding up all expenditures that the condo corporation will incur for a year. Each suite is then assessed its annual proportion of these expenditures. For example, if your annual fee is determined to be $2,000 a year, that’s $166.67 to be paid on the first of every month.
If the budget does not change, the maintenance fee stays the same. But if costs increase by two per cent then all owners’ fees will increase by two per cent.
Special assessments could also drive up maintenance fees. It’s an additional payment a condo board imposes on unit owners when there’s an unexpected shortfall or expense to be covered and there’s not enough in the savings to pay the bill. For example, a flood in the basement or wind damage to the grounds could prompt the extra payment. Just like monthly maintenance fees, condo owners must pay special assessments. Owners can’t vote on whether or not to levy that assessment.
Like maintenance fees, special assessments are proportional. A smaller suite will pay less than a larger one.
In Ontario, special assessments are more commonly enacted in condos built before 2001, when the Condo Act didn’t enforce boards to do reserve fund studies, which, like a home inspection, roots out potential problems in the future and ensures there’s enough money saved to cover those costs.
Before you purchase a condo, be sure you know how much you will have to pay in condo fees. Your realtor and lawyer will help you decide if the fees are reasonable and if the condo fund appears to be managed properly.
Any questions give me a call Todd Fryer Broker Century21 Aberwin Realty 905 869-3473