A condo’s declaration is the basic document that defines the legal agreement between the condo corporation and the individual condo owners. The declaration should provide a definition of the building’s shared spaces, individual unit’s boundaries, as well as the portion of the common expenses are owed by a given unit. The amount paid to common expenses may vary from unit to unit depending on size or placement in the building. The portion of the common expenses paid by the condo owner will make up a part of the monthly condo fee. The declaration also lays out any restrictions there may be on use of the building and use of the individual units such as whether tenants can have pets etc.
Declarations are different from building to building and are written in legalese, which can sometimes be a challenge, we always recommend that you have a lawyer take a look at them before committing to a building that may not be right for you.
The condominium board of directors or condo board is an elected group of condo owners who are responsible for the administration and by-law enforcement of the condominium. Each condo development will have a board who are elected by the condo unit owners. The condo board cannot have less than three members and in larger condo corporations may have more members. The condo board would direct the management company in their duties and determine maintenance costs and time-lines and convey this to the rest of the unit holders.
A special assessment isn’t actually as awesome as it sounds. A special assessment is imposed when a maintenance issue presents itself that cannot be covered by the reserve fund. The condo board would determine the amount needed and each unit is then required to contribute the additional amount. The amounts that each unit pays is divided proportionally the way the condo fees are divided. These payments, once determined as necessary, are not optional, everyone must pay their share.
Things that might arise that could force a special assessment would be thing like a building’s furnace becomes inoperable or there is a major plumbing issue.
As soon as a special assessment is considered advance warning should be sent out to the condo owners and this information must be made available to potential buyers who are considering the building. The buyers can then make the decision to accept the cost or negotiate the fee with the seller.
A reserve fund is a savings account put in place by the condo board and contributed to by all unit holders in the condominium through their condo fees. The funds are accumulated in accordance with a reserve fund study that assesses the various common components of the structure. The common components include the exterior (roof, windows, doors and paving), systems (heating, plumbing and electrical) and the building amenities (fitness centers, social rooms and pools). The reserve fund study is conducted when the building is complete and projects when the various components of the building will require major repairs or replacement. A new reserve fund study should be done every five years to maintain accuracy of the projections.
The amount invested by each unit is based on the percentage of the building the unit owns; this is divided in various ways, some equally, some based on square feet, and some on the location in the building.
At times the reserve fund will appear to be very robust and other times to be very lean, this should not be reason for alarm as there is usually a reason behind the numbers. The condo board will save up funds for a major project, spend them on the upgrades and begin to save again for the future.
Ultimately the reserve fund is another layer of protection for the condo buyer. Imagine buying a house that came with a pre-set savings fund for future repairs as well as already having a good sum saved up. There is security in knowing that you have money in the bank for when those things come up.
An estoppel certificate is a binding document drawn up by a condominium corporation that states the financial standing of a given condo unit as well as that of the condominium corporation itself. It should detail if there are any assessments to be paid toward repairs of the common elements of the building, and if the unit you are considering owes anything against them. The document should also have the balance of the reserve fund and if there are any planned expenditures in the foreseeable future. The percentage of the common elements the unit owns and thereby how much the condo fees will be per month are also found in the estoppel certificate. The document will also have the contact information of the condo management company if there is one, and the names of the condo board members.
The estoppel certificate is issued along with the most current copies of the condominium declaration and the by-laws. These should all be provided to the buyer ten days in advance of closing and the buyer then has an opportunity to bring up any problems with the finances at this time, and even the ability to terminate the deal if the financial standing is unacceptable to them. Termination of the deal is fairly uncommon as typically the buyer will have seen a recent version of the condo boards meeting minutes and any large expenditures are usually discussed in the meetings.
The binding disclosure of the estoppel certificate offers an additional level of security to a condo buyer, allowing them peace of mind in the transaction.
Condo Fees Posted on Oct 02, 2012
Condo maintenance fees are your percentage of the total cost of managing and maintaining the condo building that you live in. They typically cover things like common area cleaning, snow and garbage removal, and landscaping. In a well managed condominium, there should also be small monthly deposits coming from the condo fees going into a reserve fund, these are saved for larger long term maintenance projects such as replacing windows, resurfacing the roof, plumbing repairs etc.
Some smaller condos and townhouses that have fewer amenities may tend to have lower fees. In some buildings the fees may be slightly higher if there are additional services and amenities such as security guards, concierge service, pools and hot tubs, or gardens that require extensive landscaping.
Condo fees can fluctuate slightly, increasing when there is a large project in the coming years and decreasing after the job is done. This information can often be found in the condo board meeting minutes with a little looking.
Condo fees should reflect what it would cost to maintain a home, provided you were saving for long term maintenance, and had someone to take care of shovelling your walk, etc. In the end, if the condo fees seem too high there may be a reason for it, and a skilled REALTOR® should be able to help you find out why.
A condominium, or condo, is typically defined as a form of real estate that is a unit within a larger building, the owner of a condo within the building then has access and use of the common facilities such as the plumbing, and heating system, as well as hallways and elevators. Many condo buildings include common facilities such as underground parking, fitness rooms, party rooms that can be booked out, rooftop terraces, pools and hot tubs, and the list goes on. These common facilities are covered by the condo fees, the access to these areas and management of them are executed under the legal rights that come with ownership of one of the units in the building.
Condo usually refers to an apartment style unit, however there are many forms of condominiums such as townhouses, commercial condominiums, and flat land condominiums, to name a few. The common thread between them is an ease of use for the condo owner, the knowledge that your property will be cared for when you are away on vacation, or when work becomes too busy to take the time out do those maintenance projects that need to happen.
More than just shared maintenance costs, a condo building is a vibrant community living in a convenient, efficient way.