What are condo fees? What do they cover? How are they calculated? Condos are becoming a very popular choice for Canadian home buyers, but many buyers are not doing their research before deciding if this lifestyle is for them.
Affordability and a “maintenance free” lifestyle are a large factor in a shift to condo living, however, they are not the only factors. They also include a sense of community, easy access to urban conveniences, public transit, and employment.
What are condo fees?
Condo owners pay a regular, non-negotiable fee that is typically paid out monthly. The fees are calculated by each individual's share of the condo building - larger units have to pay a greater fee, and additional parking spaces with each condo will also increase your fee. The fee is reviewed annually and adjusted based on the condo’s operating budget.
What do condo fees cover?
Utilities, common areas, and reserve funds are how condo fees are divided.
A large portion of your condo fee will go towards utilities such as water, gas, hydro, and heat. However, with newer condominiums being built heat and hydro tend to be paid separately by the individual owner. Be sure to see a breakdown of included utilities in your fees before purchasing.
You know those amazing amenities that you use? You have to contribute to their upkeep. A condo with an extensive list of amenities will have higher condo fees. Be sure to make sure you will be willing to use things like the gym, pool, indoor and outdoor areas because even if you do not use them - you will still be paying for them.
We have already mentioned the draw to condos being a “maintenance free” lifestyle, but just because you are not doing does not mean that no one is doing it. Garbage removal, snow removal, cleaning, yard maintenance, etc. are all included in your fees.
A portion of your condo fee is set aside in a reserve fund. Every condo board must maintain savings for pricey occurrences that are inevitable to arise. Materials start to deteriorate in a condo just like a detached home, therefore money needs to be set aside for big-ticket items - roof replacement (that can cost half a million dollars).
If you are considering purchasing a condo, make sure you incorporate the condo fees into your budget. Condo fees will increase so make sure you are able to keep up with increasing prices.
Include the condition of reviewing the status certificate before having your offer firm up. The status certificate contains important details regarding the condo’s financial status. Have a lawyer review it and take the time to understand it yourself. The document will include the reserve fund, maintenance fees, any litigation history, and any potential increases that are planned for the near future.