For first-time buyers, condos are an attractive option — they are less expensive than detached homes, they are found in urban areas, which negates the need for a long commute to work, and the need to keep up on house maintenance is less than a detached home thanks to condo boards.
Condos mean more security as people in their retirement years choose to do the travelling they’d been waiting to do. For similar reasons, condos are also an attractive option for people downsizing as they head into retirement. As nests become empty, the number of furnishings decreases, as does the need for space.
If you’ve never looked into condos before, here’s a look at condo fees, their use, and what you should look out for as you embark on a condo-buying journey.
What are Condo Fees?
While some developers advertise their development as having no condo fees (which will mean all maintenance and repair costs will fall on you), most condos will have a monthly condo fee in addition to the mortgage price. These fees vary based on the size of the building, the size of the unit, how many amenities are in the building, and what utilities (if any) they may cover.
What Do the Fees Cover?
Every building will be different, so ask for the fee breakdown for each condo you consider. Condo fees usually cover common areas: parking lots, lobbies, hallways, exercise rooms, elevators, etc., but not always. It may also include home owner’s insurance, lawn care, maintenance, and more. Ask for a list of everything covered in the fees.
Reserve Funds
A portion of the monthly condo fees (again, this will vary from condo to condo, so make sure you’re aware) is reserved for larger repair items: exterior repair, roofing, or a boiler unit. Be aware that as an owner, it’s your right to be made aware of these necessary upgrades. You will also need to be made aware of the cost of the repair in a general meeting, an email, a letter, or perhaps all three.
Special Assessments
Even with the best planning, some emergencies still do happen. If those emergencies arise and there are insufficient funds in the reserve fund, condo owners will be informed of a special assessment. That will mean owners must provide more funds than just the typical condo fees to cover the repair. Something to keep in mind: while at the outset, finding a condo building with a lower-than-average condo cost might be a fantastic find, it could be a sign that there is less in a reserve fund. If the unthinkable ever happened, owners would be on the hook for more than they would if a healthy reserve fund was made from an average monthly fee. Make sure to enquire about the health of the reserve fund and the history of major repairs in the past.
Are Condo Fees Negotiable?
Condo fees are non-negotiable. An owner with a 3-bedroom condo will probably have higher fees than an owner with a 1-bedroom condo. In Canada, there isn’t a cap on increases, but condo owners have a vote and sit on the condo board. So when making an offer, keep in mind that the fees won’t budge.
Why Don’t Freehold Townhouses Pay Condo Fees?
Freehold townhouses are also known as row houses. It’s different from a condo in that it has the same features as a detached home and doesn’t have any common areas. These row homes are on a public road, and all owners are responsible for the maintenance and utilities.
For more questions about purchasing a condo and fee structures, contact our experienced agents. Finding a real estate agent who knows the condo owner’s ins and outs is the first step to making your buying process more manageable. They’ll know the questions to ask, as well as have information on the various boards and buildings in the area you’re interested in living in.
