Condominium Questions

1. What are condominium fees and a reserve fund?

A condominium fee is paid in the form of a monthly maintenance fee. It is your payment for sharing the cost of operating and maintaining the condominium project. A reserve fund is part of the monthly maintenance fee and is like a savings account. This money is used to maintain the common areas of the complex. A good example would be the roof of the building. Each month a portion of your condo fees are put aside and when a new roof is required, and if the reserve has been funded properly there will be enough money to make the necessary repairs. It is more important that the reserve fund is being adequately funded than the actual amount of the reserve fund. If the corporation has completed a reserve fund study a copy of this document should be requested.

2. How can I tell if my condominium fees are appropriate?

When you purchase a condominium you are given time to review the condominium documents. In the documents supplied, you should have an operating budget and previous year’s financial statements. Review the budget as it compares to the previous years statements to see if the board is cutting any corners. The reserve fund can be the biggest portion of the budget. Ensure that a reserve fund study has been completed and that the board is currently funding the reserve adequately. If no reserve fund study has been completed then be very careful in evaluating the complex.

3. What is the advantage and disadvantage of condominium living?

Condominium living gives you the freedom to pursue your lifestyle without many of the responsibilities involved in maintaining a more traditional home. A condo can make an ideal "starter" home, often costing thousands less than single-family homes and they are ideal for individuals downsizing to a smaller home. Condos can however, restrict your freedoms through a list of rules and bylaws governing how you may use your unit.

4. What condominium documents should I expect with the purchase of my property?

The condominium documents are listed in the purchase agreement. They consist of the bylaws, the latest financial statements, the last annual financial statement, the current budget, the current insurance document, the minutes of the last Annual General Meeting, Minutes from board meetings, the Reserve Fund Study, the reserve fund plan and any engineering reports or other documents that may effect the condominium complex.

5. I have put a conditional offer in to purchase a condominium and have a condition to review the condominium documents. Now what do I do?

I recommend to my clients that they consider having their condominium documents reviewed by a company that performs this service. The company can review the documents and offer a report on the health of the complex and their reserve fund. They can discuss with you aspects of the condominium documents and help you decide if this complex is right for you. I also would also suggest that you contact the current management company and ask if the complex is facing any problems or possible changes in condo fees or special assessments. Always try to find out as much as possible before deciding to remove the condominium document condition.

6. Parking can be an issue, what are the different types of parking stalls and why is it important that this information be in my purchase agreement?

There are a number of ways that parking can be allotted in a condominium complex. The condominium complex can have titled parking (you own your parking stall and even pay property tax on it), assigned parking where the complex controls the parking and allots stalls to the owners, leased parking where the parking stalls are on a lease to the owners and may require a transfer to be registered with the condominium corporation upon transfer of the property. You may find a property where there are some indoor parking stalls and some outdoor parking stalls. In these complexes you must be aware of the bylaws and how they are allocating the parking stalls. In some complexes the selling owner may have an indoor parking stall but upon sale of the property the new owner must take an outside parking stall and get on a waiting list to obtain an indoor stall. Other complex will treat this situation differently. Get it in writing on the purchase agreement.

7. What is the difference between a condominium and a townhouse?

Condominium is a form of joint ownership; townhouse is a style of property. When you buy a single family home you own not only the home but also the lot on which it sits. In condominium ownership, you own your unit, and a portion of the rest of the property also known as common property. Ownership is divided into shares and is described as unit factors. The number of unit factors for your unit out of a total of 10,000 units, determine the dollar amount to be paid. It is also your portion of ownership of the total complex. Condominiums can come in many different styles including townhouses, apartments, villas, duplexes, even individual properties. If there is common property attached to these styles of ownership than they are condominiums. If no common property is attached then they are deeded ownership.

8. Do condominiums increase in value at the same rate as single family homes?

The simple answer is no. All markets move at different rates. There are times when single family home prices are moving faster than condos and vice versa.

9. Can I make alterations to my condominium?

Most buyers want to make some changes to their condominiums once they have purchased their home. The safest way is to check with the management company before embarking on any changes to your unit. The manager will let you know if the changes can be made or if you will need approval of the board overseeing the complex. Interior cosmetic changes such as paint should be no problem; however replacing carpet with hardwood flooring is something that should definitely be passed by the management company to ensure you are not violating any bylaws or rules and regulations.

10. What are the biggest differences in condominium ownership rather than single family home ownership?

The biggest difference in condominium ownership is the fact that you have to live within the rules of the corporation. Most of the rules are there to ensure you have quiet enjoyment of your unit. Another advantage of condominium living is that it is a simpler lifestyle with less maintenance issues. Condominium corporations maintain the common areas of the project for you. Finally, clients like the fact that they feel a sense of safety in condominiums and don’t mind heading off on holidays knowing that the place will be OK.