When you purchase a condominium, there is a monthly fee payable to the condo corporation. This fee is made to cover the operating costs of the building. It is non-negotiable and is usually calculated depending of the size of your unit and sometimes number of parking spaces you own. Smaller unit owners in a building would pay a lesser amount than owners with larger units. Not every condominium is the same and they all differ as to what the condo fees include. It is important to ask your Realtor or lawyer what fees are associated with the unit you wish to purchase, so you won’t have any surprises. Every unit owner contributes common expenses in proportions that is outlined in the declaration. This fee can include water, hydro, gas, common elements, insurance costs. Cable and Internet costs are almost never included in the condo fees. Any default in payment can result in a lien against the unit’s owner (including legal costs and other expenses), which can be enforced in the same manner as a mortgage.
Condo corporations are non-profit organizations, so they don’t pocket any of the remaining condo fees that they receive. There is however a reserve fund that holds extra money in case of an unexpected large expense that might arise, such as a major repair and renovation. These funds are collected from common expenses and must be held in trust. Its important to do your due diligence and find out exactly how much the reserve fund holds. If it doesn’t have much money in the reserve fund, if a major repair or renovation needs to be done, every unit owner in the building will have to cover the bill. This is called a special assignment, when the repair cost exceeds the amount in the reserve fund, and the remaining balance is billed to all unit owners.
Its always wise to get a copy of the status certificate. This provides a lot of information for the buyer, it is a document containing information regarding the operational, legal and financial dimensions of the condominium corporation. Anyone can request a copy and it must be delivered within 10 days. The corporation can also charge up to $100 for the certificate.
Here is a list of what is included in a status certificate:
- Corporations address, directors and officers names
- Statement of common expenses
- Amount payable for the unit for common expenses
- Particulars of any increase in common expenses for the unit since the date of the current year budget
- Statement concerning any assessments relating to the reserve fund since the date of the budget for the current year
- Information concerning any applications regarding amendments to the declaration
- Current budget
- Copy of current declaration, by-laws and rules
- A listing of various current agreements
- Owner compliance with current agreements regarding modifications that relate to the unit
- Particulars concerning the most recent reserve fund study and the amount of the fund
- Number of units leased
- Certificate of current insurance policies
- Any planned or proposed additions, alterations or improvements to the common elements
Before making a firm offer on a unit, I would strongly suggest reviewing the status certificate incase there are any major problems with the condo corporation, such as if they are getting sued by someone or have financial problems. As I stated before in order to find out exactly what the condo fees cover and how much you will have to pay, all that information will be showed in the status certificate.
If you have any additional questions, I would be happy to help you. You can contact me here
Kris Vindbergs
Realtor with Century 21 Heritage Group
647-382-8732