Every condo owner in Canada has to pay condo fees. Why?
Owning a condo isn’t exactly the same as owning a detached house. A condo is part of a small community, and condo fees are like a subscription fee for belonging to that community. Condo fees cover a range of important things.
In this article, we’ll explain which things condo fees cover, and how condo fees are calculated.
Condo fees are a mandatory monthly charge that everyone who owns a condominium must pay.
These fees go to the condo corporation—an entity shared between all owners that operates the building and is in charge of all the common property. Condo fees are also known as strata fees, maintenance fees, or co-ownership fees.
The condo corporation uses these fees for many things, like maintenance, landscaping, insurance, and more. We’ll go over what condo fees cover in the following section.
Condo fees are set for each unit, and are non-negotiable. When you buy a condo, the fees are the fees, and you don’t get to negotiate that aspect of the purchase. You can, however, find out what the fees will be before you make an offer, so at least you can budget for them.
Since condo fees are mandatory, there’s no way to skip out of paying them if you’re a condo owner. Someone who’s way behind on condo fee payments can find themselves in serious legal trouble with the condo corporation—even being forced to sell their unit in extreme cases.
Condo fees are separate from mortgages, and separate from property taxes. So, while condo living can be an affordable way to get into homeownership, it’s important to budget appropriately.
Condo fees cover several things, some of which are unique to condo buildings.
One of the most important things that condo fees go towards is the condo building’s reserve fund. The reserve fund is money set aside for major, irregular expenses that the condo corporation may have to pay for. A portion of every month’s condo fees go into the reserve fund.
Reserve funds are mainly for significant repairs or replacements that the condo corporation’s insurance policy won’t cover. For example, replacing an aging HVAC system doesn’t fall under insurance, so the condo building would have to pay such a cost out of their reserve fund.
The reserve fund can also be used for things like repainting the building’s exterior or repaving the parking lot. Any maintenance or repair task that’s not routine may get paid out of the reserve fund. Elective upgrades often require an owner vote before any reserve funds can be spent.
If a major repair comes up and the reserve fund doesn’t have enough cash in it, the condo board can issue a special assessment. A special assessment involves each owner pitching in to pay for the difference.
While condo owners are responsible for maintaining the interior of their homes, everything else on the condo property is the condo corporation’s responsibility. Maintenance costs money, and that money comes from condo fees.
Things like mowing lawns, washing windows, trash and recycling pickup, and snow removal all get paid for by the owners’ condo fees.
The condo corporation must have a master insurance policy that covers the condo building. Part of each owner’s condo fees go toward the master policy premiums. Despite this, each owner needs to have their own condo owner insurance as well.
Most large condo properties hire a property manager to oversee day-to-day operations. Condo fees pay for the property manager (or management company).
In addition to a property manager, some condo buildings have additional staff. Caretakers, door attendants, security, and any other on-site staff are all covered by condo fees.
Condo fees normally cover at least some utilities, like electricity and water. Heat may also be included, depending on the building’s heating system. Telecommunications like cable or internet are rarely included in condo fees.
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Condo fees feature many variables, so it’s hard to say how much condo fees are for any given property. Broadly speaking, they range from about $150 to $500 per month, though there are many outliers on either side.
The location of the condo is one of the most important factors. Condo fees tend to be higher in Ontario than they are in BC or Quebec, for example. This is at least partially due to differences in provincial condo legislation.
Another important factor is the building itself. Old condo buildings often have higher fees, because they have higher ongoing and projected maintenance costs. Large buildings often have lower fees than small ones, because costs are split amongst a greater number of owners.
The amenities in the building influence fees as well. A building with a pool, fitness centre, and racquetball court would have additional fees to cover the operation and maintenance of those amenities.
But, perhaps the most significant factor that determines condo fees is the individual unit. Even within the same building, not every unit pays an equal share of fees. An owner’s share of fees is equivalent to their share in the condo corporation.
Contrary to popular belief, condo fees aren’t always strictly tied to square footage, though there is usually some correlation between unit size and share size. You may see this unit share referred to as a unit entitlement or a unit factor.
Example
Picture a condo building with 10 one-bedroom units and 10 two-bedroom units. Let’s say there are 250 total shares in the condo corporation. The shares might be broken down like so:
The building needs $12,500 each month to cover its operating costs and set aside reserves. Split amongst the 250 shares, that’s $50 per share that needs to come from condo fees.
So, each one-bedroom unit would pay $500 per month in condo fees (10 shares times $50), while each two-bedroom unit would pay $750 per month (15 shares times $50).
When a new condo building is constructed, the developer sets the unit entitlements. After that, they’re changed very rarely. Normally, the only way to change entitlements is through a unanimous owner vote, though there are exceptions depending on provincial laws and the condo’s bylaws.
Want to learn more? Visit our Condo Owner resource centre for more helpful articles about the intricacies of condo life. Or, get an online quote in under 5 minutes and find out how affordable personalized home insurance can be.
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