Condos are an attractive option for people looking to downsize, minimize yard work and house maintenance, or, simply want to enjoy various amenities. However, these benefits come at a price, meaning condo fees, which can add up with your other monthly bills. That’s why it’s important for prospective condo owners to know what to expect.
What are condo fees?
Separate from your mortgage, condo fees are monthly, non-negotiable fees that typically go towards general expenses such as upkeep, repair, and building insurance.
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Ranging from $50 to $1,000, condo fees depend on multiple factors such as square footage, age of the property, whether it’s a highrise building, how many buildings are in the complex, and of course, the amenities included. Keep in mind that the more amenities the building has, the higher the condo fees will be.
What do condo fees cover?
Remember that lack of maintenance that drew people to the condo life? Well, someone has to do it! Things like window washing, lawn care, and snow and garbage removal are some of the types of services included in your fees, as well as administration costs for managing the building.
A large chunk of the fees also goes towards utilities such as water, heat, and hydro. Although some newer buildings are being equipped with individual heat pumps that are controlled (and paid) for by the unit owner, it’s important to check what condo fees cover in your specific building.
What is the reserve fund?
Acting like a savings account for the building, a portion of the condo fee goes into the reserve fund. This is where the money comes from for big repairs like a roof replacement. If the reserve fund doesn’t cover the entire bill, then each condo owner will have to pitch in and pay their proportionate share to cover the cost. This is called a Special Assessment.
What is a status certificate?
The status certificate contains important details about the condo’s financial status, such as the building’s budget, information about the reserve fund, current maintenance fees, any pending legal matters, and any increases that are planned in the near future. This is an important document that any prospective condo owner should request. It can cost about $100.
Condo Insurance
Condo insurance is important to have as it protects the contents in your unit such as appliances, clothing, and furniture, as well as items stored in a locker. It also provides coverage for additional living expenses in the event of an insured loss (if you have to temporarily vacate the premises) as well as liability coverage.
Although somewhat similar to homeowners insurance, one major difference is that you are buying coverage to protect your unit and belongings, not the entire building. That’s where building condo insurance comes in.
Condo building insurance is purchased by the condo corporation to cover damage to the building and common areas and liability on the property, which is usually also covered in your condo fees.
Is condo insurance mandatory?
While home and condo insurance is not mandatory in Canada, you will need it to secure a mortgage. Also, the condo association may require you to have it before you move in, so always be sure to check the rules and regulations of the building beforehand.
If you’re unsure about what condo insurance coverage to get you can always ask your insurance advisor.
Condo vs strata — What’s the difference?
In some provinces, such as British Columbia and parts of Alberta, condominiums are referred to as strata housing. A “bare land” strata refers to a condo with little-to-no amenities and only a few common areas, mostly found in older buildings. This term can also refer to townhouses, duplexes, and some single-family homes (strata subdivisions).
Condo costs recap
When considering condo ownership, keep in mind that each unit owner is responsible for paying their condo fees as well as their mortgage, property taxes, and insurance, along with other monthly bills such as cable/internet and cellphone.
By incorporating the condo fees into your budget ahead of time, you can help avoid surprise costs and find the perfect condo for you. Still, make sure you leave a buffer because as the building gets older the fees can increase – which is at the discretion of the condo board. Looking for a condo in Toronto? Surex has a guide on what you need to do before finalizing the sale.
