I’ve decide to write a blog as a source of information for potential buyers and sellers and I encourage all comments and feedback- the greater the dialogue the better for everyone
The issue of monthly maintenance fees comes up quite often when showing clients Condominium properties and I find there’s a general lack of understanding with respect to maintenance fees. Maintenance fees are a cost that’s incurred as part of Condominium ownership and are paid on a monthly basis.
Many buyers tend to assume that if one Condo Town home complex or Condo apartment building has cheaper monthly fees compared to another then it’s a better opportunity or deal. Nothing could be further from the truth- the expression “you get what you pay” applies here without a doubt. The Board of each Condo complex or Condo building determines what services will be offered and what type of maintenance will be provided and what the cost will be to each owner per month to provide these services and coverage.
Maintenance fees vary from one complex to another and you should be very careful not to assume they provide equal coverage for dissimilar costs. Most Condo Town home maintenance fees will cover the landscaping of the common areas, snow removal in the common roadway, repairs to elements in the common area ie curbs, lamps, sidewalks, parking, fences as well as liability insurance for the common areas.
A portion of the monthly fee is allocated towards what’s known as the reserve fund and the reserve fund is what’s used to pay for the capital (major) repairs in a complex as determined by the Board. Under Provincial law, every Condo Board is required to complete a reserve fund study which identifies what capital repairs may be required over the next 5 years and the corresponding cost to perform those repairs. Depending on the cost of the repairs, the amount of money currently in the reserve fund, expected revenues until the repairs are to be completed will then determine whether there will be enough money on hand to complete the repairs. If not the Board may have to increase the monthly maintenance fee cost accordingly to ensure there will be sufficient funds otherwise they’ll have to implement what’s known as a special assessment/levy to cover the reserve fund shortfall.
If you decide to purchase a Condominium (of any type) your Agent must include a condition that makes your offer conditional upon a satisfactory review by you and your lawyer of all of the documents contained within the status certificate. The status certificate identifies the rules, regulations of the complex, details from the most recent reserve fund study as well as the amount in the reserve fund itself.
If for any reason during the review of these status certificate documents you or your lawyer are not satisfied with what’s contained in the status, then you have the option to walk away from the purchase within a specified period of time without any penalties or deductions
Remember the following
- never assume the maintenance fee coverage is the same from one complex to the next
- maintenance fees are not for profit
- and with respect to repairs, you’ll either pay now or pay later