C Condo ownership continues to grow in popularity, offering locations that are usually convenient to services, entertainment, shopping and transport, with recreational facilities, some type of security system and a care-free, low-maintenance lifestyle.
Choices range from Luxury Suites and Townhomes for those who can afford a Detached Home but prefer the Condo Lifestyle, to Affordable Suites and Townhomes offering a great range of options to First Time Buyers,New Canadians,Singles, Empty Nesters, Smaller Families and Income Property Investors.
Whatever size and facilities you require there is probably a Condo that's right for you and I'll be happy to help you find it. Just e-mail specs to paul@buyerscall.com and see all the details on properties that match your needs and budget.
But first, its important to know how a Condo differs from owning a Freehold property ....Detached, Semi, Duplex, Freehold Townhome etc .... and to understand the Differences between various types of Condo and between a Condo and a “Co-op”
Ownership
A Condominium typically has 2 portions;
1/ The unit interior, which is individually owned in much the same way as owning a house
2/ The ‘common elements’ such as the building exterior, grounds, lobbies, corridors, elevators, pools, recreation facilities, roof air-conditioners etc which are jointly owned by all of the unit owners.
In some cases there will also be ‘exclusive use common elements’ for instance Balconies, Patios, Parking Spaces or Lockers where each is for the exclusive use of a particular unit owner but are part of the ‘common elements’ for purposes of ownership, insurance, maintenance, and repair
When considering a Condo Apartment, find out whether the Parking Spots are ‘owned’ or ‘exclusive use’. On a day-to-day basis it is not important but if the Space is ‘owned’ there is a separate deed so that you or a future owner would have the option of selling it separately from the unit.
Condominium Fees
In addition to Mortgage and Property Taxes each unit owner pays a monthly ‘Condo Fee’.It is very important to know what is and is not included in the Fee
- For most Condominium Townhomes the Fee will include all Exterior Repairs and Maintenance (Driveways, Roofs, Windows, Doors, Gutters, Drainpipes, Fences )as well as Insurance on the Building itself. In some complexes the fee will also include Landscaping and Snow Removal and in some it will also include Water & Sewer costs and occasionally Cable Television. Each individual unit owner will separately pay for their own Interior Repairs and Maintenance, Contents Insurance and Utilities…. as well as Water & Sewer and Cable if not included in the Fee.
- For most Condo Apartments and Lofts the Fee will include all Exterior Repairs and Maintenance, Repairs and Maintenance to the Common Elements, Security Guards or System, Building Insurance and Water & Sewer costs. Some will also include Cable and / or Wireless Internet. Many also include Utility Costs ( Heat & Electric) though don't just assume this as the trend on newer buildings is to have separate meters so that each owner pays directly for Utilities according to how much they use.
- For “Common Elements Condos” or “Vacant Land Condos” which are relatively new types of ownership for certain Detached or Town Homes, the Fee will often only cover Landscaping and Private Road Maintenance. As an individual owner you will still be responsible to pay your own Building Insurance, Contents Insurance, Repairs and Maintenance and Utility Costs
Whenever you look at the Full Realtor Listing Detail for any Type of Condominium it will show the Monthly Fee and will show a ‘Y’ for YES by the various items that are included and a ‘N’ for ‘NO” by the items that are not included so you can compare ‘apples to apples’ when you look at total costs of occupancy for each unit.Note that a portion of your Fees go towards Current Expenses while a portion goes into a ‘Reserve Fund’ for Major Repairs to expensive items such as Elevators, Pools, Roof Air Conditioners, Windows etc.
Some people object to paying Fees or feel that they cannot afford them and therefore believe that Freehold properties are automatically better but this is not necessarily so.Its true that in many Condo Apartments you pay for some facilities that may not be important to you and if so that portion of the Fees would be wasted.
However if you buy a Freehold property you must still pay for Building Insurance, for Repairs and Maintenance and for all of the items that are included in a Condo Fee. The difference is that with a Freehold property you must set aside the money and plan for eventual replacement of Windows, Roofs, Garage Doors etc whereas with a Condo, funds for structural maintenance are automatically ‘Saved’ each month through the ‘Reserve Fund’ portion of the Fee.
An example would be to compare a Condo Townhome with monthly Fees of say $270 which cover Building Insurance and Exterior Repairs and Maintenance against a similar Freehold Townhome with no Fees. The Freehold owner would pay about $25,000 more for his property, increasing his Mortgage Interest by about $100 per month and would have to spend around $45 per month for Building Insurance as required by his Lender. This leaves about $125 per month or $1,500 annually so over a 30 year period his regular monthly payments would be about $45,000 less than for the Condo. From these ‘savings’ he would pay, very approximately : to re-shingle his Roof twice ($10,000) replace his Windows twice ($20,000) re-paint the exterior twice ($5000) replace Soffits, Fascia, Gutters and Downspouts ($5000) and replace Garage Door ( $2000). After allowing for re-sealing the Driveway a couple of times, making any repairs to Brickwork or Siding, Vents and Chimney he would be no better off and would still be doing his own Landscaping and Snow Removal.
Also, he would have no assurance that his neighbors would keep their property in a suitable state of repair so as to not reduce the value of the development and therefore of his property.
Certainly there are cases where a Freehold Townhome makes more sense. For instance if you are buying something relatively new and planning to only stay there a couple of years you might re-sell before you incur any major Exterior Repair expense.
However, if you are planning to stay in a Townhome for more than a couple of years, or if you prefer a mature area, you might consider a Condo Townhome in a well-managed complex that has already built up a good ‘Reserve Fund’ and where the necessary repairs and maintenance are up-to-date.
Ownership Rights and Restrictions
With a Freehold property, rights are restricted to some extent by the Laws of the Land, be they Federal or Provincial and by Municipal zoning restrictions and by-laws.
Freehold properties in some neighborhoods are also subject to local ‘subdivision rules’ which prohibit uses of a property that might tend to reduce the value of neighboring properties or the enjoyment of it.For instance there might be a ban on installing a tree house or large antenna, parking large trucks, painting the exterior except in approved colours,etc.
Condo owners are subject to the same Laws, zoning restrictions and by-laws but instead of subdivision rules are subject to the Condominium Declaration, By-Laws and Rules and Regulations of their own specific Condominium Corporation
These documents govern what one may and may not do in the Common Elements and also in the Individual Units as determined by the unit owners through a Board of Directors composed of owners elected among themselves, in most cases assisted by a Property Management Company.
Some developments are designated as 'Adults Only', while many have either a a ban or a Restriction on Pet Ownership re number size and weight of Pets and rules regarding their presence in the common areas.
In most Condo Townhome developments the restrictions on a Unit owner are fairly limited, though there are exceptions.
Condo Apartments tend to have more Rules because one is living above and below one’s neighbors and sharing more ‘Common Elements’ with them so more Rules are needed to ensure consideration of other Unit owners.
Condominium Status Certificate and Documents Package
You should never buy any type of Condominium without making your Offer conditional upon reviewing and approving the condominium documents
This package of Documents which used to be called the Estoppel Certificate includes everything that you need to know about the Ownership, Financial Health and Rules and Regulations of the particular Condo Corporation.
Once you have a Conditional Agreement then either you or your Buyer Agent, should immediately contact the Condo Corporation, usually through the Property Management Company in order to pay for ($100) and requisition a complete and current set of documents relating to the particular Unit that you plan to buy.
The Condo Corporation is allowed up to 10 business days to prepare the documents, though most do it within 3 or 4 days. They will ‘phone when the documents are ready for pick-up. It makes sense to have your Solicitor review and approve the package before you ‘waive’ or remove the Condition. The Condition should allow adequate time for review of the documents after receipt; normally an extra 2 or 3 days is sufficient.
Because I see more Condo Documents than many Solicitors my procedure is to first go through the entire package myself and create a ‘check-list’ of the most important items, high-lighting any deficiencies or problems. I then provide a copy of the check-list to you, and provide one to your Solicitor together with the documents.
Checklist of Condo Documents.
1/ Are all the necessary documents included in the package ( Cover Letter, Status Certificate, Declaration and Description By-Laws, Budget, Insurance Certificate ) ?
2/ Does the Legal Description agree with the Listing and the Agreement?
3/ Is the person who is selling us the property the registered owner?
4/ Are the Condo Fees as described in the Listing and do they include the items described?
5/ Are there any additional fees that we were not made aware of?
6/ Are there any 'special assessments' (lump-sum charges to each owner for necessary common element repairs not covered by the budget) announced or planned?
7/ Is the current owner up-to-date on their fee payments?
8/ Is the necessary Insurance current and adequate?
9/ Does the 'Reserve Fund' appear adequate?
10/ Any Major Changes Planned?
10/ Are there any restrictions on Pets?
11/ Is there anything else in the By-Laws / Rules and Regulations that is concerning?
12/ How many of the units are rented out rather than owner occupied?
13/ Are there any judgments or lawsuits against the Condo Corp and if so what is the status and outlook on them?
14/ Does the package include the necessary info to arrange ongoing payment of Condo Fees?
What is a “Co-op”?
Click above to see Article in "News and Advice" section
What is a Special Assessment ?
Click above to see Article in "News and Advice " section
