Considering Buying a Condo? Get Consumer Savvy about the expenses you are committing to. Consumer Protection Ontario has put together an excellent breakdown of what fees mean, what they do and do not cover, and what to expect over the years: 

Buying a condo means you must be aware of 2 key expenses:  

  • monthly common expense fees (condo fees)

  • special assessments

Monthly common expense fees

Monthly common expense fees (condo fees) cover the costs of keeping common elements in good repair. They also cover the operating costs of things like fitness facilities, party rooms and swimming pools.

If the condominium has staff, like security, cleaners and concierge, these costs will be covered by monthly condo fees.

Monthly fees may cover all, some or none of the costs of your utilities. Condo buyers need to make sure they know:

  • what services are and are not included in the monthly condo fees

  • if they need to pay certain costs in advance

  • what is included in the monthly operating costs (e.g., utilities, legal fees, property management services and landscaping)

The condominium declaration shows (in percentages) how much each unit must pay in monthly condo fees. Although it is not required by law, condo fee percentages are usually calculated by the size of a unit. For example, owners of a three-bedroom condo typically pay a higher monthly condo fee than owners of a one-bedroom condo.

You are responsible for paying your condo fees. They are your share of the operating expenses of the condo corporation.

Generally, if you do not pay your condo fees your mortgagee will likely be notified and the condo corporation will have the right to register a certificate of lien against your unit. Condo fee payment is as important as paying your mortgage and your property tax.

Increases can happen at any time and for a number of reasons, like an unexpected major repair, a lawsuit involving the corporation, or just to keep up with rising costs.

These increases tend to occur when the annual budget is set by the board of directors. Check when the last increase took place to help you determine when to expect another.

Owners of newly-built condos can experience a significant increase in condo fees in the second or third year of ownership. This is because fees to cover the cost of certain amenities, like a guest suite that a corporation may have to buy as an asset, might not take effect until year 2.

Although developers estimate monthly expenses for the first fiscal year of a condo corporation, it isn’t until the board of directors takes over and conducts the first reserve fund study that you begin to know the true costs of maintaining the building.

Reserve fund

A portion of your monthly condo fees goes to build up a reserve fund.

 A condo corporation must set up and maintain a reserve fund for the major repair and replacement of common elements and/or assets. These can include the roof, exterior of the building, roads, sidewalks, sewers, heating, electrical, plumbing, elevators, laundry and recreational facilities. The reserve fund is not used to add new common elements such as a new exercise room.

The corporation must hire a qualified professional, like an architect or engineer, to conduct a reserve fund study. This study:

  • recommends how much money is needed for the reserve fund 

  • includes estimates of how long the common elements and assets will last and what it will cost to repair or replace certain parts of each one

  • is designed to help keep the condominium property in good repair

  • reduces the risk that owners will need to pay a special assessment fee to make sudden major repairs

  • helps ensure that the cost of future repairs is not passed on only to future owners

  • must be presented to the board for approval

New condo corporations must complete a reserve fund study within 1 year of registration. The fund must be adequately funded by the end of the following fiscal year. The corporation must conduct reserve fund studies at least every 3 years.

The value of a condo unit can depend on the financial health of the reserve fund.

Special assessments

Special assessments are a type of common expense fee. They can be charged by a condo corporation from time to time in addition to the regular monthly condo fees. Special assessments may be charged to help pay for unexpected major repairs or shortfalls in the reserve fund.

The condominium declaration sets out how much each condo unit will pay when there is a special assessment. It is the same percentage that is used to determine an owner’s share of monthly condo fees.

A special assessment is set by the condo board and does not need to be approved by all owners. You have the right to request copies of financial records from your board, as long as you put your request in writing and give reasonable notice.

Get involved

Condo owners have different rights and responsibilities 

than other homeowners. For example, a condo owner is entitled to vote at meetings of the condo corporation and has to comply with the condominium’s declaration, by-laws and rules.

Being involved in the condo corporation is important. If you do not attend owners meetings, decisions about the property and the fees you pay to live there can be made without your input.

Being an active and engaged community member will help enhance the quality of life in the condominium.