Condominium Buyers Guide
Purchasing a condominium differs from buying a typical house. Whether you’re a first-time buyer or not, you need to be mindful of the unique aspects of a condominium purchase. There are many questions you should ask to protect yourself before making this life-changing decision. Contact us for Buying Condos.
What is a condominium?
A condominium, otherwise known as a condo, is a residential building in which apartments or townhouses are individually owned as pieces of real estate. A condominium unit could be a suite in a building, townhouse, or even a detached house. Each unit has a legal description based on the space it occupies.
The condominium corporation manages the condominium and the land. The unit owners elect a Board of Directors to oversee the decisions made by the corporation that owns the structure, including its financial decisions.
There are various types of condominiums in Ontario, including:
Common Elements Condominiums
With this type of condominium, there are no specific units, you own the land and the building(s) on it as freehold. You also own a percentage interest in the common elements, such as; roads, facilities and recreational centres.
Phased condominiums are built in phases. As each phase is built, it is added into the existing condominium corporation. Some of these phases could include new units or even new recreational facilities.
Leasehold condominiums, are where you own a unit and a share of the common elements associated with the building where you lease the land where it is built. The initial term of the lease must be between 40-99 years and the owner of the unit has freedom to sell, mortgage, or lease the unit without the Landlord’s consent.
Standard condominiums are the regular, more commonly known, tower condominiums that are not defined as the above stated types of condos (i.e. common elements, phased, vacant land or leasehold condominiums).
Condominium Documents & Rules
Documents are registered on the title to each unit and they direct the organization and operation of the building, in addition to the restrictions and allowed uses of the units. Here are some documents you may come across in your condo-buying journey:
Contains the boundaries of the units, the expenses allocated to each unit, the common elements designated for the exclusive use of unit owners and may also have conditions or restrictions regarding the use of the units.
Made by the Board of Directors, they are meant to set out specific functions of the Board and elect those who are qualified to sit on the Board. It’s also used to govern the management of the property and the use of the assets belonging to the condo corporation.
Made or amended by the Board of Directors and could affect the use of the units and common elements.
Why do we need to pay common expenses?
Maintenance fees or condominium fees are also known as common expenses. These monthly payments are made by the unit owners to cover their share of the expenses to operate and maintain the common elements. These payments are allocated towards
maintenance, including but not limited to, cleaning of the common elements (hallways, elevators, etc.), snow removal, building repairs or even landscaping. Additionally, they are used towards property management fees and utilities for the common elements.
Why is there a Reserve Fund?
This particular fund is set up by the developers of the building to cover major repairs, upgrades, etc. of the building. A portion of each common expense payment goes toward the funding of the Reserve Fund.
What is a special assessment?
This added expense may be an unwanted surprise. It is a charge that is additional to the monthly common expense fee if the Reserve Fund doesn’t contain enough money to pay for a major repair. A special assessment may also be levied to recover a deficit or shortfall in the operating fund.
Why we need a Status Certificate?
Status Certificates are a written summary of the current financial and legal status of the condominium’s corporation and the condominium unit. This certificate will provide you with detailed information regarding your monthly common expense fees, if there are any pending legal proceedings affecting the condo, and/or any special assessments levied to cover unexpected costs and expenses.
It’s important that your real estate lawyer reviews a copy of the up-to-date Status Certificate because of the following reasons:
- It includes details relative to common expenses, payment debts, special assessments, any pending legal actions, insurance and other unusual additions.
- It also contains material regarding the Reserve Fund
Here are some other elements that condo buyers should consider:
Some condo rules and regulations could have an impact on your lifestyle. For instance, if you own a pet or if you enjoy barbequing on the terrace. There may also be restrictions on types of vehicles that can be parked and smoking restrictions and prohibitions. Inform your real estate agent and lawyer immediately if any of these deal breaker issues arise in terms of your lifestyle.
Our real estate lawyers at Nanda can clarify the sort of property rights you will have. For example, do you actually own your own storage locker or parking space, or do you just have the right to exclusively use them as part of the common elements?
Realty Tax Assessment
If you’re purchasing a “nearly new” resale unit, you need to be carefully aware of whether a separate assessment of realty taxes per unit has taken place. If the assessment is not up to date with the new development, you may find that your realty taxes dramatically increase after the assessment is complete. Your real estate lawyer at Nanda can work with you to determine whether the unit taxes have been separately assessed and make efforts to shield you from having to pay those hefty realty taxes attributable to the previous owners.