Questions about condo fees answered
A lot of people when considering purchasing a home, start with “not a condo”. They say that don’t like paying condo fees, especially high condo fees. That’s fair. However often I find that people don’t really understand condo fees and the benefits that they can bring.
What are condo fees?
A condominium is our most typical example of shared ownership of property. A condo unit owner owns his or her individual unit and shares the “common elements” which include things like hallways, driveways, the lobby, elevator…Fees are collected from all unit owners to cover the expense of maintaining the condo’s common elements.
What is covered by condo fees?
Fees are collected to cover the maintenance of common areas, landscaping and snow removal. If your building has a concierge, security, cleaning staff and/or property management company, these salaries are covered. Repairs, upkeep and regular maintenance of elevators, air conditioning, underground parking… are covered. Some condos include utilities in their fees, water being the most typical, especially in older condos (1970s).
Some condos include cable TV and internet services. Some condos have pools and tennis courts.
A portion of the fees also gets put away for future needs. A reserve fund is set up to cover the future expected and sometimes unexpected large outlays of funds to cover major repairs.
What is a special assessment?
Sometimes an unexpected large repair is needed and the money in the reserve fund is not enough to cover it. When this happens, a special assessment is needed. Unit holders will be levied a portion of the total amount needed for the repair, usually based on square footage of their unit.
How much are condo fees?
When a new condo is near completion, the new owners are first given occupancy. During occupancy, the owners are charged a fee commonly thought of as a condo fee. It’s not. It is a maintenance fee. The builder uses it to cover the cost of running the building but the condo corporation cannot be formed until ownership passes to the unit owners.
For the first two or three years of a condos existence, condo fees will be at their lowest. The condo corporation is required to start building up a reserve fund and this usually gets off to a slow start.
In Kitchener-Waterloo fees tend to be $350-$450/month. This would be average. Some simple condos and new condos will have fees in the $200s and some older buildings will have fees over $800/month.
When do you pay condo fees?
Condo fees are paid on a month to month basis and typically go up (by about the rate of inflation) every year.
Special assessments are usually added onto the maintenance fees to be paid over a series of months until paid in full.
A final thought on Condo fees
Condo fees are not wasted money. When you own a single family home or any other non-condo property, maintenance will have to be done either by the homeowner or by a service that the homeowner hires. If you own a home, you will someday have to replace your roof and maybe your furnace. I encourage all of my homebuyers to set up both a maintenance fund (for things like a new lawnmower) and a reserve fund (for the future big ticket repair or replacement).
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