Condo ownership is attractive in Canada’s current hot housing market because condos tend to be less-expensive than single detached homes; condo buildings often offer attractive amenities; and maintenance responsibilities are shared among residents. Owning a condo unit can be a less-intimidating first-step toward home ownership, a great way to downsize, or an appealing option for those who prefer apartment-living.
But when you purchase a condo, you don’t just purchase a home. You become the co-owner of a shared property, which presents some unique challenges to the homeowner. Some special considerations should be made before you buy into a condo association, to ensure the value of your purchase and the security of your investment in the long term.
Condo associations are generally managed by a board, made up of elected residents, and a manager, often a resident who is employed by the board. A board that meets regularly and functions smoothly is essential to the health and security of the building. To assess the board’s quality you can:
– Ask to see the minutes of recent board meetings. This will give you a sense of the concerns and complaints being aired by residents.
– Talk to current owners about their level of satisfaction with the building and the association. Is the building well-managed? Is the board functional and responsive?
– If the condo has a professional manager, meet with them to learn about their style and priorities. This is a person you will need to depend on, and you want to be sure you can do so.
– Ask whether there is any litigation pending in the community. Sadly, disputes within condo boards do sometimes lead to litigation, and you may not want to be liable for an association’s past mistakes.
– Ask to see the association’s insurance policy. If you have trouble understanding it, ask your own insurance agent for assistance. They can help you to understand whether the association has sufficient coverage.
When purchasing a condo, you will need to consider not just the purchase price, but the monthly fees applied by the condo association. These fees cover the cost to maintain the property in the short and long tern, including funds set aside for upkeep, repairs, litigation, and other shared expenses. Ask for a breakdown of the monthly dues, documentation of the repair fund, and a report on delinquency rates. Good associations will have a delinquency rate of less that 15% and a robust fund to cover unexpected repairs. Beware of associations that offer extremely low fees. Especially of the building is older, they may not setting aside enough to cover the cost of unforeseen expenses, and residents could be hit with a big bill if there aren’t reserves to cover such costs.
Look closely at the Unit Deed and the Master Deed, and make sure you have a clear understanding of what belongs to you and what belongs to the association. Are you responsible for the repair and upkeep of your balcony, front porch, or other outdoor spaces? Does everything in your unit belong to you? Do you have access to storage space and parking? What other amenities are offered?
Rules & Regulations
One of the difficulties of condo living is that the board defines and enforces the rules of the community, regulating everything from clotheslines to holiday decorations. Are pets allowed? Could you rent out your unit if you wanted to? Are there noise restrictions or special policies regarding guests? Be sure you are comfortable with your association’s rules before you commit.
Our real estate representatives can guide you through every step of your home purchase and help you to understand all the fine print associated with buying a condo. Call us today to learn more!