If you’re in the market for a condominium, one of the first things you will likely look at when you receive a new listing from your realtor is the little area entitled “monthly maintenance fees” (also referred to as condo fees). Condo fees vary drastically, depending on location, the size of the condominium and included amenities, but you can expect to pay anywhere from $0.50-$1.20/sq.ft. per month.
Condominium maintenance fees are a monthly charge the owner of the unit must pay to cover the costs of building insurance, upkeep, repairs to common areas, the heating and cooling system, water and sewer pipes and in some cases, property taxes. A portion of monthly fees are also set aside and put in a reserve fund for future expenses, like a new roof or furnace. The reserve fund is a contingency fund for future expenses to avoid having each condo owner hit with a major bill.
In a new building filled with luxurious amenities – a concierge, fitness centre, indoor pool or rooftop lounge, for example – the condo fees will be much higher than a building with few extras. If amenities are not high on your priority list, look for buildings without them as it will save you a lot of money via maintenance fees.
So, how is the amount of the condo fee determined? If you are purchasing a newly built condominium, the maintenance fee is pre-determined by the developer and outlined in the schedule of declaration. Based on the size of each unit, a percentage of the common expenses is allocated so that the sum of the whole adds up to 100 per cent. A budget is then drawn up, describing and adding up all expenditures that the condo corporation will incur for a year. Each suite is then assessed its annual proportion of these expenditures. If the budget does not change, the maintenance fee stays the same. But if costs increase, then all owners’ fees will increase.
It’s important that condo owners take into consideration the fact that condo fees can and probably will eventually rise as the building ages. It’s also possible that something called a special assessment is enacted. A special assessment is an additional payment that condo owners must make in the event of an expected shortfall or an added expense – perhaps caused by a flood or major storm damage. This is something a condominium owner must be prepared to shell out for and when purchasing, current special assessments must be disclosed by the seller’s via a status certificate which will indicate to the purchaser and their lawyer, exactly what the special assessment is, the amount, and who is responsible to pay for it.
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