April 8, 2016 by admin
 

When you buy a condominium, you’re actually purchasing two things.

Your own unit and a portion of the space you share with all your neighbours. That’s the simple explanation. The more complicated one is contained in the Condominium Property Act, a little light reading on the Service Alberta website. Condo fees are your communal responsibility.

How are condo fees calculated?

The Condo Corporation, to which you’d belong, sets the annual operating and maintenance budget. Fees are dependent upon the building’s age, the location and the volume of seasonal maintenance required. The budget could include heat and electricity or amenities such as a pool, fitness room or 24-hour concierge. Money must be set aside in a reserve fund to pay for big ticket items like the roof, replacing siding, fencing or replacing a boiler. Once the corporation knows how much they need every year, owners are assessed a fee based on the square footage of their unit.

Can you afford it?

If you have a mortgage, your payment is now PITCF: principal, interest, taxes and condo fee. If your unit is 700 square feet and your condo fees are 60 cents per square foot, because your downtown building has a yoga studio, a concierge and a bike/dog wash in the underground parkade, that’s a quick $420 a month. But remember, that likely includes your heat, water, sewer, electricity and you might not need a gym membership anymore. Condo fees can also increase with very little notice, often every year.

Who’s in charge of the money?

As an owner, you have a say in how your condo fee is spent. The condo corporation is a non-profit organization run by a resident volunteer board. A fee is paid to a professional condo management company, which, under the board’s direction, oversees the maintenance and pays the bills. Board members are voted in every year at the Annual General Meeting and should be approachable at any time of year when residents have concerns. As a governance board, this group calls the shots, however, it’s a democracy and your vote counts.

What is a reserve fund?

By law, all condo associations must have a capital replacement reserve fund. A predictive study must be done every three to five years by a qualified person to determine the amount of funds required for future maintenance. The amount of money in the reserve fund depends on the size of the complex. Reserve funds are built over time, so a new development will just be starting its fund. Of course, being a new development, it should be several years before any major work needs to be done. This information should be part of your pre-purchase research.

Additional costs

A special assessment is a repair, replacement or maintenance issue over and above what is covered by the reserve fund. Special assessments are usually put to a vote by residents, but often due to the emergency nature of assessments, meetings are impromptu and owners usually have to reach deep into their pockets. It’s no different than owners of single-family homes who have to suddenly replace the roof after a violent hailstorm. You’re an owner — it’s what you do.