- CMHC's condominium buyer's guide
- Chapter 1: condominium basics
- Chapter 2: condominium governance
- Chapter 3: the pros and cons of condominium ownership
- Chapter 4: buying a condominium
- Chapter 5: checklists, tip and FAQ's
- Tips for buying a new condominium
- Tips for Buying a Resale Condominium
- Checklist for buying a new condominium
- Checklist for buying a resale condominium
- Condominium purchase and recurring costs
- Physical evaluation checklist (for resale units)
- Questions to ask advisors and condominium experts
- Frequently asked questions
- Provincial and territorial fact sheets
Condominium living can be an appealing housing option. It’s often affordable and someone else handles much of the maintenance and repairs, such as shovelling snow and replacing the roof. Many condominiums have enhanced security features over those found in single-family houses and offer a wide range of social, entertainment and recreational activities.
However, purchasers should be aware — before they buy — of the many issues and considerations surrounding the purchase of, and the lifestyle in, a condominium. Condominium ownership is very different from owning a home under traditional fee simple tenure. This section of the Guide will help you better understand this unique form of ownership and prepare you for successful condominium living.
WHAT IS A CONDOMINIUM?
A “condominium” refers to a form of legal ownership, as opposed to a style of construction. Condominiums are most often thought of as units in high-rise residential buildings, but they can instead be:
- low-rise residential buildings (fewer than four storeys);
- townhouse or rowhouse complexes;
- stacked townhouses;
- duplexes (one unit over another) or a side-by-side;
- triplexes (stack of three units);
- single-detached houses; or
- vacant land upon which owners may build.
There are even mixed-use condominiums that are partly residential and partly commercial buildings. Condominiums come in various sizes with diverse features and can be found in almost every price range.
Condominium buyers have three choices. They can buy a new condo, a resale condo or a conversion condo.
“New condominiums” refer to units that have not been previously occupied. They can be in the planning stage, under construction or recently completed and are usually purchased from a developer. For many buyers, they’re an attractive option because of their fresh appearance and modern fittings, surfaces and appliances. They also often give purchasers the chance to customize their units.
“Resale condominiums” are units that have already been occupied, typically in older buildings, and are for sale by the current owner. One of the advantages of purchasing an existing condominium is that you get to see the unit, building and grounds before you make your purchase. You also have the opportunity to meet other unit owners, speak with a representative of the board of directors of the condominium corporation and ask questions of the property manager.
“Conversion condominiums” refer to units in a building that was previously used for something else but has been, or is to be, renovated for residential use. For example, many loft-style condominiums are converted from former commercial or industrial buildings. Conversions can also refer to the switching of units from rental units to condominium units.
A UNIQUE FORM OF OWNERSHIP
Owning a condominium differs from owning a conventional home in several ways. Key differences include:
What do you Own?
When you purchase a condominium, you own a private dwelling called a “unit.” Your unit is registered in your name. You also share ownership of the common elements and assets of the building and community.
It’s important to be clear where your unit’s boundaries are located before you purchase. You’ll want to know, for instance, whether you’ll be paying for window washing or repairs to your townhouse’s bricks or whether the condominium corporation will be responsible for this. You can find information about your unit’s boundaries in your condominium’s governing documents.
Some condominium units (called freehold condominiums) include ownership of the land your home is on. If this is the case, your unit may be the entire house including the exterior walls, the roof and the lawn. You may want to carefully review the condominium corporation’s site plan, prepared by a professional surveyor, so you know exactly where your unit’s boundaries lie.
Common elements may include lobbies, hallways, elevators, recreational facilities, walkways, gardens and other amenities. They may also include structural elements and mechanical and electrical services.
Some common elements may be outside the unit boundaries, but are for the sole use of the owner of a particular unit. Balconies, parking spaces, storage lockers, driveways and lawns are common examples.
What will you Pay?
In addition to paying for your unit and a proportionate share of the common property, you also pay monthly condominium fees, along with all of the other unit owners. This covers the upkeep and replacement of common elements — whether you use them or not. The fees may also cover the corporation’s insurance policies, utilities and services such as snow removal.
Part of those monthly fees may be put into a reserve fund to cover the estimated cost of future maintenance and repairs.
Required by law in some provinces and territories, a reserve fund study is often used to tell condo owners how much money should be paid into the reserve fund. Conducted by an engineer or other professional, it involves a detailed examination of all components, an analysis of when repair and replacement are expected, and an estimate of these costs.
Condominium fees may have to be adjusted from time to time to reflect the changing costs of goods and services and the state of the building’s reserve fund. Look for these adjustments in the next year’s budget.
Don’t expect a refund if the board overestimates the common expenses. Refunds are not commonly given to unit owners. Instead, surpluses are typically either applied to future common expenses or paid into the reserve fund.
If a unit owner sells a unit before the end of the condominium corporation’s fiscal year, the owner cannot obtain a refund for any prepaid common expenses but should provide for adjustments for prepaid expenses in the purchase or sale agreement.
Did you know?
Even though condominium owners often pay the same municipal taxes as other homeowners, they don’t always receive services covered by those taxes, such as garbage pickup, road repairs and snow removal. This is because condominiums may be considered (by the municipality) to be private communities, some with limited access. Before you buy, ask what municipal services the condominium corporation receives and what other services are carried out by independent contractors — and reflected in your condo fees.
What can you do?
Three of the most common causes of annoyance to condominium owners are pets, people and parking — the “three Ps.” That’s why condos have rules and restrictions around them and other issues, such as noise and the number of people who may live in a unit. It’s essential that you review the condo’s rules, bylaws and declaration before you make an offer.
Before buying, find out what common property elements are for your use only and what restrictions apply. For instance, restrictions may prevent you from parking a boat, RV or commercial vehicle in your parking spot or there may be restrictions on what you may place on your balcony.
YOUR ROLE IN A CONDOMINIUM COMMUNITY
When you become a condominium owner, you become a member of a condominium corporation and have certain rights and responsibilities. One of your key rights is the right to vote at general meetings on matters that affect the condominium. You are also eligible to help elect the board of directors.
The board of directors takes responsibility for the management of the corporation’s business affairs. The board is generally made up of individual condominium owners.
As an owner, it’s your responsibility to participate in the governing of the condominium. You can do this by attending general meetings and information sessions, serving on the board of directors or on a committee and voting. It’s also important to read the minutes of meetings and other information sent to members, such as the condo newsletter, as well as the corporation’s budget and financial statements.
You are now part of a community with shared responsibilities. If the parking garage in your development unexpectedly starts to crumble and there aren’t enough funds on hand to repair it, you — along with all of the other owners — must pay the increased condominium fees or a lump-sum payment to cover its repair.
Condominium corporations are legal entities. You and all of the other owners can be sued for matters for which you’re collectively liable. Likewise, you and all of the other owners have the right to sue for damages to the common property.
CONDOMINIUMS ACROSS CANADA
Condominiums across the country have many similarities and are generally run along the same principles. For example, condos in all provinces and territories are corporations whose units are privately owned and whose common elements, such as elevators and hallways, are owned by all of the condo members.
But there are a number of differences. In British Columbia, for instance, the legal term for condominium corporation is “strata corporation;” in Quebec, it is “syndicate” or “syndicate of co-owners.” In some jurisdictions, a purchaser can ask the condominium corporation for vital information about a particular unit and the corporation as a whole, such as whether the current owner (in the case of a resale unit) has defaulted in paying his or her common expenses and if there are any outstanding lawsuits against the corporation; depending on the jurisdiction, this is called either a “status certificate” or an “estoppel certificate.”
It’s not only condominium terminology that varies from place to place. Some jurisdictions have detailed rules addressing condominium reserve funds, which cover the costs of major repairs and replacement of the common property over time; in other jurisdictions, reserve funds are not mandatory.