- 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
WHERE ARE MY UNIT’S BOUNDARIES?
This will depend on your condominium. Sometimes, a unit boundary can be at the backside of the interior drywall of the unit’s dividing walls. Or, it might be the centre line of the unit’s walls.
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. You can find information about your unit’s boundaries in your condominium’s governing documents.
If you buy a freehold condominium and own the land your home is on, your unit may be the entire house including the exterior walls, the roof and the lawn. You may want to hire a professional surveyor to review the condominium corporation’s site plan so you know exactly where your unit’s boundaries lie.
WHAT IS THE DIFFERENCE BETWEEN A FREEHOLD CONDOMINIUM AND A REGULAR CONDOMINIUM?
The biggest difference is what is included as part of the unit. With a freehold condominium, you own the plot of land and any structure on that land, such as a house or a townhouse. You are normally responsible for the care and upkeep of the entire house, including the exterior walls and roof, as well as the lawn, garden, driveway and garage. Your monthly condo fees go toward the upkeep of common property elements such as recreational facilities or visitor parking.
With a regular townhouse or house condominium, your unit typically consists of the interior of the house itself, while the exterior of the house and the plot of land on which the unit sits are considered part of the common elements. This means that repair and maintenance of items like exterior walls, windows, lawns, gardens and driveways may be the responsibility of the condo corporation.
Due to the fact that condominiums are governed by provincial and territorial legislation, terminology that is commonly used can vary from jurisdiction to jurisdiction. The term “freehold condominium” has different meanings in different provinces. In most jurisdictions, the term refers to a condominium where the unit holder owns the house as well as the plot of land on which the unit sits. However, in others, the term includes all condominiums where the land is owned by either the unit holder or the condominium corporation. This is to distinguish freehold condominiums from leasehold condominiums. With leasehold condominiums, the developer leases the land and the condominium corporation is essentially a tenant.
WHAT DO MY CONDO FEES COVER?
Your monthly condo fees pay your portion of the cost to maintain and repair the common property. These costs may cover:
- removal of snow, garbage and recyclables;
- cleaning (carpets in common areas and outside windows, for example);
- heating and cooling systems maintenance;
- amenities (such as a swimming pool or party room);
- cable and Internet;
- insurance policies for the condominium’s common areas;
- security systems maintenance and monitoring;
- salaries of employees (if there is a superintendent or security guards, for instance); and
- property management fees.
A portion of your condo fees will also likely go toward the building’s reserve fund. (Your province or territory may have another name for this, such as contingency fund or capital replacement reserve fund.) A reserve fund ensures that the condominium has enough money to pay for the major repair and replacement of the common elements over the life of the building. These may include the roof, roads, sewers, sidewalks, elevators, plumbing and other building systems. For more information on reserve funds, see the question below, "Is there enough money in the reserve fund?"
To find out exactly what is — and is not — included in your monthly condo fees, check:
- your disclosure statement (for new condominiums);
- your estoppel or status certificate (for resale condominiums); and
- the condominium’s operating budget.
You can also find out more about your fees by speaking with the vendor, property manager, board of directors or the developer prior to purchasing a unit. Ask for confirmation in writing.
WHAT CAN HAPPEN IF I DON’T PAY MY CONDO FEES?
Don’t even think about withholding your condo fees! They are neither optional nor negotiable. For example, if you don’t plan to use your building’s swimming pool, you must still pay a share toward its care and upkeep. Likewise, being frustrated with the board of directors, property manager or another unit owner doesn’t allow you to stop paying your fees.
In some provinces, the condominium corporation can register a lien on your unit if you do not pay your share of the common expenses. This means the corporation may have the right to sell the unit to recover the money it is owed. It may also be entitled to charge interest and collect any reasonable legal costs and expenses it has incurred while trying to collect the debt.
Suspension of voting rights can be another unfortunate consequence of withholding condominium fees. In some jurisdictions, you are not entitled to vote if you are more than 30 days behind in your payments.
Many banks include provisions in their mortgages that owners who are in default of their condo fees are automatically in default of their mortgage. Depending on the amount owed, they may be at risk of foreclosure.
IS THERE ENOUGH MONEY IN THE RESERVE FUND?
The condominium’s reserve fund provides financing for major repairs and renewal projects over the life of the condominium building. The fund essentially ensures that the condominium’s common elements will be maintained in good shape.
The amount of money that should be in the reserve fund depends on:
- the condition and life expectancy of all of the common elements in the building; and
- the estimated cost to repair or replace them over the life of the project.
Condominiums often rely on a reserve fund study to help them determine how much money should be in their reserve fund. Reserve fund studies are carried out by engineers or other professionals who assess the condition of the common elements of the building, estimating their remaining lifespan and their related repair and/or replacement costs. They then estimate what monthly or annual contributions will be necessary for long-term renewal.
Some jurisdictions have condominium legislation that requires that reserve fund studies be done on a regular basis. Others leave it up to the owners to estimate how much should be in the fund.
Regardless of where you live, it’s essential that you find out the current state of the condominium’s reserve fund. Check the disclosure statement or the estoppel or status certificate for this information.
HOW DO NEW HOME WARRANTIES WORK?
Many new condominiums come with a developer’s warranty, backed by a third-party new home warranty.
As an owner of a new condominium, you’ll want to report any defects or omissions in your unit and co-operate with the builder’s warranty inspections. Some builders perform regular investigative service calls during the first year of possession; others prefer to deal with all warranty issues toward the end of that time.
If the developer fails to correct construction defects and deficiencies within a reasonable time frame, buyers can turn to the third-party new home warranty program to help resolve outstanding issues.
New home warranties don’t cover every item you might think is a defect so be clear on what the warranty does and does not cover, and for how long, before making a claim. Buyers of resale condominiums should find out what warranty coverage remains on the unit.
WHAT PROPERTY OR GENERAL INSURANCE COVERAGE SHOULD I LOOK FOR?
There are special considerations when insuring a condo as opposed to a residence held under other tenure. You’ll want to ensure that your individual unit and the condominium corporation as a whole are sufficiently insured.
A condominium corporation’s property or general insurance coverage may include:
- one hundred per cent replacement cost of the corporation’s property, such as furniture, equipment and vehicles;
- all-risk or major perils;
- personal liability — against claims for bodily injury and/or property damage occurring on the condominium property;
- directors’ and officers’ insurance — for claims made personally against a director or officer of the condo;
- Boiler and machinery (equipment breakdown);
- Fidelity — against claims for theft of money; and
- Human rights defence costs — for claims made against members of the board of directors.
Your unit owner’s property or general insurance package should cover:
- chargeback of the corporation’s deductible. It’s vital that you make sure that your policy covers you if there is a chargeback of the corporation’s deductible (sometimes $25,000 or more). This could happen if there were a flood in your unit that affected another unit, for example. The corporation’s insurance may cover damages to the common elements and possibly other units, with cost of the deductible being charged back to you as the unit owner that caused the problem.
- personal property and contents (appliances, furniture, jewellery, items stored in lockers, for example);
- improvements made to the unit (finishing a basement, installing new cabinets, for example);
- loss of use;
- loss assessment — property damage or liability (when the corporation’s insurance is invalid or insufficient); and
- unit contingency (coverage if the condominium corporation’s insurance on your unit’s structure is insufficient).
Condominium insurance requirements vary across Canada. You should consult your provincial or territorial condominium legislation, your condominium’s governing documents as well as a condominium insurance specialist to ensure sufficient coverage.
CAN I RENT OUT MY CONDOMINIUM?
Many condominium buyers purchase their units as an investment and plan to rent them out. Most condos allow owners to do this but you should confirm this by reviewing your condominium’s governing documents and provincial or territorial legislation.
You may also want to find out from the property manager what percentage of the building is owner-occupied. In some condominiums, a large percentage of the units are rented out and there may not be the same pride of ownership and sense of community and security that you may find in a building that is fully owner-occupied. Additionally, absentee owners may not have the same maintenance and repair priorities for the building as owners who actually live in the building.
Find out about key business and legal aspects of being a landlord in Your Guide to Renting a Home.