When you purchase a condo, you’re buying into a community as well. Most people love the opportunities that come with condo living, but it does mean you have to follow their rules and do your part in being a good neighbour. If you’re considering buying a condo, you’re likely to come across some unfamiliar terms. To take any confusion out of the process, we’ve listed a few of the most common ones below.
Bylaws
The bylaws are the rules set forth by the community. Typically, these include details about the condo association membership and management, and voting procedures. They also might include rules about:
Types of pets allowed on the property
Visitors and quiet hours
Usage of common property
The exterior appearance of your unit
Some communities have more rules than others, so this is definitely something you should check out before you make a purchase.
Common Property
This is any area outside of your own unit. It can include shared hallways and stairwells, walking trails in the community, and any other amenities available for the owners. For instance, some communities have recreation rooms, fitness centres, and other gathering spaces. These would all be considered common property.
Condo Fees
These are monthly fees all residents pay. The condo fees are used to cover the costs of things like landscaping, snow plowing, and general repairs and maintenance to common areas while some of the money goes into a reserve fund. Your condo fees are in addition to the monthly mortgage payment, so it’s important to factor them into your budget.
Reserve Fund
Think of the reserve fund as the condo association’s emergency fund. It’s used to cover any unexpected major expenses. For instance, if the condo has a pool, general maintenance charges like opening and closing, pool chemicals, and cleanings will be a part of the regular budget. However, if the pool filter breaks, the association will dip into the reserve fund to pay for the repairs.
Unit Factor
The unit factor is what determines the percentage of the annual condo fees you have to pay. To use some round numbers, if the association needs $100,000 to meet their yearly budget, and there are 100 equally-sized units in the community, each owner would be responsible for 1 percent of the total, or $1,000/year. Of course, the reality is rarely that straightforward. Those who have larger units are responsible for a larger share of the total amount.
The same is true for those who take advantage of other amenities, like an extra parking space or an on-site storage container. Each association has a formula for calculating the unit factor, so before you move into a community, ask how they calculate fees.
Special Assessment
On rare occasion there may be a major, necessary repair not included in the budget. If the cost of this repair exceeds the amount in the reserve fund, the condo association will create a special assessment, which is an extra fee owners pay to cover the cost of the repairs – similar to a group of roommates all chipping in to replace a broken washer. Fortunately, special assessments are rare, especially in new condo developments.
Condominium Plan
The condominium plan is where you can look up the details of the community. It expressly shows property boundaries, including which areas belong to the unit owner and which areas are common property. Turn to this plan if you ever have a dispute with your neighbour or the association. You’ll find it at the land titles office.
Condo Board
The condo board is a sort of mini-government that runs the condo association. They hold meetings, make proposals about the direction of the community, and plan the budget. According to the Condominium Property Act, a Board of Directors must have between three and seven members.
The only exception to this is when there are no more than two unit owners in a development. In most cases, these are elected positions, and members serve a specific term. You can find more details about the role of a community’s Board of Directors and voting procedures in the bylaws.
Once you have a good understanding of how condominium communities work, it becomes easier to take a closer look at various developments to find the one that’s truly best for you. Don’t be afraid to ask an Area Manager if you have any questions.
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