THE COSTS OF CONDO MEMBERSHIPS
As an owner of a condo, you must be prepared to pay costs that reflect
belonging to a community
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There are ongoing monthly or annual expenses and potential expenses
that you have to plan for and you must factor these in to your purchase
decision. The most common expenses are as follows:
Mortgage Payments
Unless you paid cash for your unit, you will be making monthly payments
for principal, interest and probably taxes.
Property taxes
Each individual condominium unit is assessed by the municipality and has
to make an annual payment for the property taxes. The common elements
have property tax as well, but that tax is covered in your monthly
maintenance payments.
Maintenance Payments
Maintenance payments or “assessments for common expenses” cover all the
operating costs of the common elements and are adjusted accordingly for
any increase or decrease in expenses. You are responsible for a portion
of the development’s total operating cost. The payments for common
expenses are made directly to the condominium corporation and generally
cover the following items.
Maintenance and Repair of Common Property
This includes costs for maintenance, landscaping, building repairs,
recreational facilities, equipment and other expenses.
Operating and Service Costs
These include expenses relating to garbage removal, heat, electricity
and municipal water supply.
Contingency Reserve Fund
This is a fund for unforeseen problems and expenses. This fund is for
expenses that have not been included in the annual budgeted expense
calculations for the common property and other assets of the condominium
corporation. Owners contribute monthly to this fund, on the basis of a
portion of the monthly maintenance fee. The condominium legislation in
most provinces requires a minimum amount be contributed by owners to the
contingency reserve fund.
In most cases, you are not entitled to a refund of your contributions to
the reserve fund when you sell your unit, or have it calculated on the
purchase and sale statement of adjustments.
Management Costs
These are the costs associated with hiring private individuals or
professional management firms to administer all or part of the daily
functions of the condominium development.
Condo Corporation Insurance
Condominium legislation requires that the development carry sufficient
fire and related insurance to replace the common property in the event
of fire or other damage. Condominium corporations generally obtain
further insurance to cover other payables and liabilities. The insurance
does not cover the damage done to the interior of an individual unit.
The cost of condo insurance for the corporation is included in your
monthly maintenance fees.
Special Assessment
There may be situations in which 75% or more of the condominium members
wish to raise funds for special purposes. These funds would not be able
to come from the contingency reserve fund or from the regular monthly
assessments. Once the decision is made to assess members, you cannot
refuse to pay the special assessment if it has been properly approved,
even though you might not agree with its purpose.
Lease Payments
If you have a leasehold condominium, you will be required to make
monthly lease payments in addition to many of the other costs previously
outlined.
