House vs. Condo
Several hundred thousand Canadians make their homes in condominiums that take various forms including apartment style, townhomes and detached homes.
The term condominium doesn't define a style of structure, it describes a form of property ownership. Condominium ownership is divided among two or more parties. When you purchase a condominium unit you are purchasing 100% of the unit itself along with a portion of the common areas of the condominium property (the buildings, grounds, elevator, lobby, recreational facilities, stairs etc.). Buying a condo also involves buying into the condominium corporation, so it's not only important to evaluate the unit itself, you'll need to make sure the common property is in good physical condition and the condominium corporation is in sound financial condition.
In addition to the mortgage payment and taxes associated with your unit, you'll also be required to pay a condominium fee to the corporation. This contribution goes towards covering the expenses of the corporation (including gas, electricity, water, management, repair and maintenance of the building, landscaping and snow removal and savings in a 'reserve fund' toward large expenses).
Is Condo Living for You?
Condos can offer an affordable choice as a first home. Condominiums are also very attractive to anyone who doesn't have the time or inclination to maintain a home (yard-work, shovelling snow, painting, etc). Condos are very appealing to buyers who travel extensively because of the ability to lock the door and leave for an extended period of time without worrying about the property.
Condominium living can restrict your freedoms though a list of rules and bylaws set out and enforced by the condominium corporation. These bylaws govern the use of the unit and can include limitations placed on pets, age restrictions, etc.
There are some areas on concern specific to condominiums:
The Building - The general appearance and condition of the lobby and other common areas will give a good idea about how well the property is being managed.
Management - Perhaps the most important consideration relating to a condominium purchase. Find out if the complex is managed by a competent property manager. What is the track-record of the manager or management company? Review the minutes of the recent board of directors meetings and annual general meetings of the condominium corporation. These will help identify any ongoing concerns or upcoming planned maintenance.
Budget and Financial Condition - The financial condition of the corporation is very important. If there isn’t sufficient money in the reserve fund for upcoming repairs, the cost will be distributed to the owners. If an unplanned expense isn’t covered by the reserve fund you could receive a bill for hundreds or thousands of dollars to help cover your share of the cost. Another consideration is what the condominium contribution includes and what expenses will you pay as an individual unit owner (heat, electricity, water etc.)
The Unit - Since condominiums involve living in close proximity to other owners, make sure you’re happy with the level of privacy offered by the unit. Consider the units location in relation to elevators, stairs etc.
Parking - A major factor in condominiums is the scarcity of street parking. Make sure the parking facilities of the building will meet your requirements. Determine if the parking associated with the unit is owned, assigned or leased. Find out how much guest parking is available.
Recreational Areas - Be sure to examine all of the common areas, including the recreational facilities along with the unit itself. As part owner of the corporation you’ll have a share in the ownership of these facilities. Find out if use of the facilities is limited to owners of the units and included in the condominium fees or if there is an additional usage fee associated with them.
Owners vs. Renters - Find out what percentage of the units are occupied by their owners. Many condos are purchased by investors as income-producing properties. Overall, the pride of ownership is higher when the majority of units are owner-occupied; this is often reflected in the overall condition and management of the complex. If you’re planning to lease out your unit in the future - make sure the condominium bylaws do not restrict this.
Insurance - Condominiums require two types of insurance. The first is the master policy owned by the corporation which covers all of the common areas and liability. The second is your individual policy to cover anything not included in the master policy, and the contents of your unit and your responsibility relating to public or common area liability. For example, if a fire starts in your unit, make sure your insurance will cover the damage not only to your unit but to the rest of the building.
Important Documents - As a condition of the purchase we will ask for a number of important documents to be provided by the sellers. These documents will answer all of the important questions regarding the state of the building and the condominium corporation. This offers you a great level of protection as it provides an escape route if a major problem is found as a result of reviewing the documents.
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