UNDERSTANDING
CONDOMINIUM FEES
Presented by
CONDOMINIUM FEES
•What is a condominium
corporation?
• A Not-For-Profit Corporation
• Created under the Condominium Property
Act, 1993 upon application to raise titles in
accordance with the Condominium Plan
CONDOMINIUM FEES
•What are condominium fees called?
• Common expenses; maintenance fees, condo
fees
•What are they?
• The lifeblood of the condo corporation.
• sole principal source of income to cover costs to
operate and maintain the corporation
CONDOMINIUM FEES
•What are they?
• Unit owner’s proportionate share of expenses of
corporation including contribution to reserve
fund
• Collected monthly on first of each month
• Special assessments + other permitted costs
• Act obligates owners to pay and mandates Board
of Directors to collect.
• No excuses
CONDOMINIUM FEES
•How are the annual costs determined?
• Annual budget for total costs of operating the
corporation (common expenses) incl.
mandatory annual contribution to reserve
fund.
•E.g. insurance, maintenance of common
property and facilities, utilities, security,
management fees, elevator service
CONDOMINUM FEES
•How determined for each unit?
• Either based on unit factors or Scheme of
Apportionment
• Not discretionary
• Not necessarily based on sq. footage
• Not always appear to be fair
DUTY TO PAY
• Owners must pay
• Not exempt even if:
• Owner doesn’t use common property
• Owner making a claim against the corporation
• By-laws or rules restrict owner from using
common property or part of them
DUTY TO PAY
• Corporations have powerful statutory
collection tool:
LIEN FOR ARREARS
(Sec. 63)
lien
• Statutory lien right against unit (immediate)
• Arrears plus interest and reasonable legal costs
and expenses (check by-laws)
• Constitute secured claim for fees due 3 months
before notice provided to other interest holders
• Registered lien covers future arrears
• Registered lien takes priority over mortgages
COLLECTION PROCEDURE
• Different for each corporation
• Warning letter from management
• Formal Steps under Act:
• Notice Of Lien
• delivered to mortgagees and other interest holders
•Wait until confirmed that delivery has occurred
• Certificate of Lien registered on title
•Cost
•ISC
COLLECTION PROCEDURE
• Garnishment of rent – if leased (s.81)
• If owner pays all amounts then lien must be
discharged
• Foreclosure
• Lien can be enforced in same manner as a
mortgage
• Lose your home
CONDOMINIUM FEES
•Special Assessments – ‘Dirty Word’
• Added to owner’s common expenses and
collected in same manner as normal
contributions
• Usually decided by Owner’s meeting
RESERVE FUNDS
• Mandated by Act (Sec. 55)
• Major repair and replacement of common
elements and assets
• Cannot be used for general operations
RESERVE FUND
• Reserve Fund Studies
• Within 3 years after first annual meeting
(S 58.1)
• Every 10 years thereafter
• Included in Estoppel Certificates
CONDOMINIUM FEES
It’s not about fees
It’s only about costs
CONDOMINIUM LIVING
People living together
and sharing
housing costs
CALCULATING CONDO FEES
• Estimate all the costs that will be required to
operate the community of homes for the year
• add them up and
• Based on scheme of apportionment or unit
factors.
CALCULATING CONDO FEES
• There is no landlord making outrageous
profits
OWNERS ARE THE LANDLORD
THERE IS NO PROFIT MARGIN
EXPECTATIONS
• Just bought/going to sell
• Fixed/low income/higher income
• Basic lifestyle/best of everything
Individual owner expectations are unlikely to match
those of any other owner
COMPROMISE IS NECESSARY
EXPECTATIONS
• Disconnect between costs and service levels
• Can’t drive a Cadillac, pay for a Chevrolet
• What you get, you must pay for
• Quality definition and owner agreement essential
MORE/BETTER SERVICES
MEANS HIGHER COST
EXPECTATIONS AND COSTS
• Can’t have 24/7 security without paying for 24/7
• Cant expect clean windows if washed once a year
• Can’t expect a clean building without paying for the
hours necessary to keep it clean
• Can’t have well maintained grounds without paying for
the necessary flowers, shrubs and labour
• Can’t expect skilled security, cleaning and grounds
personnel, etc. by paying minimum wage
COST
FUNCTION OF QUALITY AND SERVICE
The highest price is not a guarantee of the best
quality and/or service
A really low price pretty much guarantees lower
quality and/or service
COST
• For comparable quality materials, suppliers have
to pay much the same prices
• For comparable skills, suppliers have to pay much
the same wages and benefits
• Very low quotes almost certainly mean that the
materials, the labour, or both, are lower quality
and the level of service is suspect
CONDOMINIUM COSTS
There are only 5 cost categories
1.
2.
3.
4.
5.
Reserve fund
Utilities
Professional Service
Repairs and maintenance
Administration and all other
COSTS
Reserve fund
189,500
Utilities
People costs
530,500
322,000
Repair & maintenance
159,500
Administration
Total
42,000
1,243,500
TYPICAL COSTS
• Reserve fund
• Utilities, heat, air conditioning, lights, water,
waste, telephone
• People costs, management, security, cleaning,
grounds, elevator, mechanical contracts, etc.
• Insurance, audit
• Inspections, fire, elevator, roof anchors, etc.
VARIABLE COSTS
• Compensation levels
• Service levels
• Quality of materials
• Repair and maintenance standards
• Other (small) costs
CAUTIONS
• Energy costs rising over time
• Rising energy costs increase material costs
• Wages and benefits rise over time
• New costs occur from time to time
CAUTIONS
• Fees kept unrealistically low lead to deferred
maintenance, deficits and special assessments
• Directors have a duty of care to manage the
property reasonably on behalf of the owners
• Beware electing directors who promise
reduced fees
NO FREE LUNCH
• Owners have to pay the costs necessary to operate
their community at the consensus quality level
• Either they pay in the current year or run a deficit or
defer needed repairs and maintenance
• A deficit, in dollars or repair and maintenance, is like a
bank overdraft - it never goes away and
• Sooner rather than later, deficits have to be paid or
the community deteriorates
So you are looking to
Purchase a Condominium…
• What is a Condominium Budget
• Why do some Condominiums have higher or
lower fees than others?
• Items to look for in a Condominium Budget
that can influence costs
• Why Fees often increase from year 1 to year 2
What is a Condominium Budget?
• A budget is made up of the total estimated
costs to run a condominium corporation for the
year.
• It outlines all anticipated expenses, contracts,
insurance, maintenance and repair,
administration and reserve fund contributions.
Why do some Condominiums have
higher or lower fees than others?
• How many units in the building?
• How many stories and how intricate is the
architecture?
• How many elevators?
• Does/will the Condominium have underground
parking. How many levels? How often will it be
cleaned? Is it heated?
• Are energy efficient alternatives used?
Items to look for in a Condominium
Budget that can influence costs
• Is there Concierge and if so how many hours?
• Is there a pool, whirlpool or steam rooms / saunas?
Are the pools heated, year round, indoor or
outdoor?
• Does/will the Condominium have a large Garden or
roof Top Terraces that will need to be landscaped
and maintained during the summer months?
Items to look for in a Condominium
Budget that can influence costs
• Does/will the Condominium have a large driveway and areas
requiring snow removal?
• Does/will the Condominium have full time professional
Property Management?
• Does/will the Condominium have a Superintendent?
These are just some of the items that will influence
the budget and in turn, your monthly common
element cost.
Why Condominium Fees often
increase from year 1 to year 2
• It is often difficult for a builder to anticipate the
costs required to run a condominium which will
finish being built in 2-3 years time
• Reserve Fund Study and subsequent funding plan
• Inflation
• Contract Increases
• Utility Increases