Owning a Condominium in Canada
Owning a Condominium in Canada
Owning a Condominium in CanadaIn Canada a condominium or condo actually refers to a type of ownership rather than a building type. In British Columbia condos can be referred to as strata and as syndicates in Quebec.
Condos can offer the perfect solution for many people, particularly if they want to live in a city. Many condos include features not found in other property types such as recreational facilities, lobby and security features etc.
Although most people think of condos as high-rise residential housing, they can take many forms: low-rise, townhouses, detached houses, duplexes etc. So what sets them apart from other forms of home ownership?
The Unit
The unit refers to the private dwelling within the building that is owned and registered to the purchaser.
Common Elements
Common elements are parts of the building that impact on all unit owners such as the lobby, recreational facilities, laundry facilities, electrical services, gardens, elevators and hallways. The unit owners own these common elements and they are responsible for their operation and upkeep.
Each unit owner is responsible for the ongoing maintenance etc of common elements and their ownership percentage is usually directionally proportional to the size of the unit they own in relation to the building and other units. Therefore someone owning a 300 sq metre unit would own less and therefore contribute less than someone with a 500 sq meter unit.
Board of Directors
Condos have to be registered and then regulated by provincial or territorial legislation and guidelines. When a condominium corporation has been established a Board of Directors is elected to take responsibility for the administration and management of the condo corporation. The Board is usually made up from the condo unit holders and regular meetings take place to discuss relevant issues such as maintenance, repair and financial decisions. Each unit owner has voting rights in proportion to their unit ownership.
Who Owns What?
When you own a condo you own your unit as well as a percentage of the common elements. Unit boundaries can vary by condo, so even if you have owned a condo before, check new purchases as there may be differences. This can be important, as you need to know if you own and are therefore responsible for things such as dividing walls, exterior walls, loft space etc.
The unit owner may be responsible for things like internal plumbing, air conditioning, electrical systems etc that serve only that unit. If the condo is a detached building or duplex, you may be responsible for the entire interior and exterior walls, roof and any surrounding land. It may be wise in this instance to have a professional surveyor look at the property to make sure you know of any potential issues before you purchase.
As we mentioned common elements are co-owned by all unit holders to varying percentages. You must make sure you know what areas are covered by this component. Usually things such as common plumbing, air conditioning, electrical, roofing, walls, doors and garden maintenance are included.
There is also another type of common element that will impact on your purchase. These are elements that are for the exclusive use of the unit holder, but are outside the boundaries of their unit. This can include balconies, parking spaces, storage units, driveways, private gardens etc. Although the unit holder can use these exclusively, they do not usually own these elements and there may be restrictions on their use such as the type of vehicles allowed in a parking space and the things that can be placed in the garden i.e. no washing lines.
You should always hire a qualified building inspector to look around the whole property before you purchase to make sure there are no major problems ahead. If anything major is found, you can make it a condition of the sale that the item be fixed before purchase.
Freehold v's Regular Condominiums
A regular condo is much like we have described where the unit owner purchases the unit and has access to and responsibility for common elements. There are often restrictions on what can and cannot be done to the property.
With a freehold condominium you not only own the unit but the structure and land as well. This also means you are responsible for the upkeep, repair etc of these areas. A freehold condo usually allows more freedom for any changes and improvements by the owner.
In certain instances freehold condos can also include common elements such as parking, playgrounds etc. In these cases all unit holders pay a monthly fee towards their upkeep.
Restrictions and Rules
Each province and territory has its own regulations and legislation regarding condo registration, operation and ownership. You should make sure you are aware of the regulations covering your location.
Equally every condo will have its own set of rules depending on the corporation. These can include: number of occupants per unit, noise levels, pet ownership, exterior colour restrictions, and satellite dish erection amongst others.
Condo unit holders will need insurance specifically assigned to condo ownership. Likewise the condominium corporation will also need insurance. You should ask to see a copy before purchasing to be sure it is in place and adequate. Specific requirements vary between provinces and territories.
Sub-letting
Subletting is when a unit owner rents out the unit to a third party. Most condo corporations allow this practice, but if this is your intention, you should check to make sure before purchase.
Costs
It is important when entering into a condo purchase that you are aware of all the costs involved, both for the initial purchase and any on-going costs.
The initial purchase will include: the unit sale price, associated taxes where applicable, utility hook-ups, warranty fees, legal fees, disbursements, land transfer tax and the cost of any upgrades requested. In addition to these costs, you may be responsible for a monthly maintenance fee, property taxes, insurance, mortgage payments, common element fees, utilities and the general upkeep of your unit.
In the event of a shortfall in the condo corporation's budget or a major unforeseen event, such as the roof falling in, you may be responsible for additional costs. In this instance a special charge is levied against all unit owners. Usually
owners can choose to pay the amount in one lump sum or have the amount spread over monthly payments and added to their normal monthly contribution. If spreading the payments for this type of event is important to you, make sure this option is available when you purchase.
Check Before You Buy
When considering purchasing a condo it is important to know the financial well being of the condo corporation before you commit. It is no good purchasing a condo because the initial fees are lower than others, only to find that there are insufficient funds to properly maintain the property and you end up paying far more in the long term.
All condominium corporations are required by law to keep annual operating budgets, financial statements etc. You should check these out before purchasing. For resale properties you can check the estoppel or status certificates. These include things such as rules, regulations, insurance information, financial disclosures, management contracts etc.
For a new build look at the disclosure statement. Developers must provide a disclosure statement before the purchase is made binding. The statement includes amenities, features, completion dates, budgets and construction plans.
You should check the condo reserve fund. This is a fund in place to provide financing for any repairs etc. This is where your monthly condo fees will be placed. Make sure there are sufficient funds available should something need replacing, repairing etc.
Your lawyer should be able to get hold of all the relevant documentation and go through it with you to make sure everything is as it should be. It is also worth speaking to potential neighbours to see if they are happy with the condo arrangements. Also speak to the Board of Directors and ask them about the management of the condo and the condo corporation.