Joyce Byrne, Broker

Condominiums - Questions & Answers

What is a Condominium?
Common Property or Common Elements
Condominium Contributions (Fees)
Questions to Ask When Buying a Condo
Buying a Condominium From a Developer
Buying a Previously-Owned Condominium
What is a Reserve Fund?
How do I find out about the condo corporation?
How Condominiums Are Run (Voting Rights)
Are condominiums risky to buy?
Are condos a good investment?
Are one-bedroom condominiums a good investment?
How do you choose between condos and single family homes?


What is a Condominium?

A condominium is a form of real property ownership. This type of property ownership has two parts: owning your own unit to which you get title, and jointly owning property with other unit owners in the same complex called common elements (link to next page). Examples of common elements are parking areas, pool, clubhouse, sidewalks, etc.

Some examples of residential condominiums are an apartment within an apartment building, a bungalow, or a townhouse style.

Non-residential condominiums may be commercial outlets, resorts/timeshares, bare land units, the interior of a building, or air space.

Personal relationships and interactions are very much a part of condominium ownership, perhaps more so than any other form of property ownership.

Every condominium corporation contains both condominium units and any common property identified in the condominium plan. A unit is the part of the property owned by the individual. The condominium plan identifies the exact unit boundaries. The common property is everything in the condominium plan that is not within a unit.

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Common Property or Common Elements

The common property or elements are identified in the condominium plan. It usually includes space and facilities outside the units, such as hallways, elevators, heating and electrical systems, laundry rooms, recreation rooms and landscaped areas. As the owner of a unit, you also become the partial owner of the condominium’s common property. In the case of a bare land condominium this would include such things as roads. You agree to share the expense and responsibility for the repair and maintenance of this property with other unit owners. Your share of the costs is determined by your unit factor.

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Condominium Contributions (Fees)

As a condominium owner you’ll pay a yearly or a monthly condominium contribution often referred to as a condominium fee. A condominium corporation needs money to meet its financial obligations—paying for insurance premiums, snow removal, grass cutting, repairs to common property, reserve fund contributions, etc. The main source of income for a condominium corporation is the money paid by the owners in their condominium fees.

The condominium board sets contributions by taking into consideration the budgeted needs of the corporation and the unit factors (for each unit). Corporations can now charge the formula for allocating condominium contributions, if the owners pass a special resolution to amend the by- laws. Make sure you know how your condominium contributions are calculated. Most condominium contributions are paid monthly. Be aware that condominium contributions can and do go up! If the corporation does not have enough money in the reserve fund to cover significant repairs or incurs other large unexpected expenses, the board may require each condominium owner to pay a special assessment to cover the costs. However, the new government requirement for condominiums to do a reserve fund study and to develop a reserve fund plan should significantly reduce the need for special assessments for repairs and maintenance

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Questions to Ask When Buying a Condo

We will be sure you know the answers to these questions before you purchase a condominium:

  1. What is the development’s history? For example, are there any persistent problems?
  2. If you are buying from a developer, what work remains to be done on the condominium development? Does your purchase agreement identify a completion date?
  3. Is there an operating surplus or deficit?
  4. What is the current financial status of the corporation? Ask for a copy of the year-end financial statement, the current financial statement, the current budget, and evidence of adequate insurance coverage.
  5. Does the common property appear to be well maintained and managed?
  6. Do the unit owners own the recreational facilities as part of the common property, or does the condominium corporation lease them? If they are owned, are they used by anyone besides the unit owners? If they are leased, what are the terms?
  7. How many of the units are unoccupied? Rented?
  8. Are you personally responsible for any maintenance duties?
  9. Are there any restrictions in the by-laws governing your use of your unit? Can you have pets? If there is an age restriction on occupants in the complex? Can you operate your home-based business from your unit? Can you put up your satellite dish? Can you put in a hot tub?
  10. Are there extra parking spaces for owners? Is there enough visitor parking? Are there restrictions on visitor or owner parking? Can you park your motor home somewhere?

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Buying a Condominium From a Developer

The developer has a duty to deal fairly with you when entering into, performing and enforcing the purchase agreement. Before you buy, the developer must provide you with a copy of:

  1. the purchase agreement
  2. the by-laws or proposed by-laws
  3. any management agreement or proposed management agreement
  4. any recreational agreement or proposed recreational agreement
  5. the lease, if the land on which the unit is located is leased
  6. any mortgage or proposed mortgage that may affect the title of the unit
  7. the condominium plan or proposed condominium plan
  8. the phased development disclosure statement if the unit is in a phased development
  9. reserve fund information, if the development is a conversion

If you want to cancel your purchase agreement:
If you are buying a new unit from a developer, the Condominium Property Act allows you to cancel your purchase agreement within 10 days from the date you signed it, if you did not receive all the required documents . You are entitled to a full refund within 10 days after the developer has received your written notice to cancel.

As your representative we will guide you through what can be "information overload" and act as a go-between, between you and the developer, to be sure your special interests are met!

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Buying a Previously-Owned Condominium

When you buy a previously owned condominium, you are not protected by the disclosure and trust provisions of the Condominium Property Act. The onus is on the buyer to get the necessary documents and information.

As your Realtor, we will be sure you obtain the following documents before you make a firm commitment to purchase:

  1. the condominium plan
  2. information about any restrictive covenants
  3. the condominium by-laws
  4. the phased development disclosure statement, if any.

The condominium corporation will provide us with the following information within 10 days of our written request. The corporation will charge a fee for these materials (as of 2004, it is $100 plus GST):

  1. Status Certificate
  2. any governing policies of the condominium
  3. the particulars of any legal action or claim against the corporation
  4. details of any written demand made upon the corporation for $5,000 or more
  5. a copy of the corporation’s current budget
  6. a copy of the most recent financial statement and year-end statement
  7. a copy of the latest minutes of general meetings of the corporation and of the board
  8. details of any management, recreational and lease agreements
  9. a copy of the approved reserve fund plan and annual report, including a statement identifying the amount of the capital reserve fund
  10. a statement setting forth the unit factors and the criteria used to determine the unit factor
  11. information on any structural deficiencies that the corporation has knowledge of at the time of the request in any of the buildings of the condominium plan
  12. a copy of the corporation’s certificate of insurance, showing the amount of insurance on the complex
  13. a copy of any lease agreement or exclusive use agreement with respect to the possession of a portion of the common property, including a parking stall or storage unit

Acting as your Realtor we also try to obtain the corporation’s most recent newsletter, the names & numbers of the corporation’s current board of directors and property manager.

As with the purchase of any real estate, it is wise to use the services of both a Realtor and lawyer experienced in condominiums.

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What is a Reserve Fund?

As buildings age they need to be repaired and maintained. This also applies to other common property such as the exterior of the building, asphalt, underground utilities or services and landscaping. As with all other expenses of the corporation, the owners must pay for the repair or replacement costs. A portion of your monthly condominium fees must be allocated to a reserve fund to ensure there are monies available for needed repairs and maintenance.

By September 1, 2002, all condominium corporations registered before September 1, 2000 must have completed a reserve fund study and approve a reserve fund plan to establish and maintain a reserve fund. Condominiums developed after September 1, 2000 have two years from the time they are completed to do a reserve fund study and approve a plan. Reserve fund studies must be conducted every 5 years.

Questions to think about:

  1. Is there a reserve fund?
  2. How much money is in the reserve fund?
  3. How much of the condominium fee goes to the reserve fund?
  4. Has a reserve fund study been done, and if so, when?
  5. What major expenses, if any, are being considered in the reserve fund plan?
  6. How much money will be needed to establish and or maintain the fund to offset future replacement assessments etc?

As your Realtor we will be sure you obtain a copy of the reserve fund plan and the annual report if available

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How do I find out about the condo corporation?

Learn everything you can about the condo board of directors before you buy into a development governed by one. The association's financial, political and legal conditions are very important to your investment and quality of life.

When run properly, condo corporations maintain the common grounds and keep civility in the complex. If you follow the rules, the association should not intrude on your privacy or cost you too much in condo dues.

Poorly managed associations can drag down property values and make living there difficult for residents. Start by studying the association's covenants, codes and restrictions, and find out if you can live by them. For example, if the rules prohibit loud music after a certain hour and you like to play your CDs late at night, this may not be the place for you. Don't move in thinking you can get away with violating the rules or change them later because you may find yourself in turmoil with determined neighbours firmly in control of the association board. If you have a pet be sure they will be welcome.

Find out all you can about the association's finances. Beyond reviewing the budget, talk to the association treasurer and find out if fees are expected to increase and if any special assessments are planned. Ask if special inspections have revealed problems with roofs or plumbing that may cause a dues hike or special assessment later on.

Speak with residents to get their views on the association's financials, its property manager, how it operates and any politics. Associations are volunteer organizations with elected boards, like a mini government, so politics can enter the picture and spoil a good thing.

Lastly, take some time to understand how homeowners associations are organized and how they conduct business. Like all real estate investments, the more you know the better off you are.

We can help you with all these details because of our familiarity with the issues regarding condo corporations.

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How Condominiums Are Run (Voting Rights)

As an owner of a unit you have the right and obligation to vote. Your voting rights are determined by the Condo Act, by-laws and by the unit factor for your condominium unit.

As with most general meetings, votes are conducted by a show of hands. The by-laws clarify who has the right to vote if more than one person owns the unit.

All by-laws permit owners to ask for poll votes at meetings. In a poll vote the person’s share of the unit factor assigned to the unit determines the weight of that owner’s vote.

You may exercise your right to vote personally or by proxy. If you owe money to the corporation for 30 days or more before a vote, you lose you right to vote

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Are condominiums risky to buy?

While condos never had the kind of appreciation experienced by single-family homes in the go-go 1980s, most ultimately have not lost any more value than a single family home, say some experts.

As with any home purchase, you should do your homework about the neighbourhood or development before you buy. In the case of condominiums, it is important to read the past association minutes to see how effective the board is and learn about any possibly detracting issues. We make sure you receive status reports, by-laws and regulations so you can make the most educated decision possible!

With years of experience in the London market, we have information that can assist you in such condo concerns as the budgets, past sale prices, potential appreciation and future promise. Having taken many recent courses to familiarize ourselves with the new condo act, we are able to assist you in deciding if a particular corporation is more at risk than another.

Other resources:

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Are condos a good investment?

Condominiums have held their values as an investment despite economic downturns and problems with some associations.

While there are lots of reports about homeowners association disputes and construction-defect problems with condominiums, the London market has, overall, been free of most of this.

Be sure elected volunteers who serve on condo association boards are trained to handle complex budgets and legal issues. Find out what updates have been done and when, what needs to be completed and when? Is it in the budget or will there be special assessments?

Meanwhile, changing demographics are making condominiums an attractive investment for single home buyers, empty nesters and first-time buyers in expensive markets.

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Are one-bedroom condominiums a good investment?

One-bedroom condominiums historically have not been considered as good an investment as condos with two bedrooms or more. But in high-cost markets, such as Toronto or Vancouver, one-bedroom condos have proven to be equally good investments. Helping that along are changing demographic trends. With more single home buyers in the market today than at anytime in history, there is more demand for one-bedroom condos, but generally only in high price areas.

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How do you choose between condos and single family homes?

Using appreciation as a measure, condominiums in some areas have been as profitable an investment as single-family homes in the past ten years. And in some markets, condos appreciated even more, according to some experts.

While single-family homes have been the preferred investment for home buyers, changing demographics are helping make condos more popular, especially among single home buyers, empty nesters and first-time buyers in high-priced markets.

Especially promising in the London market are the one floor condos which seem to be sprouting up everywhere. Two car garages and open concept floor plans seem to be the most popular. Many of the buyers are even finishing the lower levels.

When deciding between a single family home and a condo consider condo fees, price per square foot, privacy issues and your lifestyle. Do you still want to garden? Are you away a lot? Is maintenance an issue?

Contact us for a confidential consultation to assist you in considering all your options.

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Joyce Byrne, Broker
Sutton Group Preferred Realty Inc., Brokerage
Independently Owned & Operated

181 Commissioners Rd W • London ON Canada • N6J 1X9
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