Condos and Money

Information provided by Kathleen Waters, vice-president, TitlePLUS

What kind of expenses do you need to be prepared for when buying a condominium? What do all the terms mean—and which are more important than others? These types of concerns are common among many new condo buyers. Here are some frequently asked questions to get you started:

What are common expenses?

Common expenses - which are sometimes called maintenance fees or condominium fees - are payments that unit owners must make every month to cover their portion of the expenses for the common elements (areas in the condominium development enjoyed by all residents).

Common expenses pay for the daily care and upkeep of the condominium. For example, cleaning of the common elements, snow removal, landscaping, building repairs, plus property management fees, utilities for the common elements and more.

What is the Reserve Fund?

The Reserve Fund is a fund set up by the condominium corporation to cover major repairs and upgrades to the building, including items such as the roof, elevators or parking garage. A portion of each common expense payment goes to the Reserve Fund.

What is a special assessment?

A special assessment is a charge beyond the monthly common expense fee that is established by the condominium corporation if the Reserve Fund does not contain enough money to pay for a major repair. A special assessment can be levied at any time. The added expense can be an unwelcome surprise: It is a good idea to have your lawyer review your Status Certificate so that he or she can bring any special assessments to your attention and discuss your options with you.

What is a Status Certificate and why is it important?

A Status Certificate is a written statement of the condominium unit's current financial and legal status and that of the condominium corporation. It will give you specific information about your monthly common expense fees.

It's important for your real estate lawyer to review a copy of the up-to-date Status Certificate because:

• It includes key information including: details relative to common expenses, payment arrears, special assessments, any pending legal actions, insurance and any unusual additions to the common elements for your unit that have not been approved by the Board. For example, the condominium corporation may have established a special assessment for unanticipated repairs or expenses such as a leaky roof. This information will appear on your Status Certificate.

• Information on the Reserve Fund is also included on the Status Certificate. Reserve Fund studies are an important aspect of condominium management. You want to know that the condominium corporation is complying with its requirements to obtain Reserve Fund studies and that the Reserve Fund is currently considered adequate for future major repairs.

If you have questions about buying a condominium, speak to your real estate lawyer. If you need a referral to a professional real estate lawyer in your area, go to the Real Simple Real Estate Guide on titleplus.ca.