A lot of our condo buyers, particularly first timers will often ask about condo fees and what they cover
How is my Condo Fee Amount calculated?
This is typically done on a cost per square foot per month. As an example, if your condo is 1000 sq ft and the per foot condo fee is 60 cents, that would equal $600 per month in condo fees.
Where does this monthly condo fee go?
There are 2 places where your condo fee is allocated.
- 1. Operating Expenses, roughly 90%
- 2. Reserve Fund, roughly 10%
Think of the two places above as a chequing account and a savings account. The operating expenses will be maintenance people, landscaping etc.
The reserve fund will be there to cover larger things like replacing all of the windows or rehabilitation of the parking garage, which could be costly.
There is another cost that is over and above the operating and reserve, this is called a special assessment, or 3rd cost which is unanticipated and over and above the reserve fund available. In this situation, all owners are levied a special assessment as there is not enough money in the fund to pay for all of the stuff needing done.
The board of directors will then need to go to the condo owners and tell them that they have a problem and each condo owner needs to chip in a certain amount to fix the problem.
You should know about all of the expected and unexpected costs that can come when buying a condo.
How does the condominium struture work?
This is a common question we are asked from people looking to buy condos here in Ottawa.
Quite simply, here's how it works. You have all of the condo owners who get together and they form a board of directors.
These board directors live in the condo building and are voted in to their positions. These directors now represent the homeowners who then look at how they will manage the property.
If it's a big building they might choose to pay a condo management company to take care of everything. They will take care of the cleaning of the carpets as well as longer term issues that are going on with the building. The board of direcors can also decide they don't need to hire an external property management firm and they can self manage their own building.
This way they can save the 5-8% fee and manage things on their own. This way the directors would then contact and negotiate their own contracts with outside companies for landscaping, snow removal etc.
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