Condominiums are appealing to purchasers because they can be in a more desirable price range than single-family homes and provide easier access to amenities and a low-maintenance lifestyle.
However, these advantages do come at a price. You’ll also have to budget for the upkeep expenses, commonly known as condo fees, and your mortgage. This article will discuss what condominium fees are, when they can be reassessed and what they imply for your mortgage, especially when it comes to apartment-style condo construction.
What are condo fees, and how are they different from rental fees?
To summarize, condo fees are monthly payments made by condo owners to a condo corporation (the organization that manages the building). This money is then combined and used to pay for maintenance and general upkeep of the facility. A condo board, comprised of individuals from the building who act in the interests of all parties, is in charge of managing the property.
The most frequent expenses included in monthly fees are as follows:
- Utilities—A condo corporation may pay the utility expenses of a building. It may pay for water and electricity, but no heat.
- The reserve fund—The building’s reserve fund is a sum of money set aside for unforeseen repairs, and a portion of condo expenses will be used to maintain it. If the roof or boiler in a building has to be replaced, the condo board may utilize some of this money to pay for it. Knowing how much money is in the reserve fund of a building before you buy into it can help you assess its financial health.
- Common area maintenance—Condo fees may also be used to pay for garbage removal, snow removal, and the maintenance of common areas such as hallways, lobbies, elevators, and grounds surrounding the building or properties.
- Amenities—The more amenities your condo complex provides, the higher your condominium fees will almost always be. Pools, welcome services, steam rooms, shared rooftop terraces, and parking all increase the cost of your condo fees while providing value in return.
The size of the development might also influence the cost of your condo. Because the necessary maintenance and utilities will vary, a building with 20 units will not have the same fees as one with 200.
Is there a charge to live in townhouses?
Not all townhouses charge condo fees—owning a freehold townhouse is the same as owning a freehold single-family house. That said, specific townhouse neighbourhoods will have condo fees, which may include gardening, fence maintenance, garbage collection, common facilities, and other general upkeep costs set forth by the condominium board. When buying with your Chilliwack real estate agents, they’ll tell you if the townhouse is a condo or freehold.
When can your condo board change your fees?
When it comes to condo fees, it’s all too easy to favour those with lower costs. Lower prices, however, may come with a hidden cost. If the fees are too low, the condo corporation may not have enough cash to pay for more substantial repairs, resulting in a special assessment.
Your Chilliwack Realtor may assist you in obtaining a better understanding of the building’s past since they are familiar with the region. They can also suggest properties with better success rates to feel more at ease with your selection.
A special assessment is a sum of money that condo owners must pay in addition to their usual monthly condo fees and mortgage payments. The rules surrounding special assessments will differ depending on provincial legislation, so it’s always a good idea to familiarize yourself with them.
- Unforeseen expenses—Unanticipated expenses, such as replacing the roof, may occur. This might happen when a condominium board has used up its reserve fund during a crucial year for the reserve fund when it is near depletion. As a result, the remaining balance is insufficient to cover unanticipated expenditures, and a special assessment must be paid.
- Under-budgeting—If an expenditure or a major repair turns out to be more than anticipated, you may also pay a special assessment.
- Losing a lawsuit— Unit owners must “bear any judgment against the condominium,” implying that the board will need to impose a special assessment to cover expenses if the operating fund isn’t sufficient to pay the judgment.
Is it true that condo fees influence your mortgage?
When searching for a condo, it’s always a good idea to double-check your monthly expenditures—including your mortgage payment, property tax, insurance, utility costs, and condo fees—to ensure you can afford everything before applying with your lender.
Furthermore, condo fees might impact an owner’s condo insurance.
Not all condo fees are the same. Each property may have its costs. Some condo fees may be paid for with a certain type of insurance, while the kind of home insurance policy you should get might differ. Conversely, whether your house insurance considers what’s covered by the condo or expenditures is entirely up to your insurer.
If you’re unsure how to interpret the condo fees, request the board’s status certificate. This document contains all of the information about the condo maintenance corporation’s financial situation, current information on their reserve fund size, and ongoing legal conflicts.
Whether you’re a first-time buyer or not, it’s all about asking questions and staying up to date. Your Real estate agent can assist you with condo fees, status certificates, and other aspects of your condo purchase procedure.