What are Condo Fees? What Do They Cover?
It’s official! You just bought the perfect home for your family. It’s the right size, in great condition, and the location and neighborhood are exactly what you were looking for. Your new home is in a condominium development, so the common areas and landscaped grounds are well-maintained and beautiful. The community also has great amenities; there’s a clubhouse for entertaining and fitness center – now you don’t have an excuse to not get back in shape!
When you purchase a home in a condominium community you not only own your residence, you also share ownership of all the common property with the rest of the owners. In addition to responsibility for the expenses related to your private home, you are required to share the costs of operating and maintaining your community’s common areas, systems equipment and shared amenities. It is important to maintain the common areas and equipment; an inviting appearance and smooth operations improve lifestyle for the residents and also enhance property values. These expenses are paid for by your condominium fees, which each unit owner must pay. Payments are usually due at the beginning of each month.
Condominium Contributions are set by the Board of Directors, who determine each owner’s share based on projected annual expenses and the unit factors of each residence. The unit factors for each unit are set out in the condominium plan and may not be altered. Titled parking or storage also have unit factors in addition to the residential space. Board members do not profit from condominium contributions; they are unpaid volunteers who are also homeowners and must pay the fees as all owners do.
No doubt you know you must pay a condominium fee each month, but do you know what this money is used for? Each condominium corporation is governed by its own unique rules and policies, so it’s important that you read your community’s bylaws to find out the specifics that apply to your situation. The overview below will give you an idea of what your condominium fees may cover. Attention to these details is important to operate the business of your condominium and protect your property values.
When you purchase a home in a condominium community you not only own your residence, you also share ownership of all the common property with the rest of the owners. In addition to responsibility for the expenses related to your private home, you are required to share the costs of operating and maintaining your community’s common areas, systems equipment and shared amenities. It is important to maintain the common areas and equipment; an inviting appearance and smooth operations improve lifestyle for the residents and also enhance property values. These expenses are paid for by your condominium fees, which each unit owner must pay. Payments are usually due at the beginning of each month.
Condominium Contributions are set by the Board of Directors, who determine each owner’s share based on projected annual expenses and the unit factors of each residence. The unit factors for each unit are set out in the condominium plan and may not be altered. Titled parking or storage also have unit factors in addition to the residential space. Board members do not profit from condominium contributions; they are unpaid volunteers who are also homeowners and must pay the fees as all owners do.
No doubt you know you must pay a condominium fee each month, but do you know what this money is used for? Each condominium corporation is governed by its own unique rules and policies, so it’s important that you read your community’s bylaws to find out the specifics that apply to your situation. The overview below will give you an idea of what your condominium fees may cover. Attention to these details is important to operate the business of your condominium and protect your property values.
- Day-to-day repairs and maintenance to common property, shared amenities, equipment and systems. Depending on your community, this may include:
- Office (copying, postage, etc)
- Miscellaneous operating expenses
- Social events
- Electricity
- Water and sewer
- Natural Gas
- Recycling fees
- Cable TV/Internet
- Garbage container rental
- Janitorial contract
- Building cleaning supplies
- Mechanical maintenance contract
- Electrical repairs and maintenance
- Elevator maintenance contract
- Building repairs (interior/exterior)
- Parkade/parking lot cleaning
- Floor mats/carpet cleaning
- Window washing
- Painting
- Landscaping/snow removal contract
- Fire systems and monitoring
- Security system maintenance
- Utilities. The corporation’s budget covers the costs of water, heating, electricity, lighting, air conditioning, etc. for all of the community’s common areas. Depending on the situation, residents may be responsible for the cost of these utilities within their units.
- Insurance. Condominium corporations must purchase insurance policies to protect the common property of the community in the event of damage, lawsuits and other perils. This insurance doesn’t cover the personal property and liability of the residents. Owners and tenants still need to protect themselves with homeowner or tenant insurance coverage.
- Reserve fund. In Alberta, the Condominium Property Act requires condominium corporations to have a reserve fund. The board must hire a “qualified person” to prepare a plan for maintenance or replacement of major components of the common property such as roofs, asphalt, mechanical systems – items that are not part of annual maintenance. The reserve fund planner creates a contribution schedule to cover the anticipated expenses. These contributions are incorporated into the annual budget, and the money collected deposited into a reserve fund trust account.
- Contingency fund. A percentage of the total budget may be collected to be used for emergencies or unforeseen expenses.
- Employees. All corporation staff expenses are paid by the owners through their condominium contributions. Staffing varies from community, but includes roles such as concierge, security, janitorial, and site manager.
- Professional property management. Many condominium boards retain professional management companies to ensure their community’s ongoing operations continue and to maintain financial stability. The management fees are incorporated into the annual budget and collected with the monthly dues. A professional management company’s role is to carry out the decisions of the board and provide full-service management that adds value and enhances the lifestyle of the residents.
There can be many benefits to living in a multi-family community and paying condominium fees. You may have access to community amenities you may not be able to afford and maintain on your own, such as a fitness facility, swimming pool, or a social amenities room. In some communities, you may no longer have to pay separately for landscaping and snow removal, heat, electricity, water and sewer, recycling, cable TV, and other services, saving you money.
Some people consider condominium fees an unwanted expense, but they are necessary to keep your community financially stable and operating smoothly. They also help protect the value of your property and provide benefits that enhance your lifestyle. For more information on condominium contributions and condominium living, contact FirstService Residential, the property management leader.