Condos are becoming the home of choice for Torontonians, gaining popularity over other types of dwelling every year. There are several factors driving this shift, including desirable urban locations, tempting amenities, and affordability.
However, many first-time condo buyers are unaware that condo fees are part of the deal. It is essential that buyers factor these fees into their budget and purchase decision, as in Toronto they can be expensive.
In order to understand them properly, here are five of the most important things you should know about condo fees.
They cover a range of different things
Condo fees pay for various things including utilities, communal areas, maintenance, and a reserve fund.
A portion of the fees goes towards the water, hydro, and sometimes heat.
Condo fees also pay for the upkeep of all communal areas including amenities.
The more amenities the building has, the higher the condo fees generally are, and you will be required to pay for those amenities whether you use them or not. Your fees also cover maintenance such as exterior window cleaning and snow removal, as well as creating a reserve fund for emergency repairs.
You are legally required to pay
Condo fees are not optional, and in Toronto, they are governed by the Ontario Condominium Act. All owners are required to contribute their share, and falling behind on payments could lead to you being sued.
In some circumstances, the condo corporation is also given the right to sell a unit in order to recover the debt owed by the owner.
Fees can vary between different units in the same building
Condo fees are calculated based on the value of the unit as a portion of the value of the building. For example, if your unit is worth 5% of the value of the building, then you will pay 5% of the common costs.
Therefore, condo fees are affected by factors such as square footage and placement in the building, so you may be paying more or less than your neighbor.
You may still have to pay more
It’s important to understand that budgeting for the advertised condo fees isn’t enough, as the amount can increase as a building ages.
If you purchase a condo pre-construction, then be aware that these fees have been set without knowing how much the upkeep of the building will cost.
They are often set initially low and are therefore likely to increase in the first couple of years. Furthermore, if there is not enough money in the reserve fund to cover costs, then all owners will be required to pitch in their proportionate share.
Low condo fees aren’t always a good thing
It’s easy to be tempted by attractively low condo fees, however, it's important to be cautious.
Often fees are set low in new buildings to sway buyers, however, in time, they will need to be increased substantially.
Low condo fees could also be an indication that the building is not being effectively maintained.
This neglect decreases the value of the building, disadvantaging owners. For more helpful tips like these come back and visit mirvishandgehry.ca