It is often said that buying a condominium is buying a lifestyle. What does that mean?
Condo living is different from owning or renting a single dwelling, town house or apartment, because condos have a dual nature. Condo owners hold title to their units and share responsibility for the operating costs of the balance of the property (common elements such as lobbies) that makes up the condo.
There are many advantages to condo ownership. It may be less expensive than other types of home ownership. It can provide an "instant" sense of community. While someone else is shoveling the snow, you can participate in community decision-making. But condos are not everyone's cup of tea. Condominium corporations may set restrictions on such things as owning pets, or having an outdoor barbecue.
When you purchase a Condo, you automatically become a part of a homeowner's association to which you pay Condo fees The fees cover the cost of maintaining and insuring the common areas. Precisely what the Condo Fees cover will vary from one complex to the next, so find out exactly what's covered before you buy.
The Condo Fees also help fund a Reserve Fund to cover major expenses, like refurbishing common areas or replacing an elevator. Before you buy a condo make sure your lawyer checks a current financial statement for the association. If the reserve account isn't flush enough to cover unanticipated expenses, the individual homeowner's could be accessed an additional amount to cover the expense. This will add to your cost of ownership.
Reserve Fund Studies:
A condo corporation must maintain a reserve fund for the sole purpose of paying for major repairs and replacement of the corporation's common elements and assets. Corporations are required to conduct a reserve fund study to determine whether the fund can cover these costs. Once the study is done, the board proposes a plan to ensure the reserve fund is adequate. All owners must be given a notice containing summaries of the study and plan and a statement indicating any differences between the two. All existing condominiums must have completed a reserve fund study by May 5, 2004.
The fund must become fully funded within 10 years of the study. New condominiums must complete a study within one year of registration and the fund must be fully funded by the end of the following fiscal year.
How is the condominium run?
A board of directors elected by the owners runs the condominium corporation. The board's function is to manage the corporation. A new requirement will ensure that if at least 15 per cent of the units are owner-occupied, owner-occupants will reserve one position on the board for election. In this way owner-occupants are assured representation on the board.
Major decisions are voted on at owners' meetings. Under the new Act, annual general meetings must be held within six months of the end of the condo corporation's fiscal year to ensure that unit-owners have an opportunity to review the financial statements in a timely manner. Participation in community decision-making is a benefit of condominium living.
If you own a condominium Ontario's Condominium Act helps to better protect your investment and to improve the day-to-day operation of your condominium.
