Condo fees and reserve funds

What do my condo fees cover?

Your monthly condo fees pay your portion of the cost to maintain and repair the common property. These costs may cover:

• removal of snow, garbage and recyclables

• landscaping

• cleaning (carpets in common areas and outside windows, for example)

• heating and cooling systems maintenance

• amenities (such as a swimming pool or party room)

• utilities

• cable and Internet

• insurance policies for the condominium’s common areas

• security systems maintenance and monitoring

• salaries of employees (if there is a superintendent or security guards, for instance)

• property management fees.

A portion of your condo fees will also likely go toward the building’s reserve fund. A reserve fund ensures that the condominium has enough money to pay for the major repair and replacement of the common elements over the life of the building. These may include the roof, roads, sewers, sidewalks, elevators, plumbing and other building systems. For more information on reserve funds, see Is there enough money in the reserve fund?

To find out exactly what is — and is not — included in your monthly condo fees, check:

• your disclosure statement (for new condominiums)

• the condominium’s operating budget

You can also find out more about your fees by speaking with your Realtor prior to purchasing a unit.  Ask for confirmation in writing.

What can happen if I don’t pay my condo fees?

Don’t even think about withholding your condo fees! They are neither optional nor negotiable. For example, if you don’t plan to use your building’s swimming pool, you must still pay a share toward its care and upkeep. Likewise, being frustrated with the board of directors, property manager or another unit owner doesn’t allow you to stop paying your fees.

In some provinces, the condominium corporation can register a lien on your unit if you do not pay your share of the common expenses. This means the corporation may have the right to sell the unit to recover the money it is owed. It may also be entitled to charge interest and collect any reasonable legal costs and expenses it has incurred while trying to collect the debt.

Suspension of voting rights can be another unfortunate consequence of withholding condominium fees. In some jurisdictions, you are not entitled to vote if you are more than 30 days behind in your payments.

Many banks include provisions in their mortgages that owners who are in default of their condo fees are automatically in default of their mortgage. Depending on the amount owed, they may be at risk of foreclosure.

Is there enough money in the reserve fund?

The condominium’s reserve fund provides financing for major repairs and renewal projects over the life of the condominium building. The fund essentially ensures that the condominium’s common elements will be maintained in good shape.

The amount of money that should be in the reserve fund depends on:

• the condition and life expectancy of all of the common elements in the building

• the estimated cost to repair or replace them over the life of the project.

Condominiums often rely on a reserve fund study to help them determine how much money should be in their reserve fund. Reserve fund studies are carried out by engineers or other professionals who assess the condition of the common elements of the building, estimating their remaining lifespan and their related repair and/or replacement costs. They then estimate what monthly or annual contributions will be necessary for long-term renewal.

Some jurisdictions have condominium legislation that requires that reserve fund studies be done on a regular basis. Others leave it up to the owners to estimate how much should be in the fund.

Regardless of where you live, it’s essential that you find out the current state of the condominium’s reserve fund. Check the disclosure statement or status certificate for this information. Your Realtor will assist you in obtaining this information.

— Canadian Mortgage and Housing Corporation