Although there are more than 2,500 registered condominium corporations in the City of Toronto alone, one thing is common between them all: condo maintenance fees.
Designed to spread the cost of common expenses among all unit owners, condo fees can fluctuate greatly between condo buildings. On average, condominium fees in the GTA are approximately $0.50 per square foot but can range up to higher than $1.00.
Are your building’s residents wondering how condominium fees are calculated, and why some condo buildings’ fees are so much higher than others? Here are some of the main determining factors you can pass along to residents at the next condo Board meeting:
How Condo Fees are Calculated
Before learning the factors that cause condo fees to rise, it’s important to know how they are calculated in the first place.
The 1998 Condominium Act requires each condominium corporation to have a declaration that’s registered by the developer of the condominium corporation. The document outlines the common expenses that are payable by each unit owner, expressed as a percentage of the entire corporation’s common expenses.
For example, if each unit owner has a one percent common expense allocation, then that unit is required to pay one percent of the common expenses for the whole corporation annually. Normally, this is paid in equal monthly payments at the beginning of each month.
Because common expenses usually correspond to a unit’s square footage, larger units typically pay more than smaller units. However, this is not always the case; in the end, a developer is free to set common expenses as it sees fit.
A Condo Building’s Common Expenses
An approved budget by the condo corporation’s board members helps determine a condominium’s common expenses for the upcoming year. The amount that is determined is usually equal to the budget’s anticipated expenses, although sometimes a slight surplus or deficit is budgeted for.
Included common expenses differ between corporations. Although one corporation may include hydro, gas and cable television in their common expenses, another may use metres to charge these item fees to each individual unit.
Besides utilities, typical common expenses include shared facilities, reserve fund, service and maintenance contracts, repairs and maintenance, administrative costs and on-site personnel.
Determining Factors in a Condo’s Fees
A condo’s fees are calculated using a variety of factors, with the main ones being:
- Building Size: Buildings that have more units to share the common expenses normally have slightly lower monthly fees.
- Age of Building: Older buildings usually require more repairs than newer buildings. However, all new buildings may not have lower fees since they may offer more amenities.
- Building Amenities: Amenities require upkeep and operation costs. Whether a condo building has only basic amenities (such as only a foyer and party room) or luxury amenities (ie. swimming pools, valet parking and theatres) will account for the difference in condo fees.
A Condo’s Building’s Status Certificate
Although shopping around for a condo building will likely include comparing condo fees, many potential buyers don’t research a crucial piece of information: a condo building’s status certificate.
Requesting a status certificate can provide crucial information regarding the financial state of the condominium corporation. Besides the current maintenance fees, discover the corporation’s total budget, reserve fund, management contract and legal matters it has been involved with.
Reviewing this document can provide insight into potential fee increases in the future – and save condo residents from a purchase that’s later regretted.
A lot goes into calculating a building’s condo fees and ensuring that enough money is in the budget to complete any necessary work on the building.
As a leader in condo renovation projects, Canadian Design and Construction ensures that a condo corporation’s budget is well spent.
For a complete listing of the services we provide, check out our website today.
By Sarah McKenzie