What are Condo Fees?
Condo fees are regular monthly fees condo owners pay to cover expenses associated with the upkeep of the building their unit is housed in.
The condo corporation’s board of directors annually determines these fees.
Condo fees pay for utility costs, expenses related to common areas and contribute to the reserve fund.
Utility expenses primarily include water, hydro (electricity), and heating in your unit.
Depending on the condo you live in, you might be responsible for paying some of the utility costs directly.
Common areas refer to parts of the property shared by and accessible to all condo owners.
Costs related to this category of expenses include lawn care, snow removal, janitorial services, security, and trash removal.
Amenities such as gyms and swimming pools, insurance, accounting, and legal fees also fall into this category of expenses.
The reserve fund is a pool of money set aside to pay for significant repairs and upgrades that affect the entire building and surrounding property.
Examples are roof replacement, re-pavement of the parking lot, and landscaping.
Don’t Forget!
You can obtain a condo corporations’ status certificate for a small fee, containing valuable financial details, such as the operating budget, pending legal issues, and reserve fund size.
Factors that affect Condo Fees
Below are the most common factors that impact the amount of your monthly condo fee.
1. Your Condo Unit Size
Your condo fees are assessed based on the amount of square footage your unit occupies within the building.
Generally, the larger the unit, the more you can expect to pay.
2. Building Size
Large buildings often contain many units, which results in lower monthly fees as each unit absorbs a tiny portion of maintenance costs.
Conversely, a small building might charge a high monthly fee since expenses are divided among fewer units.
3. Type of Building
There are several different condo buildings in terms of construction style and features.
They can be high-rises, mid-rises, townhouses, etc.
An opulent high-rise building might contain a sizable lobby, multiple elevators, a sprawling parking garage, and concierge service.
Naturally, the upkeep for this building type will translate to higher monthly fees.
On the other hand, a townhouse-style condo building can afford to charge substantially lower fees.
The reason is that there are fewer common areas, and condo owners are more likely to pay for their utilities individually.
4. Age of Building
In general, older buildings have higher monthly condo fees than newer ones.
Ageing buildings require more frequent repairs and replacement of crucial components, such as the roof, balconies, elevators, and windows.
Naturally, the condo board will increase fees to ensure there’s enough money to cover these rising costs.
5. Amenities
If you’re keen on living in a condo building that offers an abundance of amenities, be prepared to tackle potentially outrageous condo fees.
Conversely, if you’re content with simply a surface parking stall for your car, you probably won’t need to break the bank to meet your monthly condo fee commitment.
6. Location
Properties situated in the downtown core or near a popular park might command higher condo fees due to strong demand and a higher cost of living.
On the flip side, properties in underdeveloped neighbourhoods will often charge lower fees.
High vs Low Condo Fees
A high-fee condo unit might make you grimace, but the steep rate could be due to the numerous and exceptional amenities provided.
For some people, these benefits outweigh the high cost of the monthly fee.
High fees however may also result from poor financial decisions made by the condo board.
Therefore, it’s wise to examine the condo corporation’s financial statements and other relevant documents to determine what is causing the high fees.
A condo unit might offer low a low monthly fee because it provides few amenities.
You might also have to cover the cost of some utility bills personally, which reduces the fee accordingly.
You’ll have to adjust your budget to ensure you can pay for these extra costs on top of the condo fee.
A low condo fee charged on an old building might indicate a dangerously inadequate reserve fund.
Major repairs can quickly deplete the reserve fund, forcing the condo board to levy a special assessment, a substantial one-time expense divided among each condo owner.
Did You Know?
To protect yourself financially against a possible special assessment fee, you can add special assessment coverage to your condo insurance policy.
Frequently Asked Questions
- Why are condo fees so high?
- Are condo fees negotiable?
