Looking for a new home can be an exciting experience. If you are looking specifically for a condominium, you may be surprised at all the different things to consider; as buying a condo is not the same as buying a single-family home. There are many benefits of owning a condo, such as taking advantage of shared amenities and building maintenance. However, you will likely be sharing walls with neighbours and other common areas, which makes owning a condo different from a stand-alone house.
What is a Condominium?
A condominium, or in short, a “condo” is a single unit within a community of other units. Condos are typically apartment-style properties, freestanding homes, or townhouses. Condo owners jointly share common areas such as garages, elevators, hallways, gyms, pools, etc.
It is important to understand the responsibilities that come with owning a Condo and what the purchase includes. Although some areas are shared as common property, owners are typically responsible for the interior of the condo and the structural components of the exterior walls.
What is a Condo Association?
Shared areas of the complex are typically managed by a condo association. The association acts as a supervisory board to manage the common areas and govern the rules and regulations set out in the bylaws. Within the association, the Board of directors are nominated by the ownership to be the voice of the association. They are made up of a group of volunteer owners, who are collectively responsible and accountable for decisions regarding the association, on behalf of owners.
Often, a property management company is hired on behalf of the association to handle maintenance, communication amongst owners, and the property finances. A property manager will work directly with the Board of directors and acts as an agent of the condo association.
What is the difference between owning a Condo and a House?
The main difference between owning a condo and a house is maintenance. If you owned a house and needed the roof repaired, that would be your financial responsibility alone to have it fixed. If you own a condo, maintenance such as this would likely be split between the owners of the condo association. Since common area maintenance is shared amongst owners, this requires a monthly fee to be paid to ensure the expenses can be paid. These monthly fees are referred to as condo fees in Alberta.
Sharing common costs may be an important factor when making a decision about owning a condo, but it is important to remember that you will be part of a community that has rules and regulations that need to be adhered to. For example, your condo association may not allow pets on the premise, there may be aesthetic requirements to follow or if there is a big repair, a special assessment may be required. This involves collecting fees outside of the monthly condo fees to ensure big projects can be completed.
Why is due diligence so important when buying a Condo?
One of the most important things to protect yourself, when looking at buying a condo, is to research the condo association and do your due diligence. Review the association bylaws, look at the financial records, community rules and regulations, and Board meeting minutes. All of these documents will help you make informed decisions before purchasing a condo. Important documents to review, include:
- Recent Reserve fund – A well-funded reserve fund can be an important document that shows buyers that the condominium association is in good financial standing.
- Operating Budget & Financial Statements– These documents show what the condo association is spending the owner’s condo fees on (amenities, contractors, management fees, etc.)
- Board Meeting Minutes – This will give buyers an insight into whether there are upcoming major repairs in the forecast.
- Bylaws – This is an important document for buyers to see what the rules and regulations of the property are, regarding pets, parking, and amenity use.
- Estoppel Certificate – This is a signed statement from the condo association that provides the current condo fees for the unit, the payment schedule of the fees, and whether any contributions are unpaid.
- Information/Disclosure Statement – This document includes any lawsuits involving the association (including the amount claimed against the association), any judgments or orders that the association is liable for, how much funds are in the reserve fund, the amount of the monthly condo fees for the unit and if there are any structural deficiencies or loans.
In summary, owning a condo can be a great investment, but its own rules require potential owners to do their due diligence and check all the governing documents before making a decision to purchase a condo. It’s best to seek advice from a professional Realtor who has experience with condo sales to ensure it is the right fit for you.
