What Are Condo Fees? 3 Things to Know

What are condo fees, how are they calculated and what do they cover? Condos have become the home of choice for many Canadian homebuyers, particularly first-timers, but increasingly move-up buyers as well. But many don’t understand this lifestyle option before deciding that it’s right for them.

Affordability is a big factor behind the relatively recent shift to condo living, but it’s certainly not the only appeal. Other benefits include a sense of community (yes, vertical communities are a thing!), easy access to urban conveniences, public transit, employment and entertainment, as well as a lock-and-leave lifestyle for when life takes you further abroad.

RELATED READING: RE/MAX 2020 Housing Affordability Report

What are condo fees, how are they calculated, and what do they cover?

 

What are condo fees?

Every condo owner pays a regular, non-negotiable condo fee. This fee is calculated based on your share of the condo building – the larger your unit, the greater your fee. This fee is adjusted annually based on the condo’s operating budget.

 

What do condo fees cover?

Your condo fees are divided into three main categories: utilities, common areas and the reserve fund. Let’s take a closer look.
A chunk of your condo fee goes to utilities such as water, hydro and sometimes heat – but this isn’t always the case. Most brand-new condominiums are now being built with individual heat pumps that are controlled by, and paid for by individual owners. Make sure you’re clear on your condo fees before you buy.

We’ve already mentioned that condo ownership means less maintenance on your to-do list. But somebody’s gotta do it, right? Your condo fees cover that expense as well.

And remember those awesome amenities that your family and friends come over to use? You have to contribute to their upkeep. The more amenities your condo has, the higher your condo fees will be. Think pool, gym, hobby rooms, sports courts, an in-house theatre, indoor and outdoor areas. Ask yourself if you’re going to actually use all of the amenities offered by your condo, because you’ll be paying for them.

Condo fees also pay for snow and garbage removal, cleaning and minor repairs of common areas, exterior window washing and the like.

 

What is a reserve fund?

A portion of your condo fee is set aside in a reserve fund, which every condo board must maintain as a savings account for big-ticket items that inevitably arise. A roof replacement can cost upwards of half a million dollars, so this fund is essential.

Then there’s the Special Assessment. In the case that the reserve fund doesn’t quite cover the bill, each condo owner will be required to pitch in their proportionate amount to cover the cost.

If you’re considering condo ownership, make sure you incorporate the condo fee into your budget. Make sure to leave a buffer in case your condo fees increase, which tends to happen as condos age. Any increases are at the discretion of the condo board.

Before you make an offer, get a copy of the condo’s status certificate, which contains important details about the condo’s financial status. Review it and make sure you understand it. The document will include things like the condo’s budget, any pending legal matters, information about the reserve fund, current maintenance fees, and whether any increases are planned in the near future.

The fee for the status certificate? It varies by province, so ask your local RE/MAX agent. In Ontario, you can expect to pay about $100. The information contained it in? Potentially worth a great deal more to your investment.

 

6 Hidden Expenses Buyers Often Forget About When Purchasing a House

Buying a house is one of the biggest purchases you will make in your lifetime and a lot goes into the planning and finances of purchasing a home, especially if it is your first home. From a down-payment, to repairs & maintenance, to purchasing furniture and appliances, there are hidden expenses that one might not think of when in the home-buying process.

We reached out to our RE/MAX Influencers – a panel of RE/MAX sales associates throughout Canada- to narrow down a list of the top six expenses that buyers often forget about when purchasing a home.

Property/Land Transfer Tax

The Property Transfer Tax (PTT) or Land Transfer Tax (LTT) is one hefty expense that our RE/MAX Influencers agree is often unaccounted for in advance of the purchase. All provinces except for Alberta and Saskatchewan have this tax, which differs between provinces. In BC, for example, when a buyer purchases or gains an interest in property that is registered at the Land Title Office, they are responsible for paying PTT and filing a property transfer tax form. Meanwhile in Toronto, home buyers must pay both a provincial and municipal LTT. BC, Ontario and Toronto, as well as Prince Edward Island, all offer rebates to first-time buyers to help offset the cost.

Property Tax

“At the time of purchase, the [property] tax owing by the seller has normally been accounted for with the clients, but not that it’s going to be due. If someone takes possession in October, they will pay the seller back for November and October, but then only have 6 months to save up 12 months worth of tax before it’s due. There is not enough discussion with buyers on this and given that they are normally ‘tapped out’ after the down payment and closing costs, it can be an unexpected bill if they haven’t owned a home before,” says Taylor Hack, RE/MAX River City, Edmonton, AB.

Insurance

While home, fire and content insurance is usually an expense that is considered right away during the home buying process, there are other types of insurance that can be overlooked. These can include things like title insurance, life insurance and mortgage insurance can come as surprise unexpected costs. When planning and going through the numbers associated with purchasing a home, make sure you take all types of insurance into account.

Home Inspection

One important thing that every homebuyer should have done is a home inspection on the property they are planning on purchasing. While some sellers may opt to have a pre-inspection done, it is always a good idea to have a home inspector look at the home to ensure that there are no issues with the land or structure of the home. The cost of a home inspection can often be overlooked, so it is important to remember to allocate a portion of your budget towards a home inspector when the time comes to purchase your home!

GST/HST

While sales tax is generally only applicable to newly constructed houses and condos, as well as services related to the real estate transaction (such as agents’ commissions and legal fees) this cost is often overlooked – especially by first-time homebuyers. If you are looking at purchasing a new construction property, make sure you ask about the sales tax payable, and take the time to calculate it so you can budget for this amount.

Legal Fees

Another expense that is often forgotten during the whirlwind process of purchasing a home is that of lawyer fees. The exact amount varies depending on the purchase price of the home and differs based on the lawyer/notary. The legal expenses also often include ordering a title search and registering title.

“If we do not educate homebuyers, they usually don’t know about lawyer fees or sometimes have a skewed number of what the average lawyer costs,” says Sarah Koeckhoven, RE/MAX Preferred Choice, Spruce Grove, AB.

When estimating the cost of buying a home, don’t forget to include legal fees in the total list of main costs that need to be considered.

For more advice on buying a property, contact us today!

 

Courtesy of REMAX.ca

CANCELLED – National Home Show

National Home Show – The Big One

 

We don’t call it The Big One for nothing! There are over 800 home vendors ready to help you make your space, your way. The Big One is presented by RE/MAX and co-located with Canada Blooms for the largest North American display of innovative products, new ideas & great deals for all things home & garden. Come take advantage of all these great vendors in one space. PLUS! It’s 2 events, 1 ticket! Entrance to Canada Blooms is included!

Find Inspiration

In addition to an incredible assortment of vendors you’ll find inspiration around every corner, including the Dream Home!

Get Hands-on!

Have a few things to take care of around the house, but not sure how to start? Swing by our DIY Centres and learn from our experts! That’s right, Centres is plural! New this year, get hands-on in our outdoor DIY Centre as well!

See you there!

 

Courtesy of Toronto Home Shows

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