Insights & Articles
Purchasing a Condo: Pros and Cons
Congratulations on beginning your house hunting adventure! Whether it’s your first home or fifth home, purchasing a home is a big decision. As a home-buyer there are lots of decisions to make. One of these decisions may include whether to purchase a freehold property (i.e. a house) or a condominium. Ultimately, the decision will come down to your lifestyle, preferences and financial situation.
WHAT IS A CONDOMINIUM?
A condo is a single unit in a multi-unit dwelling or community. Condos can be high-rise or low-rise apartment style buildings, townhouses, and even completely detached. The unit (usually the interior space) is owned by the individual who purchased it and all unit holders together, as members of the Condominium Corporation, own an undivided interest and owe a percentage share of monthly expenses for maintaining a number of facilities called “common elements” (i.e. elements that are common to all owners). Common elements typically include the exterior space, as well as gardens, hallways, lobbies, roofs, parking lots, elevators, and recreational areas such as pools and gyms. In comparison, with a freehold property, you own both the home itself (interior) and the plot of land it sits upon (exterior).
PROS AND CONS OF A CONDOMINIUM
- Less maintenance and repair responsibilities: You won’t have to worry about shoveling the snow or cutting the grass! For those with a busy lifestyle, this can be enticing. As an owner, your common expenses fee that you pay monthly will contribute to supporting the operating budget that goes towards building and area maintenance. Monthly common elements fees are usually predictable.
- Access to onsite amenities: A condominium that includes amenities, like a pool and gym, for example, can cost you less than if you were to purchase a membership at a fitness centre outside the condominium than the common expenses fee.
- Major costs are shared: When a repair or maintenance cost related to the common elements are incurred, it is shared between all owners, which typically lowers the bill for individual unit owners. In comparison, if you had to replace a roof of a freehold property, that bill would be entirely your responsibility and a major cost.
- Enhanced security: Many condos offer enhanced security features such as security cameras in common areas, gated or locked entries, as well as security professionals surveilling the area.
- Monthly fees/expenses: A downside to condos that some people do not like is that condos have monthly common expenses. The amount of each resident’s common expenses will usually depend on the size of the unit, and the types of facilities offered by the condo. Monthly common expenses also vary based on the type of condo. The other side of the coin is that condo owners do not need to invest in expensive yard items such as snowblowers or lawnmowers. Sometimes certain utilities are included in monthly common expenses as well. You should inquire with your realtor or lawyer what is included in the monthly common expenses in the condo you’re considering.
- Unexpected Special Assessments: Major repairs of a condo’s common elements, such as a roof or siding, may be levied on the condo owners if there is not sufficient funds in the Condominium Corporation’s reserve fund to cover the cost. This could result in large unforeseen financial outlays for individual owners.
- Paying for amenities that you never use: While having access to these amenities can be nice, some people may never make use of the amenities. If you want to pay less in maintenance fees, look for condominiums with fewer amenities, like recreation centers. Pools often contribute significantly to inflate monthly common expenses.
- Possible restrictions: Unlike owners of freehold, non-condominium homes, owners of condos must abide by the by-laws and rules of the Condominium Corporation. Each Condominium Corporation’s by-laws and rules are different.Living by someone else’s rules might be fine for some, but others may want more freedom. Some condos place limits on the number of pets and their size. Other common restrictions include restrictions on renting, type of renovations allowed and the decorations you’re allowed to put up. This means if you want to renovate your home, you may need to get approval from the condo’s board.
TIPS FOR PURCHASING A CONDO
Before you buy a resale condominium, it is advisable to request and review the condo’s status certificate with your lawyer. In a newly-built condominium, this information will be part of the disclosure statement. A status certificate contains important information about the particular unit you want to buy and the Condominium Corporation. The information in the status certificate may influence your decision on whether to purchase a unit. As a result, it is advisable to make your offer to purchase conditional on review of this certificate.
The status certificate will also include other documents such as the condo declaration, by-laws, rules, budget, reserve fund, insurance, management contract, minutes of the last annual general meeting and will note any lawsuit involving the Condominium Corporation. Status certificates also reveal the financial health of a Condominium Corporation. While realtors and lawyers are not competent to review the financial statements of a Condominium Corporation, they may be able to point out some financial red flags. Status certificates also reveal whether the current owner is in arrears of their monthly payments.
Often, the issues and language contained in a status certificate can be complex. If you require legal assistance, contact a real estate lawyer at McKenzie Lake Lawyers – we would be pleased to assist you!
 1998, SO 1998, c 19.