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According to Wikipedia, quoting the New York Times, the first historical record of condo living comes from ancient Babylon, and unit owners have worried about rising condo fees for the two millenniums since.
Everyone knows that condos are a BIG DEAL in Toronto right now. Everyone is buying one, and downtown, a forest of gleaming new condo towers is expanding quickly. But what IS a condo? A lot of people, even people buying them(!), think that owning a condominium is like owning a house without the backyard or the hassle of maintaining the property. Actually, condos fall into a totally different category of ownership than houses. So what makes them different?
Maybe we could say that buying a house is like buying your own little boat, and buying a condo is like buying a suite inside a large communal ship. It’s a cheaper way to sail, but you don’t get to steer the ship on your own, the ship has its own set of rules to keep things organized, and you have to help pay for things that are shared by everyone. Let’s take a brief look at these three things and how they affect condo living.
Who steers the ship? Every condo building is run by a board of directors, who are volunteers elected by unit owners to represent them. The board will typically hold meetings to vote on issues relevant to the community. The board is assisted and guided by a professional property management company like Mareka, who is hired to run the day-to-day operations of the building and oversee all aspects of taking care of it.
The board is also responsible for upholding the declaration and its associated by-laws, which are like the building’s mini-constitution. Before you buy a condo you should read the declaration!! It’s important to know the rules of the building you’re buying into. These rules are intended to protect unit owners, keep the harmony of the space, and most important, maintain property value. They can include things like forbidding you from working on your car in the common parking lot or sticking an air-conditioning unit out your window. The board can also enforce rules such as picking up after your dog has defecated. Sometimes condo owners can be surprised to be presented with a bill for scooping some poop, but if a building superintendent or a contractor had to clean up a common area after someone, it’s not fair that the entire community should pay for it.
Everyone knows that living in a condo involves paying “condo fees”, but what are they? Buying a condo makes you co-owner of all the “common elements” in the entire building. These common elements need to be maintained, and contractors need to be paid to do this. The lights in the hallways have to stay on, garbage needs to be disposed of, sometimes the whole water system needs to be replaced, etc. So the management company will propose a budget to cover these things, along with the many other things that common element fees pay for. The board of directors will approve this budget, and unit owners will pay maintenance fees to fund it. Even with frugal management, these fees tend to go up on a yearly basis to account for inflation and the aging of building infrastructure. Quite often, a large portion of fees will also flow into the reserve fund, set aside to pay for big expenses like replacing that worn-out water system. Before you buy a condo, make sure you know the state of the building’s finances. We wrote an article that goes into more depth on what to watch out for when buying a condo new and as a resale.
As real-estate prices in Toronto rise, more and more people are thinking about buying a condo. Looking at our city’s ever-changing skyline it’s clear what an attractive option condo living can be, but it’s important to know the fundamentals before you climb on board the ship!