You’ve just visited the condo of your dreams and want to go further in your buying process. The real estate broker with whom you’re working presents you with all the documents related to the co-ownership, and now you have some questions.
The condominium fees seem low and you’re happy to see that! However, your broker tells you to be vigilant and explains what’s at stake when you see low condo fees.
What condo fees can you expect?Condominium fees are the costs necessary for the administration of a condominium building and the maintenance of its common areas, and are payable by the co-owners to the syndicate. Common expenses should also be included in order to have a more comprehensive view of the monthly costs incurred when buying a condo (e.g.: snow removal, grounds maintenance, etc.). It’s important to include condo fees in your monthly budget, which will be added to the amount of the mortgage, insurance and other costs.
Be careful if you see low condo feesWhen condo buildings have low fees, this can be a bad sign. It can hide, among other things, a deficiency in the contingency fund, a lack of maintenance or a failure to carry out major renovation work. Such negligence increases the risk of larger claims, which can ultimately be very expensive! [Tip: If major renovation work is to be expected but there is not enough money in the contingency fund, the condominium syndicate can charge a special assessment.]
What is a contingency fund?The contingency fund is a sum of money that the condominium builds up through payments by the co-owners, in order to anticipate the financing of certain work in the common areas. The law requires that the contingency fund be financed by a financial contribution from the co-owners, which cannot be less than 5% of their contributions to the common expenses Finally, the law requires each syndicate of co-owners to establish a contingency fund, according to the estimated cost of major repairs and the cost of replacement of the common portions. It should also be noted that the amounts accumulated belong to the syndicate, and are not reimbursed by the syndicate to the seller upon the sale of his private portion.