Condo fees: Better understanding for a better choice | Vistoo

Condo fees: Better understanding for a better choice

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Thinking of moving from a rental to owning a condo? Are you currently living in a house and wondering whether a condo is an advantageous option? Condominium fees are a well-known financial reality, but sometimes misunderstood by new owners or future buyers.


Are you wondering what these fees are and why they are so important? We'll help you demystify condo fees so you can make an informed decision.


What do fees cover?

First of all, you need to know that the terms “co-owner fees” and “condo fees” are two synonyms for the monthly amount charged to owners. As you probably know, it's a sum of money pooled together to cover various management and maintenance expenses.


For example, snow removal and landscaping are among the expenses covered by condo fees, as is the upkeep of common areas. In addition to these expenses, condo fees also cover :


  • Property management and administration fees
  • Building and group insurance costs and deductibles
  • Common equipment and maintenance
  • Contingency fund


Note that condo fees are mandatory for divided properties, but optional for undivided co-ownerships. The latter still include common expenses, as all co-owners are responsible for the building.


How is the amount calculated?

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What determines the amount you’re required to pay? The proportion you have to pay is not determined randomly, but by law. As article 1064 of the Civil Code of Québec states:

“Each co-owner contributes to the common expenses in proportion to the relative value of his fraction.”


In simpler terms, if the value of what you own is 5% of the total value of the immovable, then the amount of your contribution will be equal to 5% of the common expenses. Note, however, the value of your possessions does not only take into account the square footage of your apartment.


The surface area of your condo is of course a factor in the calculation, but your reserved parking spaces and storage areas must also be taken into consideration. Any common areas with restricted use are taken into account to establish an equitable division.


As for the total amount of costs to be divided among co-owners, this varies according to many factors. Of course, the size of the building and the number of owners will influence the amount to be paid. It also depends on


  • the area where it is located;
  • total value;
  • services offered;
  • facilities (common room, pool, gym, etc.);
  • the companies you deal with and their rates.


Note that the owner of a condo in a divided co-ownership has the right to rent his or her space to a tenant. However, the tenant does not become directly responsible for paying condo fees; you will need to factor this amount into the rent you establish.


The contingency fund

On top of the condo fees, the contingency fund is a mandatory amount. As the term implies, it is used to set up a common fund to cover additional works, repairs or unforeseen expenses.


The amount is set according to a study performed by a building professional, which must be carried out every 5 years. The amount represents at least 5% of the annual budget, but can be higher.


When the projected budget is insufficient, a condo fee overrun situation may occur. The syndicate will then ask for special contributions to supplement the budget, such as the advent of an unforeseen expense that the contingency fund is unable to cover. This can also happen when the budget has been miscalculated.

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Low fees: Take heed

When you're looking for a new condo, lower condominium fees may seem like a tempting offer. While amounts may indeed be lower from one location to another, you should proceed with caution.


Low fees should be a red flag. It could simply be that the property has a lower value, for example, because it offers few services. On the other hand, it could also mean that:


  • Maintenance has been neglected, including preventive maintenance;
  • Costs have been underestimated;
  • The contingency fund represents a minimum amount.


But this can backfire! For example, a condominium that miscalculates its annual budget will take you much more by surprise with its cost overruns. The amount may also increase in response to this miscalculation.


Finally, don't forget that neglected maintenance not only has a negative impact on your living space, but also on the value of your property. Damages caused by flooding, for instance, are not problems to be taken lightly!


With Vistoo, find the condo of your dreams, with the amenities that fulfil your desires. Whether you want to live in the city or the suburbs, there are many modern condos waiting for you in Canada!