Aside from property taxes and mortgage payments, condo buyers are sometimes confused with a monthly payment associated with their unit called a maintenance fee. This fee is charged on a monthly basis and cannot be avoided by any owner. It’s paid via certified cheque/direct deposit to the property management. The fee may change over the years and owners are notified accordingly.
The purpose of a maintenance fee is to pay for all expenses the building as a whole, incurs. These expenses include but are not limited to, overall expenses associated with running the building, security, concierge, landscaping, repairs, and maintenance of all the common areas. Every building has a different set of items covered under their maintenance fees. For example some buildings may include cable while others don’t. Different utilities may also be covered. Have your lawyer read through the status certificate so they may verify what items are included in your buildings maintenance fee.
The fees are calculated according to the size of your unit. The owner of a 500 sq ft unit would pay less then the owner of a 1000 sq ft. unit. The fees may go up or down reflective of the state of the building – financially and physically. On average, newer buildings start out with a maintenance fee of about $0.50 per sq. ft. These fees usually go up over time as wear and tear costs start to pile up. Owners are notified of the changes in fees and may follow up with the board of directors with any concerns.
Some people may look at maintenance fees as a deterring factor in owning a condominium unit. Don’t let the fees scare you off as they contribute to the upkeep of your property and investment. Maintenance fees are not setup to have the condominium corporation make a profit, their sole purpose is to protect the building and for upkeep of its amenities. Since the owners of the units receive all the benefit from the maintenance fees, the fees are more than justified.
What is a status certificate?
In every condo re-sale purchase there is an important legal document called a status certificate. The status certificate contains tons of basic and vital information that has to do with the specific unit and condominium corporation.
Among many other things, the status certificate will inform the prospective buyer of any outstanding maintenance fees, (http://shawngandhi.com/maintenance-fees) taxes, or special assessments.
In regards to the condominium corporation, it will outline the following;
The condo declaration
Property Management contract
Logs and minutes of all meetings
Lawsuits that involve the corporation
Once a seller accepts an offer, the Agreement of Purchase and Sale (A.P.S) will usually have a couple conditions. The status certificate clause will be one of these conditions. This condition will state the A.P.S will be conditional upon the buyer’s lawyers review of the status certificate. At this point the property will be sold, but sold ‘conditional’. It will be the seller’s responsibility to contact the property management and do the required paperwork to order the certificate. The seller will usually have to provide a certified cheque to the property management or Condo Corporation of approximately $100.00. It usually takes about 7-10 days for the certificate to be drafted. Once the lawyer receives the document he will begin his review of it and advise his client (the buyer) accordingly. Once the lawyer gives the buyer the green light to continue, the condition is waived and the sale may proceed.
The importance of the status certificate cannot be understated. It is a very important document that is usually only seen by the lawyer and explained to the buyer. A buyer should not try to read the document themselves as the lawyer will do all the due diligence and explain the necessary details to their client.
There are many different factors that affect a condo’s value. Buyers should be aware of these specifications when buying their own unit. An informed buyer will make an informed decision. For this reason, I have compiled the list below to give buyers an idea of what’s important.
- Floor – The higher the floor, the more desirable the unit is. Penthouse units are more expensive then units below. Builders charge a premium on the units on higher floors. In high-rise buildings, builders may charge $1000 per floor.
- View – Most Buyers value a nice view. It will affect privacy and the way the sun shines through the unit, among other things. Builders will determine the best views and charge premiums accordingly.
- Parking and Locker – Most buyers want a parking spot and locker. If the unit doesn’t come with the parking or locker potential buyers may not consider the unit because these things are harder to buy after the initial purchase.
- Finishes – Color schemes, flooring, cabinets, and all interior finishes make a big difference in the eyes of a prospective buyer.
- Layout – Layouts will display space differently. Usually, buyers look for units that feel bright, open, and spacious.
- Amenities – All buyers are expected to pay maintenance fees for their units. They should make sure the amenities are up to their standards and justify the subsequent fees associated with the unit.
- Location – Location of the building is very important. The more attractive the location the more a potential buyer is willing to pay for a unit in that building.