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A condominium is a type of ownership, not a structure
Brought to you by the Institute of Chartered Accountants of Ontario
If you’re planning to sell your condo, consider spending some time, and yes, money, preparing for the process. Making small improvements and having all the information and paperwork ready-and-waiting makes it easier for potential buyers, and that can pay you back in significant offers.
Chartered Accountant Joe J. Marchello is Director of Finance for CountryWide Homes, a builder and developer of residential real estate in the Greater Toronto Area, and its affiliate Condor Properties, which develops and manages industrial, commercial and office properties. Here, he shares six tips to help ensure you get the most value from the sale of your condo.
It’s not just about the building – A condominium is a type of ownership, not a structure. Condo owners share a lot, and first-time buyers don’t always understand the full implications of the arrangement. In buildings over five-years old, for instance, utilities are not usually metered separately. So, all owners share in the costs, regardless of individual use.
Pick up a copy of the by-laws and status certificate – Would-be buyers should know the specific rules governing life and behaviour in your particular condo complex, and any details concerning the status of the property. Smart sellers can request both the by-laws and the status certificate and have them ready to share with prospective buyers or agents to prevent hold-ups and the offer being finalized.
Work with what you can – The colours of the lobby, the landscaping and the carpet in the party room are things you can’t control. But new, energy-saving appliances, updated bathrooms and fresh paint in the kitchen will help improve your condo’s appeal and value.
Know the mix – Be prepared for buyers’ questions, like who’s on the corporation’s board of directors and how many units in the complex are rented out. Owners are legally bound to advise the property manager if they’re renting out their unit, so this information should be readily available.
Condos attract a different type of buyer – Smart sellers play up the aspects most likely to appeal to those who already want the lifestyle. Focus on the freedom from maintenance and lawn work, the amenities and the fact that the corporation insures the major structural aspects of the building. Stress the access to public transportation, any retailers on site or close by, and the fact that you can lock the door and leave on vacation with no worries about tending the lawn or garden.
Substantiate the fees – Condos are non-profit enterprises, but many buyers will still need help understanding and justifying the monthly maintenance fees. Have the corporation’s annual budget available, as well as up-to-date information about the reserve fund. Let buyers know what the history has been with respect to special, one-time assessments, and how likely these are to take place in the future.
Bringing uniformity to financial reporting in the condo industry
By Christopher J. Jaglowitz
Gardiner Miller Arnold LLP, Barristers and Solicitors
1202 – 390 Bay Street, Toronto, Ontario M5H 2Y2
PH: 416−363−2614 | FX: 416−363−8451
firstname.lastname@example.org | www.gmalaw.ca
The Institute of Chartered Accountants of Ontario has announced the release of an important document entitled Accounting and Auditing Guidelines for Ontario Condominium Corporations. This publication is the first major revision of the Institute’s audit guidelines for condominium corporations since November 2001 and incorporates recent changes in accounting practice and the requirements of the Condominium Act, 1998. All in plain no-nonsense English, the guide aims to bring uniformity to financial reporting in the condominium industry. Indeed, according to the Institute:
“The result is a comprehensive guide that promotes best practices for the industry. It details considerations for both accounting and audits that range from budgeting and financial statements to tax issues and reserve funds.”
Members of the committee that drafted these guidelines include the most prominent auditors on the local condo scene. Most have audited the books of hundreds of condo corporations and face the unit owners at their annual general meetings each year. Suffice it to say, these folks know their stuff.
The Guide comprises three parts: The first section acts as a general primer on condominiums. It outlines the history, purpose, operations, and financial structure of condo-minium corporations, and the role and duties of directors, management, and auditors.
The second section of the Guide delves into the financial realm of condominium administration by tackling accounting considerations. Here, the authors deftly explain concepts and provide practical advice about financial statements, budgets, reserve funds, and income tax considerations, just a few amongst a set of wide ranging topics.
The final section of the Guide teaches readers about risk-based audit considerations by engaging in a discussion about compliance with auditing standards, fraud, financial instruments, special assessments, record keeping, lien rights, and much more. The guide also includes a preferred specimen presentation for financial statements.
While the scope of these guidelines is limited in application to standard condominium corporations (and not the Vacant Land, Leasehold, and Common Elements types), there is no doubt that this booklet will be a valuable resource for any condominium manager, director, unit owner or professional who wants to better understand accounting principles and best practices for audit procedures for Ontario condominium corporations.
For a free copy of Accounting and Auditing Guidelines for Ontario Condominium Corporations, go online and check out the Institute of Chartered Accountants of Ontario website at www.icao.on.ca.
For more information on this topic and more, please visit www.ontariocondolaw.com.
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