Condo living is not for everyone
Don’t ignore concerns about the building, the lifestyle or the way the complex is managed
By Inst. of Chartered Accountants
There are as many reasons for choosing condominium living as there are people who buy them. For some, it’s the location. Others want the amenities condos can offer, like exercise rooms, pools or tennis courts. Then there’s convenience – home ownership without the snow-shovelling, lawn-mowing or upkeep of a private residence.
But whatever the reason – convenience, location or facilities – it’s important to know what you can and cannot expect when you buy a condo … and what constitutes value in today’s real estate market.
Chartered Accountant Alenna Morresi-Emer is chief financial officer with Morrison Financial Services Limited. It’s a Toronto firm that provides CondoCorp Term Financing to condominium corporations who, due to unforeseen expenses, require assistance in repairing or maintaining their common elements. She’s had a great deal of experience assessing the physical and financial health of condos.
Here are Emer’s top seven tips to help ensure your decision to buy that condo is one you won’t regret.
1. Purchase a property that suits your needs and goals. Those will differ, Emer says, depending on whether you plan to live there for five years, 20 years, or to rent it to someone else.
2. Location, location, location. As with any real estate, it’s only as good as the neighbourhood. Is it convenient, safe, close to schools, transportation and services? It’s no bargain if no one wants it.
3. Convenience comes at a price. Condo owners pay monthly fees to maintain common elements, like the underground garages, hallways and lobbies and exercise facilities. There can be “special assessments” too. These are often substantial extra amounts that unit owners must pay for repairs or upgrades should the corporation not have sufficient reserve funds put aside to pay for them. Condominiums are run by an elected board of directors, Emer points out, and this board has the authority to impose such assessments if deemed necessary.
4. Yours, mine and ours. Know where the condo corporation’s financial responsibility ends and yours begins. Who pays for new windows if your unit needs them? If your townhouse has a backyard patio, where does your “exclusive use” end and the community’s begin? Can you build a fence or put in a rock garden?
5. Do your homework. Before a condo can be sold, it must have a “status certificate” that your lawyer can request. It will identify any liens against the property, current legal matters or upcoming increases in condo fees. Ask to see the financial statements. These will tell you if the corporation is financially sound, and if the unit owners are likely to face an increase in monthly maintenance fees or a special assessment. A reserve-fund study, which provides a 30-year projection of estimated repairs to the complex, will also follow the financial statements. Emer suggests you tour the property and speak to actual unit owners, too. Find out what issues they’re dealing with, how they make decisions and who the key players are.
6. Know the rules, and be prepared to abide by them. Condo by-laws will tell you if you can lease out your unit, use a barbeque or install a satellite dish on the outside wall. Even the out-facing colour of your drapes or window coverings is often regulated.
7. Condo life is community life. You’ll have to deal with different types of people, often in close proximity and in many different circumstances. Know what you’re prepared to live with, and for how long.
“Condo living is not for everyone,” Emer says. Don’t ignore concerns about the building, the lifestyle or the way the complex is managed. It’s far better to walk away than invest your money, time and energy in a situation that can bring you years of unhappiness.
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