Home buyers often resist the idea of paying maintenance fees.
After the mortgage payment, house insurance, and property taxes have been factored in, this extra payment seems to be just one more unnecessary tax for homeowners to worry about.
However, there are some important benefits hiding behind condo fees.
You Are Responsible For Less
Common elements include everything in or around the building except for the units themselves. When you pay your monthly maintenance fee to the condo corporation, a portion of this money is allocated to maintaining the common elements of the building.
Common elements are such things as hallways, elevators, parking garage, fitness centre, rooftop patio, and building grounds. These will usually be maintained and repaired as needed by building management.
Since a portion of your condo fee goes towards the maintenance of the common elements in or around the building, that means the walkway will be clear of snow in the winter, and the gardens will be groomed in the spring and summer. Elevators will be operational and safe, and hallways will be maintained and kept clean. Your responsibility begins and ends with the inside of your apartment unit.
In short, if it's a common element and it's broken, you're not the one who has to fix it.
The Condo Fee May Include More Than You Think
One trend we have seen in some of the newer developments is a lower condo fee combined with more inclusions.
In the property listing of the condo you are considering, your REALTOR® will be able to help you identify what is included in your condo fees. The inclusions will depend on several factors including the builder, the municipality, and how the condo corporation was structured, among other things.
Lately we have noticed the trend allowing hydro, water, and heat to all be included in the condo fees for some of these new buildings. This could represent a savings of $200-$300 per month, depending on the size and location of the condo unit.
Even if the condo you are considering has higher than average fees, once you factor all the inclusions you may decide that the math still makes sense.
Note also that more amenities in a building usually equates to higher fees. This is important to know because all condo unit owners are responsible for sharing the costs of these amenities, regardless of whether the facilities are used or not.
You will be paying for the fitness centre and swimming pool even if you never plan to work out or swim.
Given that, you may want to consider how often you would use the various amenities before purchasing a condo in a building with higher fees.
One novel addition to condo fees we have seen recently is the inclusion of WiFi, cable, or both. Telecom companies have begun to develop relationships with builders, allowing some of these newer properties to include unlimited WiFi in the monthly condo fee.
Be sure to find out from your real estate professional what is included in the condo fees for the unit you are considering. You may not want to rule anything in or out until you have a clear understanding of the inclusions.
Your Insurance May Cost Less
Depending on what’s covered in your condo fees, you may discover that your insurance premium is lower than you expected.
Consider a condo townhouse, for example. In some cases, ownership of a townhouse unit may include the interior walls but not the full physical structure. Your backyard and garage may be considered part of the common elements and therefore the responsibility of the condo corporation to maintain and repair.
If this sounds like the townhouse you are contemplating, everything from the garage door to the roof could be considered common elements. As such, responsibility may fall to the condo corporation rather than the owner to maintain and repair these areas.
Insurance companies will discuss liability and contents insurance with you, but the building insurance in this scenario may be the responsibility of the condo corporation. If this is the case, it could ultimately result in a lower insurance premium for you, since your policy does not need to be as comprehensive.
With a freehold townhouse, by contrast, you own the full structure and the land it sits on. This includes the garage, garage door, driveway, and front and backyard, among other things. In this example, your ownership covers more (and by the way may result in a higher property value).
As such, your insurance premium may be higher in a freehold townhouse because your coverage now needs to include replacement cost of the building.
While there are many similarities among condo corporations, there are also many differences. Be sure you understand exactly what you are purchasing. Speak with your REALTOR® and your real estate lawyer to understand the ownership boundaries in your specific condo situation.***
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