Explaining Condo Fees

Condo fees can look scary at first. When someone sees a monthly fee of $700, $900, or more, the first reaction is usually, “What exactly am I paying for?”

Here is a simple way to think about it:

If you own a house, you still have maintenance costs. You just pay them when the roof leaks, the windows fail, the driveway cracks, or the furnace quits.

In a condo, many of those costs are shared and planned for monthly.

Your condo fee may include things like:

• building insurance
• landscaping and snow removal
• cleaning and common area maintenance
• elevators and security
• amenities (like a pool, gym, sauna)
• utilities, if included
• contributions to the reserve fund

The reserve fund is the building’s savings account for bigger repairs, like the roof, garage, elevators, windows, and other major items. In Ontario, condo corporations must update their reserve fund study every three years, which helps the building plan ahead.

And yes, condo fees usually go up over time. My own condo fees were $515 per month in 2016 and are $732 today. That works out to an average increase of about 3.6% per year, which is not far off the rising costs of insurance, utilities, labour, landscaping, and building maintenance.

A few things to watch for:

• very low fees that may not be realistic
• a weak reserve fund
• upcoming major repairs
• special assessments
• brand new condos with fees based only on estimates

That is why your lawyer reviews the Status Certificate before your purchase becomes firm.  This report shows the condo corporation’s finances, reserve fund, insurance, legal matters, and whether there are any known fee increases or special assessments coming.

A word of caution about brand new condos: low fees can be tempting, but they are based on estimates. Once the building is running and the real bills come in, those fees often increase. 

If you are wondering whether the numbers make sense, I would be happy to walk through them with you.