Everything you need to know about condo fees
Did you know that common costs, or condo fees, are usually determined by specialists who base their assessments on several key factors? That low condo fees often conceal nasty surprises? We address these unanswered questions by shedding some light on the topic.
What are condo fees?
Condo fees include costs related to building maintenance and contributions to the contingency fund. The amount of the monthly payment is based on the relative value of your part of the property. If your home is worth 10% of the total value of the building, that is how much you will have to pay into the budget for common costs. The services offered to co-owners, such as a pool, gym, or underground parking, are also taken into account as they require additional maintenance.
What is a contingency fund?
A contingency fund is used to pay for replacements and major repairs to the building. All co-owners contribute to the fund. In most cases, at least 5% of condo fees are dedicated to the contingency fund. It should also be noted that this fund cannot be used for any other purpose, such as paying legal fees, carrying out renovations, or eliminating a deficit.
Is there such a thing as underestimated condo fees?
Yes! Developers sometimes underestimate condo fees to attract buyers. Errors can also be made when calculating costs. In the end, some co-owners may find themselves in a predicament: major damage is incurred and the amount accumulated is not enough to cover it, so an additional contribution is required. It is important to do your homework and compare the fees of similar condo projects or enlist the help of a specialist to carry out an assessment and give you a better understanding of the right amount of condo fees.
Condo fees, though necessary, remain a source of confusion for new buyers. We hope this post has removed some of the mystery!