Condo Buyer’s Guide

First time buyers, investors and even repeat condominium buyers can often use a refresher course on the many facets of condominium ownership.
To help make that easy, we’ve compiled a series of Frequently Asked Questions and offer Answers below for you.

WHAT IS A CONDOMINIUM?

The word ‘condominium’ refers to a form of property ownership that is made of two fundamental parts:

  1. Individual units – the suites themselves, and any or all parts of the property available for individual ownership and title transfer, plus

  2. Common elements – any part of the property that is not a unit element, which is owned by all of the unit owners as tenants in common.

Together they comprise the condominium property, which is governed by a Condominium Corporation created to manage the affairs of the property. Control over the Condominium Corporation is jointly held by the “shareholders” or owners of the individual suites, and is led by a Board of Directors which is elected by the owners.

A condominium’s affairs are regulated by the Condominium Act, 1998, and documents known as the Declaration, Description, By-laws and Rules.

WHAT ARE COMMON ELEMENTS?

Common elements are those parts of the condominium development that are outside of the boundaries of the individual units.

Common elements may include, but are not limited to parks; roads and landscaping – gardens, lawns and trees; the elevators; corridors; lobbies; parking areas; garage; onsite mail room; plus entertainment, recreation and/or fitness facilities.

Other common elements include the mechanical and electrical systems and structural parts of buildings. The maintenance and repair are typically the responsibility of the Condominium Corporation.

WHAT ARE EXCLUSIVE USE COMMON ELEMENTS?

Exclusive use common elements are those common elements of a building to which ONLY the unit owner or owners have exclusive use. The most obvious are balconies, terraces, patios, backyards, a parking spot or locker. Dependant up what is provided in the condominium’s Declaration, exclusive use common elements may be maintained or repaired by either the owner or owners who have their exclusive use, or the condominium corporation.

As a rule of thumb, any feature that is within a suite is owned by that unit, unless stated otherwise in the Declaration.

WHAT IS THE DECLARATION?

The Declaration is the “constitution” of the condominium. It’s your governing documents. It outlines the division of ownership within the corporation by identifying the units, the common elements and the exclusive use common elements, if any. It also sets out the percentages of ownership each unit has in the property and the percentage that each unit contributes to the monthly common expenses. The Declaration will also indicate which costs will be the responsibility of the corporation and paid for by the owners’ contributions to the monthly common expenses.

WHAT IS THE DESCRIPTION?

The Description is a detailed plan of the boundaries, layout and location of the units, common elements and exclusive use common elements in the condominium

The Declaration and Description can be changed, but it is a rare occasion. In the instance of changing the basis for a unit’s contribution of maintenance fees, this requires the support of 90% of all owners. Changing a non-financial matter in the Declaration, such as pet restrictions, would require 80% owner agreement.

NOTE: When you purchase a suite in a new-build condominium, the proposed or existing Declaration is included with the Disclosure Statement. If you’re buying a resale condo, it’s included with the Status Certificate.

WHAT ARE CONDOMINIUM BY-LAWS?

By-Laws define how the Corporation will be organized. They outline the responsibilities and powers of the Board of Directors, how meetings will be run and the collection of maintenance fees. By-laws are made by the Board of Directors and must be approved by a majority of the owners.

WHAT ARE CONDOMINIUM RULES?

The Board of Directors may make Rules to govern day-to-day living, providing the rules are consistent with the Condominium Act, the Declaration and By-laws. Rules help promote the safety, security and welfare of the owners. These may include use of service elevators, facilities or even whether owners may have pets. The owners are required to receive notice of the Rules and have a right of veto and can amend or repeal them.

WHAT ARE CONDOMINIUM RESTRICTIONS?

The Declaration, By-Laws and Rules will determine any restriction on how you may use your suite or the common elements, for example:

  • Restrict the size or number or types of allowable pets

  • Specify the color of your shades or blinds (usually white or off-white)

  • Require you to file certain documents with the Condo Corporation if you will be leasing out your unit

  • Restrict certain renovations to your suite.

WHO IS THE PROPERTY MANAGEMENT AND WHAT ARE THEIR RESPONSIBILITIES?

A property management firm, under the direction of the Board of Directors, runs the day-to-day affairs of a Condominium Corporation. The Property Management team’s primary purpose is to maintain, protect and enhance the property value of your condominium community, as well as to assist and diligently carry out policies as set out by the Board of Directors.

Their role is to ensure consistent communication with Board members and residents; diligently resolve issues; supervise work performed on the premises; and ensure abidance of policies set out by the Board.

WHAT ARE THE MANAGEMENT TEAM SERVICES?

Collection of common element maintenance fees: the funds required to maintain, improve and/or repair the common areas; pay common area utility expenses for items NOT separately metered or paid directly by condo suite owners; pay condo associated legal fees Manage all expenses generated in order to maintain a properly functioning condominium community. Other duties include:

  • Responding to resident correspondence and inquires
  • Suite key release to new owners at interim Occupancy, once receipt of funds is confirmed by the vendors’ attorney
  • Coordination of move-in schedules
  • Organization and/or attendance at condominium Board Meetings and Annual General Meetings, provision of Minutes, and coordination of elections

  • Preparation and distribution of detailed management reports

  • Development and implementation of energy management, preventative maintenance and construction/upgrade programs

  • Preparation of budgets

  • Prepare monthly financial statements and arrange for audits, as required

  • Cash and asset management

  • Reserve fund planning and investment management

  • Enforcement of the terms of the Declaration, By-Laws, Rules and Regulations
  • Building insurance
  • Development and implementation of policies and procedures
  • Management of the common grounds and areas.

WHAT DOES THE BOARD OF DIRECTORS DO?

The Board of Directors is responsible for carrying out the obligations of the Condominium Corporation, as set out in the Act and in the condominium Documents, as it relates to:

  • Property

  • Finances

  • Maintaining Corporation Records

  • Reserve Fund Study

  • All other matters relating to the condominium community

WHAT IS INTERIM OCCUPANCY?

This is the time from the date you are granted Occupancy through to the Final Closing date of your unit, when transfer of title to your unit is completed.. Whether or not you have moved into your suite, until the unit transfer date, you do not own your suite outright. During this time it is still owned by the developer.

WHAT IS AN INTERIM OCCUPANCY FEE?

From Interim Occupancy and until Registration of the Condominium Corporation and Title is transferred to you, you will pay an Occupancy Fee to the developer. The Interim Occupancy Fee is determined by the following calculation:

  1. Interest on the balance owing on your suite’s total purchase price

  2. Maintenance fees applicable to your suite

  3. The estimated property taxes for your unit.

Your lawyer will be provided with information regarding the exact amount of your monthly Interim Occupancy Fee. Fees are not applied toward your mortgage (if any). Mortgages only come into effect when title is transferred to you.

WHAT ARE THE INTERIM CLOSING COSTS AND OBLIGATIONS?

The following are some Interim Closing Costs to consider. Please refer to the specifics detailed in your Agreement of Purchase and Sale, and all accompanying Amendments:

a) The balance of any deposits due on your Occupancy date

b) Monthly Occupancy fees (usually paid by post-dated cheques)

c) Cost of an all-risks Tennant’s Package Insurance Policy in the name(s) of the suite purchaser(s).

d) Arrange for any and all utility hook-ups required for separately-metred items.

NOTE: At Pemberton Group new-build condominiums, Hydro registration is done for you.

WHAT IS A PDI?

Your “PDI” is the Pre-Delivery Inspection. Your Customer Care Representative will walk through your suite with you before your Interim Occupancy date to itemize any “deficiencies” – i.e.: items that may be damaged, missing, incomplete or not operating properly.

The developer has 150 days (6 months) from the date of interim occupancy to complete any outstanding issues.

WHAT IS TARION WARRANTY CORPORATION?

The Ontario New Home Warranty Program Act administered by TARION Warranty Corporation manages the warrantees of new homes and condominiums and provides protection for condominium buyers of newly constructed residential units.

We recommend you review TARION’s helpful information and portals at: tarion.com.

You have up to 30 days to notify TARION Warranty Corporation of any new warrantable items, and items not listed on your PDI form or noted at the Pemberton 24-hour Check that are not yet completed.

The TARION Warranty 30-DAY and YEAR-END FORMS are available for review and completion at: tarion.com. These forms are the official opportunity to report warranty items within 30 days of your date of Occupancy; and up to one-year following that date.

NOTE: All TARION warranties repair periods and your appliance warranties commence on your interim Occupancy Date.

WHEN WILL OUR CONDOMINIUM BUILDING BE REGISTERED OR BECOME A CORPORATION?

A ‘Condominium’ is not technically formed until construction is completed and it passes the approval processes which enables it to be registered with the Land Registry Office. Only then can the title of your suite be transferred to you. The approvals process, however, begins once the first suite is occupied.

First it goes to municipal council, the regional planning department, and on to the Minister of Consumer and Commercial Affairs. These checks and balances ensure that the building(s) uphold what was stipulated in the Draft Plan and Condominium Declaration. Once all the parties are satisfied that everything meets the requirements, the Condominium Registration is complete.

WHEN IS A BOARD OF DIRECTORS ELECTED?

The Condominium Act requires that within 42 days after the developer loses majority control of the development, all of the new owners are entitled to elect a Board of Directors. The Act also requires that once 15% of the units are owner-occupied, the owners of those units are entitled to elect one representative to the Board of Directors.

WHAT IS AN ANNUAL BUDGET?

Each fiscal year, the Board of Directors approves a budget that is prepared by management and is based upon expected revenues and expenditures for the next 12 months.

WHAT IS A RESERVE FUND?

A Reserve Fund is a separate trust account which all Condominium Corporations are required to establish. A portion of the Common Expenses paid by the owners is transferred monthly to this account. The Reserve Fund is the unit owners’ savings for the major repair and replacement costs of the Common Elements which occur as a building gets older.

WHAT IS A RESERVE FUND STUDY?

The contributions made to the Reserve Fund must be based on a Reserve Fund Study which establishes the amount the Board of Directors must ensure is contributed. Under the Condominium Act, all Condominium Corporations must carry out a reserve fund study by a qualified professional every 3 years.

WHAT ARE MY RIGHTS AS AN OWNER?

  • Vote at owners’ meetings
  • Elect Board of Director members
  • Upon written request and reasonable notice, you may review Corporation records (e.g. financial statements, meeting minutes, etc.)
  • Requisition a meeting of owners and request that an issue be added to a Meeting Agenda
  • Obtain a court order to force the Corporation to carry out a duty required under the Condominium Act
  • Remove a derelict Director from the Board with a majority of owner votes.

WHAT ARE MY RESPONSIBILITIES AS AN OWNER?

Condominium living is not the same as living in a single-family home. Repairs to Common Elements are the responsibility of the Corporation while repairs to the unit are the owner’s responsibility. What makes a condominium unique is not its physical structure, but the way in which owners have agreed to share the ownership of the Common Elements of the property, while retaining individual ownership of parts of the property which makes up the units.

Your responsibilities are to:

  • Maintain and repair your unit (according to the Condominium Declaration, By-Laws and Rules).

  • If repairs must be made inside your unit, the responsibility for the repairs is normally the unit owners’ responsibility.

  • Elect a Board to govern the condominium property who as a Board establish and make policy decisions, by taking responsibility on behalf of owners for the running of the condominium corporation.

Please consult your lawyer, and/or read through the Condominium Act, the Declaration, the By-Laws, and the Rules & Regulations, for specifics you are required to comply with.

WHAT ARE MONTHLY COMMON MAINTENANCE FEES/EXPENSES?

Also referred to as Common Area Expenses, Maintenance fees are a monthly charge (your proportionate share) for the utilities, regular upkeep, management, administration, reserve fund contribution and insurance for the common element areas. The fees vary according to project and the size of the unit.

Each homeowner’s portion of these expenses is set out in the Budget Statement, which lists the percentage for which each unit is responsible. The condominium Property Manager runs the day-to- day operations and uses the funds collected to pay for the common operating expenses of the condominium.

DO THE COMMON AREAS AND BUILDINGS HAVE AN INSURANCE POLICY?

Yes. The Condominium Act, 1998 specifies that the Corporation must insure its obligation to repair the condominium property to its replacement value. The directors must have the condominium assets appraised from time to time to determine that insurance needs are being met.

The insurance premiums are part of the Common Expenses that all owners pay. While the insurance covers the full replacement value of the units and common elements, it does not cover the improvements to a unit or the personal property of the owner, nor will it cover a unit owner’s responsibility for any insurance deductible.

AM I REQUIRED TO HAVE HOMEOWNERS INSURANCE?

Yes. Purchasers must provide proof by way of a Binder or Certificate of a Tenant’s Policy to be in effect as of the Interim Occupancy Date. At the Unit Transfer Date the policy must be converted to a Condominium Unit Owners Package Policy.

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Location

RE/MAX Abouttowne Realty Corp. Brokerage. 309-A Lakeshore Road East Oakville, Ontario L6J 1J3

How can we help?

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Call us: (905) 338-9000