What are Condo Fees?
Condo fees are charges that condominium owners must pay for certain expenses needed to keep the condominium building or complex running. There is no minimum or maximum condo fee amount. Fees depend on many factors and all condominiums are different.
Real Estate Agent Explains Condo Fees
Many people do not understand why condo fees are charged, often thinking that someone is profiting from the fees (like a manager or some kind of owner). This is never the case. All condominium corporations are non-profit, meaning they cannot use the money for anything but the current and future maintenance and operations of the condominium.
Condo fees go towards making sure the building is well-kept, but their allocation is not set in stone. Sometimes condo fees are too low to maintain a building properly, or too high because they were too low in the past and now they have to keep up with new maintenance issues that have been neglected.
The condominium board sets the condo fees with input from something called a reserve fund study, which tells the board what needs to be done when, and how much it is going to cost. If condo fees include utilities, utilities cost will be taken into account as well.
Condo fee amounts are different depending unit factor, which is based on the square footage of an owner’s condo. Larger units pay more than smaller units. It should also be noted that the more that is covered by the condo fees, the higher the cost of the fees will be. Some condos cover the bare minimum required by law, while others have all sorts of amenities and perks that are included. For example, if a building has a swimming pool or underground parking, a portion of the condo fees need to be charged just to maintain these amenities.
Condo fees can be used to fund the following items:
- Amenities
- Cable TV, internet
- Caretaker costs
- Electricity
- Heat
- Insurance*
- Landscaping costs
- Snow Removal
- Professional management
- Parking
- Recreational facilities
- Reserve fund contributions*
- Security personnel
- Water & sewer
- Exterior maintenance*
* These items must be included in the condo fees by law. All others are optional depending on the condo bylaws and the condo board.
Condo fees are usually charged on a yearly basis, but almost all condo boards allow monthly payments to be made.
Because condo fees pay for essential services, they are not optional, they must be paid – failure to do so may warrant legal action against the unit owner. People often ask if you have to pay condo fees. The answer is yes, you have to pay condo fees, you have no choice.
Why Does It Matter?
If you live in a house, you must pay for water, heat, exterior maintenance and insurance on your own. A condominium just forces that payment to be made at a regular interval to protect the building. It would only be your problem if your house falls down, but it would be everyone’s problem if a condo fell apart – and that is why condo fees are charged. Much like property tax or income tax, condo fees are a form of security that go towards paying for things you wouldn’t’ be able to afford on your own – like a whole new roof or an underground parkade. Without condo fees, a condominium couldn’t function.
If you’re looking to buy or sell a condo, please contact me.
The condo that my parents live in wants to raise their fees either by one time payment of 1000$ or raise the monthly fee by 100, to supposedly fix the roof. Is that legal and what the people that live there can do to avoid such a drastic raise in fees?
Hi Izabela,
Raising fees or calling for a special assessment is absolutely legal. It is much like living in a house – if you need a new roof, not fixing it will cause more costs later on. If the condo board decides they want to fix it, it will sometimes cost money and that money needs to be paid. $1000 is actually pretty reasonable. There are some condos where each person needs to pay much much more to fix a problem. Somtimes $20,000, sometimes $50,000 if something is very wrong with the building. If that roof does not get fixed, it may cost more later, so this might be the best for the condo in the long run.
What your parents can do is be on the condo board. Without a vote on the board, you cannot help decide what to do with the condo. Also, without being at board meetings, you cannot have a say or get all the current information about the condo. It is important to be on the condo board if you are concerned about the direction of the condominium.
Hi Alan,
I was wondering if you could tell me where I could find in writing that Exterior Maintenance, Insurance, and Reserve Fund Contributions must be funded by (monthly) Condo Fees, and not separately. The board of my building wants to pull the Insurance and Exterior Maintenance fees outside of the normal condo fees (which are determined by unit factor). Then, they want Insurance & Exterior Maintenance to still be charged monthly, but on an equal basis (each unit pays the same). Unsurprisingly, the Board consists of the largest unit holders…
Hope you can help! I couldn’t find a direct reference in the condo act, but may have missed it.
Hi John,
This is an excellent question. To my knowledge they must be funded together. In the Condominium Property Act of Alberta (I believe you are writing in from Calgary)
See here in Administrative expenses 39(1), most specifically:
39(1) (c) to raise amounts so determined by levying contributions
on the owners
(i) in proportion to the unit factors of the owners’
respective units, or
(ii) if provided for in the bylaws, on a basis other than in
proportion to the unit factors of the owners’
respective units;
So I believe that unless the bylaws permit it, those contributions need to be proportional to unit factor. And changing bylaws is not easy – nor should it be – so I don’t think large unit owners can necessarily win, there. You may need a lawyer for this though, John. I’m of course not a lawyer, but please call me if you have any other questions and I’ll do my best to help, my phone number is on my contact page.