A condominium is a corporation. Most people buying their first one do not know that, and it explains nearly everything else that feels strange about condo ownership.
You are not just buying a home. You are buying into an organisation that owns the roof over your unit, decides when it gets replaced, and can send you a bill for it. That is not a warning. Plenty of my clients are happier in a condo than they ever were in the house. But it works better when you know how it is put together before you sign, rather than finding out at the first owners' meeting.
These are the questions clients actually ask me, answered from the Condominium Authority of Ontario, which is the province's designated condo authority and the one source worth trusting on this.
What am I actually buying?
Two things. Your unit, which is yours, and shared possession of the common elements, which is everything else: the lobby, the elevators, the garage, the gym, the hallways, the grounds.
What is permitted in both is set by the Condominium Act and three documents belonging to your corporation: the declaration, the by-laws and the rules. Ask for all three before you commit. They are the closest thing a condo has to a constitution, and they differ from building to building far more than people expect.
So the condo is a corporation. What does that mean for me?
It means the property is owned and operated by a corporation, and a board of directors runs it. The board has at least three directors, elected by the owners, usually for three-year terms. They are legally required to act in the corporation's best interests and in good faith.
Many corporations also hire a licensed condo manager to handle day to day operations. The manager is not the decision maker. The board holds ultimate responsibility for how the building is run, even when a management company is doing the work.
What do the monthly fees actually pay for?
Three things: maintaining the common elements, contributions to the reserve fund, and services such as cleaning, building maintenance and management.
Your share is a percentage, set out in the declaration, and it often varies with the size of your unit. In practice your fee is the corporation's annual budget multiplied by your percentage. So a fee going up is usually a budget going up, not someone picking a number.
A low fee is not automatically good news. It can mean a corporation that is underfunding the thing described next.
What is the reserve fund, and why does everyone go on about it?
The reserve fund is an account held solely for major repairs and replacements of the common elements. Roofs, elevators, garage membranes, windows. It cannot be spent on day to day operating costs.
Corporations have to commission a reserve fund study from qualified professionals. It inventories every component expected to need major repair or replacement, down to a $500 replacement cost, records how much life each has left, and projects the funding needed over at least thirty years. After the first study, an updated one is due at least every three years.
This is the single most useful document in the building. A well funded reserve means the roof gets replaced on schedule out of money already collected. A badly funded one means the next question.
What is a special assessment, and could I get hit with one?
A special assessment is a one-time charge added to owners' fees when the budget falls short. The usual causes are an unforeseen expense, a project that cost more than it was budgeted for, or litigation.
Two things to understand. The board can impose one without a vote of the owners. And your share is calculated on the same percentage as your regular fees, so it scales with your unit. If an owner does not pay, the corporation can register a lien against the unit.
This is the real reason to read the reserve fund study before you buy, not after. A thin reserve on an ageing building is where special assessments come from.
Who fixes what?
The corporation repairs and maintains the common elements, and generally the standard unit elements too. Every corporation has a standard unit definition listing exactly what that covers, and it is worth reading.
You are responsible for anything outside that definition. That includes improvements, so a kitchen a previous owner upgraded is usually yours to repair even though you did not install it. You also handle ordinary wear and tear inside your unit.
Balconies and terraces are the common grey area. They are exclusive-use common elements, and there is no universal rule about who maintains them. Your governing documents decide it, which is another reason to read them.
On insurance, the corporation must insure the building against major perils such as fire, water and vandalism. You insure your own improvements and contents. If you or a guest causes damage through fault or negligence, you may end up responsible for the corporation's deductible as well as your own.
What is a status certificate and why does my lawyer want one?
A status certificate is a snapshot of the corporation and your specific unit, and it is the document that tells you what you are walking into.
It can include the declaration, by-laws and rules, the current budget, the most recent audited financial statements, the latest reserve fund study and the condition of the fund, whether the unit is in arrears, any fee increase and the reason for it, any special assessment charged to the unit, the directors and officers, insurance certificates, and any outstanding judgments or ongoing litigation involving the corporation.
Anyone can request one. The maximum the corporation can charge is $100 including tax, and it has to be provided within ten days.
Your lawyer reviews it. That is their work and not mine, and I would be wary of any agent who told you otherwise. What I do is make sure it is ordered early enough that there is time to act on what it says.
Can they tell me I cannot keep my dog?
Sometimes, yes. Pet provisions live in the declaration, by-laws and rules, and they vary enormously, from no restrictions at all to weight limits, breed limits or outright prohibitions.
Read them before you sign. This is the question I get asked most often by people who have already fallen in love with a unit, and it is a miserable conversation to have at that stage.
If a dispute does arise over a pet provision, the Condominium Authority Tribunal hears those cases, provided there is a relevant provision in the governing documents to argue about.
What if I disagree with the board?
Start with the Condominium Authority of Ontario. They publish guidance on common issues and sample letters you can send to the board, and a surprising number of disputes end there.
If it does not resolve, the Condominium Authority Tribunal handles records requests, pets and animals, vehicles, parking and storage, nuisances such as noise, smoke, odour and light, and compliance with settlement agreements.
It does not handle everything. Governance and board decisions, financial and budget disputes, repair and maintenance disputes, and meeting issues such as quorum and voting all sit outside it. Those need a lawyer.
Where this leaves you
None of this should put you off. A well run corporation with a healthy reserve takes work off your plate that a house never will, which is the whole point for most people rightsizing. The difference between a good condo and a bad one is rarely the lobby. It is the documents.
So the short version: read the declaration, by-laws and rules before you sign, get the status certificate early, and look hard at the reserve fund study. If you are not sure what you are looking at, that is a reasonable thing to want a hand with.
If the timing is the part that worries you rather than the condo itself, there is another route worth knowing about. Buying before the building goes up can give you three or four years to sort the house at your own pace, with a move date you have known about the whole time.
Everything above is drawn from the Condominium Authority of Ontario, the province's designated condo authority, and in particular its Condo Living section together with its pages on status certificates, reserve funds and the Tribunal's jurisdiction. Rules and figures change, and your own corporation's declaration, by-laws and rules always govern your particular building, so please confirm anything that matters to you directly with the CAO before you act on it. This is general information and not legal advice. I am a Realtor®, not a lawyer.
Thinking about a condo?
Most people rightsizing have never owned one, so there is usually a long list of questions. Leave your details and I will call you back. No obligation, and we can go through how a particular building actually works before you commit to anything.
