Looking to buy a condo? Worried about condo fees rising? In this episode (part two of our series on condo fees - watch part one: What do condo fees cover?), we discuss risks of condo fees rising, how often they increase, who decides, how they are calculated and more.
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Transcription:
Karl Yeh:
Hi. Welcome to another edition of Homebuyer's School.
Today I'm joined by Karen McDonald, Community Manager with Brookfield Residential.
Today, the question we're going to answer is:
What's the risk of condo fees going up?
In fact this is part two of our two-part series on condo fees, and so we have a whole bunch of questions today, but I guess the number one question that you're always asking is: [00:01:00]
How often do condo fees go up?
Karen McDonald: Well, condo fees I would say in general can go up on a yearly basis.
Karl Yeh: Okay.
Karen McDonald:
We don't see a lot of the times where they go up more than on a yearly basis because they're assessed on that yearly basis.
Karl Yeh: Okay.
Karen McDonald:
I would say that it would be something that new home buyers should take into consideration, that they'll likely go up within a year, two years time.
To the degree which they will all depends on whether you're buying a new build, resale, whether it's an older building, [00:01:30] whether there's going to be any kind of immediate maintenance that needs to be done.
In a new build, you're relatively taken care of as far as your warranties go that you shouldn't have any kind of huge increases over the first number of years.
Who decides when condo fees rise?
Karl Yeh:
Who exactly decides how the condo fees increase or ... I don't think I've ever seen them decrease, but-
Karen McDonald: No, no.
Karl Yeh: But who decides that?
Karen McDonald:
The management [00:02:00] board ultimately.
They are who the homeowners employ to manage to:
- take care of the operating expenses,
- to take a look at the budget,
- ensure that there's enough allocated towards the reserve fund, maintenance and repair, and landscaping/snow removal contracts.
It is the management company that takes care of all of that. Homeowners' board would be consulted on a regular basis.
Karl Yeh:
Can you ever tell the management company, don't [00:02:30] want any increases this year?
Karen McDonald:
No.
Not if you want to ensure that you're still maintaining the value of your property in the common area. It is something that is mandatory that you pay.
That's what you sign up for when you buy a multi-family home.
Karl Yeh:
So let's say your condo, your board, wants to build a new rec facility inside the condo. That obviously impacts, the management company, impacts your fees.
Karen McDonald:
Absolutely it will.
Anything that the, [00:03:00] really it would be the homeowners' board that would decide.
If they want to have an additional recreational facility built, that would be a huge expense. The homeowners' board would ultimately make the decision whether everybody will be responsible for that additional expense on a monthly basis, maintenance, upkeep, everything.
Karl Yeh:
Is there a set fee or a minimum condo fee in Alberta?
Karen McDonald:
No. No, there's not. It really just depends [00:03:30] on what amount a unit factor shares each home has based on registered square meters of their home.
Karl Yeh:
Is there an average that you found in the past, like an average condo fee, or it depends on the multi-family factor?
Karen McDonald:
It really depends on what type of multi-family home you have. Apartments, you know that they're going to include some kind of utility.
They will be higher than say town homes, where they're just maintaining the exterior of the building, or a Bare Land, where they don't maintain [00:04:00] anything. You're going to have varying amounts based on whatever type of multi-family home you're buying.
Karl Yeh:
How are condo fees actually calculated?
Is there like a formula that the management company takes into consideration?
Karen McDonald:
Well, it would be based on total registered size of the home and unit factor shares that are allocated towards each home.
Now, what that means is that in Alberta, every multi-family development has 10,000 unit factor shares. So, [00:04:30] based on the registered size of the home, that would be allocated accordingly based on that square metered size.
Karl Yeh:
If you add any square meters, then obviously that would increase, right? If you were adding that rec facility inside?
Karen McDonald: Absolutely, absolutely.
Karl Yeh:
How often do you pay condo fees?
Karen McDonald: It would be monthly; on a monthly basis.
Karl Yeh:
Is there any other payment method that you know of or is it just sort of per owner [00:05:00] or kind of like as a collective, you pay the collective, or you pay your condo board and then you pay the management company?
Karen McDonald:
You would pay directly per owner to the management company. Some people, they can pay a year in advance if that's what they prefer to do. A lot of the time, it's direct debit on a monthly basis.
Karl Yeh: Perfect. Do you have anything else to add in terms of condo fees?
Karen McDonald:
I would say overall that condo fees are good. They are maintaining your investment.
They're ensuring that landscaping [00:05:30] is done, that everything looks the same, it's cohesive, and you're not having to rely on your neighbor to maintain their property so that the value of yours is ensured.
Overall, condo fees are good. You pay them regardless whether it's in a single family home or a multi-family, just not in a tidy little bundle every month.
Karl Yeh: Awesome. Well, thank you very much, Karen.
Karl Yeh: Thank you very much for joining us. Remember to view part one of our series on condo fees. It includes what's included in condo fees and other questions as well.
Your turn:
Let us know if you have additional condo questions or home buying questions that we can answer by submitting them in the comments section below.
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About Karen McDonald:
This is my 12th year with Brookfield Residential. I have been involved in 8 sites now with 7 in multi-family and 1 Single Family. I received my certification as a New Home Sales Professional from PHBIA in 2008.
